📚┃Glossary
APR (Annual percentage rate)
A year-to-year interest rate that is generated without compounding.
APY (Annual percentage yield)
The real rate of return earned on an investment, taking into account the effect of compounding interest. Compounding interest is calculated periodically and the amount is immediately added to the balance.
With r being the period rate and n the number of compounding periods, we can obtain the APY through this formula:
Audit
A smart contract audit is an extensive methodical examination and analysis of a smart contract's code used to interact with a cryptocurrency or blockchain. This process is conducted to discover errors, issues and security vulnerabilities in the code in order to suggest improvements and ways to fix them.
Automated market maker (AMM)
In a decentralized exchange, an automated market maker (AMM) facilitates the buy and sell orders automatically. AMM works by using self-executing computer programs, also known as smart contracts. AMM eliminates the need for an additional participant when making a trade. Buyers and sellers can instead trade directly with an AMM and its algorithm.
Blockchain
A blockchain is a peer-to-peer ledger of all transactions across a network.
Contract address
The contract address is where the token contract is located or where a smart contract that manages token holders' balances is located.
dApp
Decentralized Web3 software application that normally runs on a blockchain.
DAO (Decentralized autonomous organization)
Governance mechanism where votes make decisions, and where voting rights are most of the time materialized by a governance token (xGRAIL in our case)
DeFI
Stands for decentralized finance.
DEX (Decentralized Exchange)
A decentralized exchange (DEX) is a peer-to-peer (P2P) marketplace that connects cryptocurrency buyers and sellers. In contrast to centralized exchanges (CEXs), decentralized platforms are non-custodial, meaning a user remains in control of their private keys when transacting on a DEX platform.
Dynamic directional fees
Provide the flexibility to reward pairs separately based on the volatility or stability of their assets, as well as on the structure of protocols and their own custom needs.
ERC-20
ERC-20 is the technical standard for fungible tokens created using the Ethereum blockchain.
ERC-721
The ERC-721 (NFT) Token is unique and can have a different value from another Token in the same smart contract.
Gas fees
A gas fee is charged for the facilitation of a transaction on a blockchain network.
Governance and governance tokens
Governance refers to determining, maintaining, adapting and enforcing the rules of an ecosystem, product, project, or DAO. It specifically refers to the control and use of a Governance coin or token that carries the right to take part in governance processes.
Impermanent Loss
A user may incur an impermanent loss when he or she locks up crypto tokens in a liquidity pool for the purpose of providing liquidity and earning interest, but the token's price changes due to market volatility or other factors.
Layer 2 (L2)
A Layer 2 protocol applies to off-chain networks that are built on top of Layer 1 networks in order to enhance the capabilities of the underlying Layer 1 networks. For example: Ethereum (L1) - Arbitrum (L2)
Liquidity
The term liquidity refers to the ease with which a token can be converted into another asset without impacting its value. Liquidity measures the circulating supply and how much trading activity there is in exchange. A currency with low supply and/or circulation is said to be illiquid. Low liquidity levels cause market volatility, resulting in spikes in token prices. A high level of liquidity, however, indicates a stable market with few price fluctuations.
Liquidity mining
Liquidity mining involves placing tokens into a DeFi protocol in order to provide liquidity while receiving rewards for the stakes placed.
Liquidity pool
A Liquidity Pool (LP) is a pool of deposited funds used to provide liquidity for smart contracts.
LP token & Liquidity providers
A Liquidity Pool (LP) is a pool of deposited funds used to provide liquidity for smart contracts. Liquidity providers contribute to the liquidity pools by depositing assets and receiving in exchange a new token representing the share they own of that pool. This token is called a Liquidity Provider (LP) token.
Multisig wallet
A multisig wallet requires two or more private keys to sign transactions.
Mainnet
A working, fully-functional blockchain is referred to as the mainnet.
Protocol
A DeFi protocol is a program or code written on the blockchain that is used for designing DApps. The protocol is represented by DApps that offer peer-to-peer financial services.
Slippage
Slippage refers to a difference in price between buyer and seller expectations. Slippage can lead to a final sale price of the asset that is either more or less than the requested transaction amount.
Smart contract
The term smart contract refers to a program that is designed to automate the execution, control, or documentation of legally binding events according to a contract or an agreement.
Stablecoin
A stablecoin is a cryptocurrency that has its value pegged to the value of a stable asset. Stablecoins are most commonly pegged to the US Dollar.
Staked position (spNFT)
The staked position is an asset or LP token wrapped in spNFT. A staked position is an alternative to the usual farms that generate yield in the majority of DeFi protocols, and also serves as an additional layer of functionality that offers a wide range of new possibilities.
Staking
The act of depositing tokens into a yield farming protocol.
Swap
With a swap, you can instantly exchange one token for another without needing to exchange it for fiat currency.
Testnet
Testing network for a new product or project, or for possible improvements to an existing product.
Tokenomics
Among the factors that determine tokenomics are the number of tokens circulating, the maximum token supply, the rate at which tokens are emitted, and the vesting schedule for tokens.
TVL (Total Value Locked)
This metric represents the sum of all assets deposited in the protocol.
Yield
The yield is the amount earned by staking or depositing an asset in a DeFi platform.
Yield farming
Yield farming accounts for depositing or staking tokens across DeFi platforms which provide rewards to liquidity providers. You can generate additional value from your assets by farming them.
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