Glossary
To help our readers understand the terminology used in these documents we have put together a glossary table below.
Term | Description |
---|---|
AMM | Automated market makers (AMMs) allow digital assets to be traded in a permissionless and automatic way by using liquidity pools rather than a traditional market of buyers and sellers |
Base Token | The token that underlies the Yield Bearing Token (e.g. for cDAI the base token is DAI) |
Capital Token (*FKA Principals) | The token that can be redeemed for a unit of the yield-bearing token at maturity |
Fixed Yield | The return that Capital token holder earns by holding the token until maturity |
Impermanent Loss | The difference between the return achieved by a liquidity provider and the return achievable by holding the two assets outside the pool |
Liquidity Pool | A reserve composed of two assets provided in different proportion but with the same dollar value |
Maturity | The date at which the pool expires and Capital and Yield token holders can redeem their tokens in exchange for a certain quantity of Yield Bearing Tokens |
Redemption | The act of burning Capital and Yield tokens in exchange for a certain quantity of Yield Bearing Tokens |
Swap Fees | A percentage of the token swapped that represents the remuneration earned by liquidity providers |
Variable Yield | The yield accrued on the Yield Bearing Token which fluctuates over time |
Yield Bearing Token | The token on top of which a variable yield accrues over time (i.e. cDAI) |
Yield Token | The token on top of which the Yield Bearing Token variable yield accrues over time |
Zero Coupon Bond | A debt instrument that does not pay interest, but trades at a discount to the maturity value. At maturity, the zero-coupon bond will be redeemed for its face value, providing a fixed yield to its holder |
*FKA = Formerly Known As
Last modified 1yr ago