> For the complete documentation index, see [llms.txt](https://altodex.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://altodex.gitbook.io/docs/core-mechanics/2.1-perp-trading-module.md).

# 2.1 Perp Trading Module

<figure><img src="/files/AmrDDWuhVpUMRZWqXrl4" alt=""><figcaption></figcaption></figure>

The foundation of Alto is the Perpetual Trading Module, which drives the direct on-chain creation, administration, and settlement of perpetual contracts. Users have complete visibility and control over the management of trades because, in contrast to centralized exchanges, all operations are carried out through transparent, auditable smart contracts.

The fairness, adaptability, and sustainability of this module's design guarantee that traders and liquidity providers can function effectively without running the risk of unintended consequences.

***

#### Portfolios with Multiple Collaterals

Unlike traditional perp DEXs, which typically limit traders to a single stablecoin like USDC, Alto allows multi-collateral margining, which is a significant advancement.

* **Supported Assets**: Stablecoins (USDC, USDT, and DAI), ETH, BTC, and eventually tokenized real-world assets (such as gold, commodities, and treasury tokens) are among the supported assets.
* **Portfolio Margining:** The whole collateral basket is used to calculate risk. For example:
  * A trader's margin ratio lowers liquidation risk if they deposit $1,000 USDC and one Ethereum because it represents the total value of both deposits.
* **Collateral Flexibility:** Without closing positions, users are free to add, remove, or rebalance collateral whenever they choose.

As a result, traders can precisely manage risk and Alto trading is more capital-efficient.

***

### Adaptive Leverage

Alto presents an Adaptive Leverage Model that strikes a balance between system security and trader freedom.

* **Leverage Aware of Volatility:**
  * Higher leverage is available to traders in quiet markets.
  * Maximum leverage automatically reduces in volatile markets to avoid mass liquidations.
* **Leverage Based on Skills:**
  * Expert traders may be able to access increasingly higher leverage tiers if they keep their margin ratios in check and steer clear of frequent liquidations.
  * Until they show discipline, novice or careless traders are capped at lower levels.
* **Transparency**: There are no arbitrary limitations or hidden caps because all leverage rules are visible on-chain.

Instead of a one-size-fits-all cap, this model establishes a dynamic, merit-based leverage system.

***

### Cross-Asset Perpetuals

Markets are restricted to USD-quoted pairs (ETH/USDC, for example) by the majority of perpetual DEXs. By adding cross-asset perps, Alto goes beyond this.

* **Examples**: ETH/BTC, SOL/ETH, or even Gold/BTC.
* **Decreased Dependency on Stablecoins:** This lessens the need for USD-pegged stablecoins, which may be subject to depeg or regulatory risks.
* **New Trading Opportunities:** Without constructing intricate external hedges, traders can directly express relative value opinions (ETH outperforming BTC, for example).
* **Institutional Appeal:** Alto's market reach is expanded by cross-asset pairs that resemble TradFi offerings, such as FX crosses.

One significant differentiator that enables Alto to provide more advanced strategies than rivals is cross-asset trading.

***

#### Execution & Settlement

* **On-Chain Matching:** Clear contracts are used to carry out all orders, including market, limit, stop, take-profit, and trailing stop.
* **Real-Time PnL:** As prices fluctuate, profit and loss are continuously updated, and the dashboard prominently displays margin and liquidation metrics.
* **Fair Liquidations:** To avoid giving bots or insiders an unfair advantage, positions that are liquidated are handled through Dutch auctions (see Risk section).
* **Auditability**: All settlements, fees, and executions are documented on-chain for public validation.

***

#### Alto's Trading Module Advantages

* **For traders:** more flexibility (cross-asset, multi-collateral markets), more equitable leverage (adaptive system), and clear regulations.
* **For LPs:** Less systemic liquidation cascades and safer trading conditions because of balanced exposure and leverage that is sensitive to volatility.
* **For Institutions:** Well-known tools, such as portfolio margining and cross-asset pairs, in a transparent, decentralized infrastructure.


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