Trade PERP/USD

A regular AMM like Uniswap uses real token reserves, liquidity providers deposit actual tokens that traders swap against. A virtual AMM uses a pricing formula (typically the constant product formula x*y=k) but without real underlying reserves. Instead, a clearing house contract manages all collateral in a single pool and uses the virtual AMM curve only to calculate prices, funding rates, and unrealized profits and losses. The design allows perpetual contracts to trade against a market-making mechanism without requiring liquidity providers to take directional risk on specific assets.

Perpetual contracts are derivative instruments that let traders speculate on asset prices with leverage, similar to futures contracts but without an expiry date. They use a funding rate mechanism, periodic payments between longs and shorts, to keep the contract price anchored near the spot price. In centralized crypto exchanges, perpetual contracts account for a large majority of total trading volume because they allow traders to express leveraged directional views without managing contract rollovers. Decentralized versions like Perpetual Protocol aim to offer the same functionality while remaining non-custodial and permissionless.

When a trader’s margin falls below the maintenance margin threshold due to adverse price movement, their position becomes eligible for liquidation. Liquidators, which can be any address running liquidation bot software, close the position and receive a liquidation fee as compensation. The clearing house uses the insurance fund to cover any shortfall if a position cannot be fully liquidated before going into deficit. This mechanism is similar to how centralized exchanges handle forced liquidations, but executed transparently on-chain.

No. PERP/USD on StoicFX is a Contract for Difference. You trade PERP’s price against the US dollar without holding any tokens. To stake PERP, participate in Perpetual Protocol governance, or trade perpetuals directly on the Perpetual Protocol platform, you would need actual PERP tokens in an Ethereum-compatible wallet.