LUCAX Glossary

If you came accross unfamiliar terms throughout the documentation here is the list with some essential definitions.

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CDP

In context of Unit Protocol, CDP is a collateralized debt position. It is the position created by locking collateral in smart contract to generate decentralized stablecoin, USDP.

Collateral

Collateral is an asset you will have to lock-in with the lender in order to borrow another asset. It acts as a guarantor that you will repay your loan.

Wallet Connect

WalletConnect is an open protocol made to facilitate a secure connection between mobile cryptocurrency wallets and desktop applications, such as dapps. Transactions are made through an encrypted connection by scanning a QR code, and are confirmed on the mobile device.

DeFi (Decentralized Finance)

Decentralized finance, or DeFi, aims to use technology to remove intermediaries between parties in a financial transaction. The components of DeFi are stablecoins, use cases, and a software stack that enables the development of applications. The infrastructure and use cases for DeFi are still in experimental form.

Dutch Auction

A Dutch Auction is where the bidding for an item begins with the price starting at its highest asking amount but is systematically lowered until someone makes the winning bid and the item is sold.

Initial Collateral Ratio

Initial collateral ratio (ICR), % - the debt/collateral ratio represents the maximum amount of debt a user can borrow initially (when opening CDP) with a selected collateral token.

Leverage

Leverage is an investment strategy to gain higher potential return of the investment by using borrowed money.

Liquidation Ratio

Liquidation ratio (LR), % - the debt/collateral ratio represents the limit after which your CDP can be liquidated.

LR>ICR creates a buffer to protect against instant liquidation if you borrow the maximum limit.

Liquidation Fee

Liquidation fee, % - a fee which represents a % from the loan. Will be deducted from collateral if liquidation will occur.

Liquidation Price

Liquidation price - below the collateral price the position (CDP) can be liquidated.

Liquidity Provider (LP)

A liquidity provider, also known as a market maker, is someone who provides their crypto assets to a platform to help with decentralization of trading. In return they are rewarded with fees generated by trades on that platform, which can be thought of as a form of passive income.

Liquidity Provider Token (LP token)

Liquidity provider tokens or LP tokens are tokens issued to liquidity providers on a decentralized exchange (DEX) that run on an automated market maker (AMM) protocol. Uniswap, Sushi and PancakeSwap are some examples of popular DEXs that distribute LP tokens to their liquidity providers.

Mint

It refers to the process of issuing new coins/tokens.

Market Capitalization

Market capitalization refers to the total value of all a company's shares of stock. It is calculated by multiplying the price of a stock by its total number of outstanding shares.

Metamask

Metamask is an Ethereum wallet that allows you to interact with Curve and other dapps. You can also use it with Ledger and Trezor hardware wallets. It's the most popular Ethereum web wallet and is available as an add-on for most browsers.

Oracle

Oracles are service providers which collect and verify off-chain data to be provided to smart contracts on the blockchain.

Over-collateralization

Over-collateralization refers to the value of collateral asset that must be higher than the value of the borrowed asset.

Protocol

A protocol is a base layer of codes that tells something on how to function. For example, Bitcoin and Ethereum blockchains have different protocols.

Smart Contract

A smart contract is a programmable contract that allows two counterparties to set conditions of a transaction without needing to trust another third party for the execution.

Stability Fee

Stability fee, % - represents the cost of USDP debt per year. It capitalizes during every action, which reduces debt/collateral ratio like withdrawing collateral and borrowing more USDP.

Stablecoins

A stablecoin is a cryptocurrency that is pegged to another stableasset such as the US Dollar.

Staking

Staking can mean various things in crypto space. Generally, staking refers to locking up your cryptoassets in a dApp. Otherwise, it could also refer to participation in a Proof-of-Stake (PoS) system to put your tokens in to serve as a validator to the blockchain and receive rewards.

Total Value Locked (TVL)

Тotal value locked represents the number of assets that are currently being staked in a specific protocol.

Utilization Ratio

Utilization ratio is a common metric that has been used in legacy finance where you are measuring how much you borrow against your borrowing limit. Similarly, we can calculate decentralized lending application utilization ratio by measuring the borrowing volume against the value locked within the lending dApp.

3CRV

3CRV is the LP token for the 3Pool (sometimes referred to as TriPool) at Curve.fi - a decentralized liquidity aggregator. Trading fees are distributed in 3CRV. You can stake $USDP on $USDP+3CRV curve pool.