> ## Documentation Index
> Fetch the complete documentation index at: https://docs.priest.trade/llms.txt
> Use this file to discover all available pages before exploring further.

# The Secondary Market Engine

> Once a market graduates — or when an existing Monad coin is listed — it moves off the internal virtual curve onto the secondary engine.

Once a market graduates — or when an existing Monad coin is listed — it moves off the internal virtual curve onto the **secondary engine**.

Instead of trading against a standalone virtual pool, the perp now prices off real spot liquidity on Uniswap, backed by the **Counterflow Vault (`cfUSDC`)**.

***

## How pricing works

On the secondary engine, fills are based on three things:

### 1. The on-chain oracle

* **Uniswap v4 pools (graduated markets):** The engine tracks a smoothed moving average of the pool price. Samples are taken once a second and capped so a single quick swap can't spike the oracle.
* **Uniswap v3 pools (listed tokens):** Uses Uniswap's built-in 5-minute TWAP. If a token is paired with WMON, the price converts to USD using the main WMON/USDC pool.

### 2. "Worst-of" fill protection

To stop traders from front-running a lagging oracle or a moved spot pool, takers always fill at the **worse of the oracle price and the live pool price**:

* **Longs (buys):** Fill at whichever price is higher.
* **Shorts (sells):** Fill at whichever price is lower.

This means you can't buy at an old low oracle price while the real pool is already higher, and you can't dump at a high oracle price while the real pool is lower.

### 3. Skew premium and spread

When a market gets lopsided (e.g. way more longs than shorts), the crowded side pays a small premium. The premium scales with the order size and is path-averaged, so splitting an order into small chunks costs the exact same as one big order. Every trade also includes a baseline 10 bps half-spread.

***

## Leverage and limits on secondary

* **Opening leverage:** Starts at 15x on day one of graduation, then steps up by 5x each day until reaching 40x.
* **Open interest caps:** Scaled directly to how much USDC depth the spot pool actually has.
* **Single-wallet limit:** No single trader can hold more than 25% of the market's total capacity.

***

## Backed by Counterflow

Graduated markets are backed by Counterflow, Priest's community liquidity vault. If a market runs into a temporary deficit paying out winning traders, Counterflow steps in to cover the difference. In exchange, Counterflow gets 30% of the market's trading fees and keeps the surplus when traders lose.

***

## See also

* [Graduation into Uniswap v4](https://docs.priest.trade/launching-tokens/graduation.md) — how a market gets here.
* [Counterflow Overview](https://docs.priest.trade/vaults/counterflow-vault.md) — how the backing vault works.
* [Oracle & Reference Pricing](https://docs.priest.trade/core-concepts/oracles.md) — technical details on price feeds.


This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.