Our exchange model is very different from other exchanges, including AMM based exchanges. Key points to begin with:
Perpetual Protocol does not use liquidity or liquidity providers.
Perpetual Protocol is 100% AMM based; there is no order book.
The on-chain price reflects trades on Perpetual Protocol - the price only moves when positions are opened or closed.
Traders use collateral (USDC) to open long or short positions in a given asset. Every time a trade is made, the vAMM calculates the entry or exit price in the same way prices are calculated on Uniswap or other AMM style exchanges.