Glossary
Comprehensive glossary of terms used in the Oyl AMM protocol and DeFi ecosystem.
A
Alkanes The metaprotocol that enables smart contracts on Bitcoin, providing the runtime environment for the Oyl AMM protocol.
AMM (Automated Market Maker) A type of decentralized exchange protocol that uses mathematical formulas to price assets and enable trading without traditional order books.
API (Application Programming Interface) A set of protocols and tools for building software applications, defining how software components should interact.
APY (Annual Percentage Yield) The real rate of return earned on an investment, taking into account the effect of compounding interest.
Arbitrage The practice of taking advantage of price differences between different markets or exchanges to make a profit.
B
Bitcoin The first and largest cryptocurrency by market capitalization, serving as the base layer for the Alkanes metaprotocol.
Basis Points (bps) A unit of measure used to describe the percentage change in financial instruments. One basis point equals 0.01%.
C
Callback A function that is passed as an argument to another function and is executed after some operation has been completed.
Cellpack A data structure in the Alkanes runtime used to package function calls and parameters.
Constant Product Formula The mathematical formula (x * y = k) used by AMMs to determine token prices and maintain liquidity pool balance.
Cumulative Price The sum of prices over time, used in oracle systems to calculate time-weighted average prices (TWAP).
D
Deadline A timestamp after which a transaction will be rejected, used to prevent transactions from being executed at unfavorable prices due to delays.
DeFi (Decentralized Finance) A blockchain-based form of finance that does not rely on central financial intermediaries.
F
Factory Contract The main contract that creates and manages all trading pairs in the Oyl AMM protocol.
Flash Swap A feature that allows users to borrow tokens from a liquidity pool without collateral, as long as they return the tokens (plus fees) in the same transaction.
Fee A charge for using the AMM protocol. Oyl AMM charges a 0.5% total fee (0.3% to liquidity providers, 0.2% protocol fee).
Fuel The computational effort required to execute operations on alkanes. Contracts at minimum have 3.5 million fuel units.
I
Impermanent Loss The temporary loss of funds experienced by liquidity providers due to volatility in a trading pair.
Invariant A mathematical property that remains constant. In AMMs, the constant product (k = x * y) is the invariant.
L
Liquidity The availability of liquid assets to a market or company, or the ease with which assets can be converted to cash.
Liquidity Pool A collection of funds locked in a smart contract, used to facilitate decentralized trading and lending.
Liquidity Provider (LP) A user who deposits tokens into a liquidity pool to earn fees from trades.
LP Token A token that represents a liquidity provider's share of a liquidity pool.
M
Market Maker An entity that provides liquidity to a market by being ready to buy or sell at publicly quoted prices.
Metaprotocol A protocol that operates on top of another blockchain protocol, extending its functionality.
Multi-hop Swap A swap that routes through multiple pools to exchange tokens that don't have a direct trading pair.
O
Opcode An operation code that specifies the operation to be performed in smart contract functions.
Oracle A service that provides external data to blockchain networks and smart contracts.
Oyl AMM The automated market maker protocol built on Bitcoin using the Alkanes metaprotocol.
P
Pool A smart contract that holds reserves of two tokens and facilitates trading between them.
Price Impact The effect that a trade has on the price of a token, typically larger for bigger trades or in pools with less liquidity.
Protocol Fee A fee collected by the protocol itself, separate from fees paid to liquidity providers.
R
Reserves The amounts of each token held in a liquidity pool.
Reentrancy A vulnerability where a function can be called recursively before the first execution is complete.
Router A contract that finds optimal paths for multi-hop swaps across multiple pools.
S
Slippage The difference between the expected price of a trade and the actual price at which the trade is executed.
Smart Contract A self-executing contract with terms directly written into code.
Swap The exchange of one token for another through a liquidity pool.
T
Token A digital asset that represents ownership of an asset or access to a service.
TWAP (Time-Weighted Average Price) An average price calculated over a specific time period, used to reduce the impact of price manipulation.
U
Uniswap V2 A popular AMM protocol that inspired many similar protocols, including aspects of the Oyl AMM design.
V
Volatility A measure of how much the price of an asset fluctuates over time.
W
WBTC (Wrapped Bitcoin) A tokenized version of Bitcoin that can be used in DeFi protocols.
Y
Yield The income return on an investment, typically expressed as an annual percentage.
Yield Farming The practice of earning rewards by providing liquidity or staking tokens in DeFi protocols.
Mathematical Terms
Constant Product The mathematical relationship x * y = k that maintains balance in AMM pools.
Square Root A mathematical function used in LP token calculations, particularly for initial liquidity provision.
Precision The number of decimal places used in calculations to maintain accuracy.
Technical Terms
AlkaneId A unique identifier for contracts and tokens in the Alkanes runtime.
CallResponse The return value from a smart contract function call.
MessageDispatch A pattern used in Alkanes contracts to route different types of function calls.
Transfer Parcel A data structure used to transfer tokens between contracts in the Alkanes runtime.
Common Abbreviations
- AMM: Automated Market Maker
- APY: Annual Percentage Yield
- DEX: Decentralized Exchange
- LP: Liquidity Provider
- TWAP: Time-Weighted Average Price
- TVL: Total Value Locked
- UI: User Interface
- UX: User Experience
This glossary provides definitions for key terms used throughout the Oyl AMM documentation and the broader DeFi ecosystem.