Glossary
The dictionary describing all the definitions used in the docs.
Last updated
The dictionary describing all the definitions used in the docs.
Last updated
The improvements in Liquidity versus a Full Range Strategy, as measured by the increase in trading volume.
The amount capital Liquidity Providers will lose by providing and withdrawing liquidity. It is equal to realised and unrealised .
Impermanent loss cannot be eliminated, because it is an essential feature of Decentralised Exchanges (DEX) that generates Fee Income for LPs.
For simplicity, Capital Loss will be used inter-changeably with impermanent loss throughout the docs.
The income liquidity providers earn after providing assets to a DEX pool.
Traders pay a fee to LPs when they use their assets to trade, and liquidity providers incur Capital Loss whenever their assets are traded.
A Liquidity Position with the maximum possible price range.
It also guarantees tokens can always be traded.
The amount deposited into a Liquidity Position when the market price is within the range specified by the Liquidity Position.
The deposits will earn Fee Income, and will be used by traders to trade.
Liquidity is the size of the trade that can be placed to move the Market Price.
The Liquidity is always zero for Out-of-Range Liquidity.
The process of depositing assets into any Liquidity Position that is not a Full Range Position.
An individual or smart contract using an LP Strategy to manage the Liquidity Position.
The LP Strategy is open-sourced by passive Liquidity Managers, and close-sourced by active Liquidity Managers.
A wallet or smart contract depositing assets to a pool of assets in a Decentralized Exchange (DEX).
LPs earn income from the trading fees generated by the DEX, but risk Capital Loss when traders use their assets to trade.
The amount of Fees Income earned by LPs in excess of the Capital Loss.
LP Returns is often measured as the Return On Investment (ROI) versus holding the asset (ie not providing liquidity), but can also be measured as the ROI versus a Full-Range Position.
The methodology that determines how Liquidity Positions are chosen.
This methodology is open sourced by passive Liquidity Managers, and close sourced by active Liquidity Managers.
An asset management system that chooses Liquidity Positions on behalf of Liquidity Providers.
Decentralised LP Vaults are smart contracts deployed and operated entirely on a public blockchain.
The amount of tokens that can be swapped for 1 unit of the other token within a Liquidity Pool.
The amount deposited into a Liquidity Position when the market price is outside the range specified by the Liquidity Position.
The deposits will not earn Fee Income, nor will they be used by traders to trade.
An LP Strategy that relies entirely on changes in the market price to manage liquidity.
An investment vehicle that earns income using an open-source, transparent, and rules-based LP Strategy.
The vaults created by Alpha Vaults are the first Passive Vaults.
The process used to chose new Liquidity Positions.
During Rebalance, liquidity is removed from the old positions and redeposited into new positions.
A depositor's return in investment after depositing into an LP Vault.
The ROI is equal to Fee Income minus Capital Loss.
For example, if a depositor deposited 1 WETH and 2000 USDC into an LP Vault, and the ROI after 4 months is 10%, they would have earned 0.1 WETH and 200 USDC during 4 months.
The amount of trading volume that can be generated within the pool of liquidity managed by the Liquidity Manager.
Tradability is always zero for Out of Range Liquidity.
Compared to other Liquidity Positions, A Full-Range Position earn the Fees Income, but also have the lowest risk of Capital Loss.
Higher Liquidity result in higher trading volumes, lower , and lower .
The price ranges of the chosen by a Liquidity Provider or Liquidity Manager when providing liquidity.
LP Shares are used to withdraw an LP's assets from the LP Vault, and to access other benefits such as income and .
A vault manager who have passed Charm's on-chain system.