Geode Finance
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Geode Finance

Geode Glossary

Last Updated: 08/13/2022

This handy glossary defines all the unique terms you’ll find used within the Geode ecosystem.

Geode Finance Terminology

Dynamic Withdrawal Pool (DWP)

A methodology of guaranteeing a fair exchange rate between a Planet’s (DAO’s) liquid staking token and the base asset it represents (AVAX / ETH etc).

Galaxy

A Galaxy refers to any PoS blockchain within the Geode Universe. Avalanche and Ethereum are examples.

Liquid Staking Universe

The entire liquid staking ecosystem created by Geode, through partnerships with different Planets (DAOs), and across each Galaxy (PoS chain). The Universe expands as more Planets (DAOs) adopt our liquid staking solution across different Galaxies (chains).

Planet

A Planet is the name we use for each DAO within our Universe. Yield Yak is one example of a Planet in the Geode ecosystem.

Senate

The control mechanism for all Protocols within a Galaxy. The Senate has the final say on any governance proposal. This allows Planets to bring their own governance to the Geode Universe, with each Galaxy having its own dedicated Senate.

Blockchain-Specific Terminology

Avalanche:

AVAX

The native asset of the Avalanche blockchain. It is used (via staking) to secure the Avalanche network and is used to pay for blockspace.

Avalanche Consensus Protocol

A DAG-optimized consensus protocol, optimized for high-throughput, and parallelization. Implemented on the Exchange Chain (X-Chain). Implementing a directed acyclic graph (DAG) allows processing transactions in parallel, which increases throughput, but doesn’t utilize blocks, thus creating a partially-ordered timeline.

C-Chain

The Contract Chain (C-Chain) is one of the three separate and distinct blockchains on Avalanche. This is the smart contract layer on Avalanche which allows

P-Chain

The Platform Chain (P-Chain) is the metadata blockchain on Avalanche and coordinates validators, keeps track of active subnets, and enables the creation of new subnets. The P-Chain implements the Snowman consensus protocol.

Snowman Consensus Protocol

Snowman is essentially a block based (linear) version of Avalanche Consensus, used on the P-Chain and C-Chain. Snowman does not use directed acyclic graphs (DAG), like Avalanche Consensus does on X-Chain. This is because smart contracts and network coordination functions require a totally-ordered timeline.

SnowTrace

This is the block explorer for the Avalanche network.

Subnets

A Subnet, or Subnetwork, is a dynamic set of validators working together to achieve consensus on the state of a set of blockchains.

X-Chain

Also known as the Exchange Chain. Acts as a decentralized platform for creating and trading digital smart assets.

Ethereum:

ERC-20

An Ethereum token standard that ensures Fungibility (each token is exactly the same as another token of its type, eg Ether)

ERC-721

An Ethereum token standard that ensures Non-Fungibility (each token is unique to another token of its type, eg NFTs)

ERC-1155

An Ethereum multi-token standard that represents any number of fungible and non-fungible token types.

Ether (ETH)

This is the base asset on the Ethereum blockchain. It is used to secure the network and is used to pay for blockspace.

Etherscan

This is the block explorer for the Ethereum Network.

Crypto / DeFi Terminology

Alpha

Relatively unknown information about a project, team or token that could give you an investment edge.

AMM

An Automated Market Maker is the underlying protocol powering a decentralized exchange (DEX) where liquidity is pooled by the users and an algorithm determines prices and exchange flows.

APR

Short for “Annual Percentage Rate”, it is the yearly interest rate that a borrower must pay to investors. Interest is rewarded to investors for making their crypto tokens accessible for loans, or for other applications within DeFi, like validator staking. Unlike the APY, the APR does not take into account compounding interest.

APY

Abbreviated form of “annual percentage yield”. APY is the rate of return earned over the course of a year on a specific investment. Unlike APR, APY takes into account compounding interest.

Example: if a user deposits 1,000 AVAX into a protocol that offers 5% interest annually, he will have 1,050 AVAX after one year. However, the protocol may calculate and pay interest every month, which means the user would have 1,051.16 AVAX after one year. In this particular example, APR is 5%, but APY is 5.116% (APY = (1 + r/n )^n-1, where r = annual interest rate, and n = number of compounding periods per year). Although a seemingly negligible difference on the surface, after extended periods, or with large deposits the difference can be significant.

Arbitrage

The practice of exploiting market inconsistencies via the simultaneous purchase & sale of an asset in order to realize profit from differences in its listed buy and sell prices. This can be done across various exchanges or within a singular pool. Arbitrage capitalizes on short-lived variations in the price of similar or identical assets, oftentimes when oracle prices have not yet synced from platform to platform. Some peg stability mechanisms rely on arbitrage in order to maintain the value of derivative or paired assets.

Atomic Swap

Also known as cross-chain trading, an “atomic swap” is an exchange of cryptocurrencies from one distinct blockchain to another. This swapping of assets is conducted in a decentralized manner, removing intermediary third parties or centralized exchanges in order to offer a trustless environment that encourages greater personal control. Atomic swaps are not to be confused with the utilization of smart contract “bridges”.

Auto-compounding

Yield that grows exponentially as return automatically compounds, or builds upon itself as a progressively growing deposit bears yield.

Block

Blocks are data structures within the blockchain database, where transaction data in a cryptocurrency blockchain are permanently recorded.

Blockchain

A blockchain is a digitally distributed, decentralized, public ledger that exists across a network.

Bot

Bots are programs used to execute specific functions or actions. There are all kinds of bots in cryptocurrency and decentralized finance. Some are used for trading, while others are malicious and are used for extracting value from transactions on the network.

Bridge

A blockchain bridge, or cross-chain bridge, enables blockchain interoperability to take place whereby each chain can properly log and agree upon the movement of assets from one chain away from another. This connection allows the transfer of tokens and data from one chain to the other, providing a compatible way to interoperate between differing networks. On a bridge, assets are locked on one chain, while a representative asset mints on another.

The original asset remains locked on the bridge protocol representing the newly minted asset, and when a user wishes to move back assets to the original chain the bridge unlocks the collateral asset, and destroys the bridged asset upon exchange. Due to the experimental nature of blockchain bridges and the considerable amount of funds they hold, they are frequently targets of large-scale exploits.

CEX

An abbreviation of “Centralized Exchange”. Examples of centralized exchanges include: Coinbase, FTX, and Binance. As a CEX is owned through some type of corporation, or other legal entity, they generally must abide by KYC/AML (Know Your Customer/Anti-Money Laundering) procedures, in order to comply with the laws of their host county.

However, this level of legal compliance also allows them to operate as gateways for fiat currencies to enter and exit the markets. With a CEX, people may deposit fiat money in exchange for cryptocurrency, or alternatively, sell cryptocurrency in exchange for fiat (commonly called “on-ramp” and “off-ramp” services).

Coin

Any cryptocurrency token such as Ether, AVAX or Uniswap.

Composability

In general, composability refers to the ability to combine different components of a software stack. Within DeFi specifically, it is used to refer to the interoperability between different protocols. Composability connects different DeFi projects and communities, and accelerates the expansion of a decentralized ecosystem. A borrowing protocol, which accepts the token of another project as collateral would be one example of composability.

Compounding

Compounding is the ability of an asset to generate earnings, which are then reinvested or remain invested with the goal of generating their own earnings.

Cryptocurrency

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.

DAO

A Decentralized Autonomous Organization. DAOs govern DeFi protocols. There is no central authority and the community governs the project.

dApp

This is short for “Decentralized Application”. Unlike centralized applications or websites, dApps are free from the control and interference of a single authority, and often lack the ability to censor content while allowing for flexibility of development, expansion, and innovation.

Decentralized Finance (DeFi)

Offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a blockchain.

Derivative

Derivatives are financial contracts, set between two or more parties, that derive their value from an underlying asset, group of assets, or benchmark. For example, yyAVAX is a derivative.

DEX

“Decentralized Exchange”, examples include Uniswap, Sushiswap, and 1Inch.

DYOR

A term that means “Do Your Own Research” and is usually stated by anyone who may be sharing information or opinions but is NOT a legally-recognized or educated financial advisor.

Fiat

“Normal” state-owned physical currencies such as the Dollar, Pounds Sterling, Yen, Franc, and the Euro.

Front-running

Front running occurs when miners are able to access information about pending transactions to take advantage of trades by buying/selling in front of the original user requesting a transaction.

Gas

Gas refers to the fee, or pricing value, required to successfully conduct a transaction or execute a contract on a blockchain platform. For each transaction performed on a blockchain, a user pays “gas fees” to process it. Gas fees are handled differently between each blockchain and PoS-based chains have considerably smaller gas fees than PoW chains do.

GM

Short for “Good Morning”.

Governance

The process by which decisions are made by the community to improve a given DeFi project led by a DAO.

Guarded Launch

When deploying a new smart contract, a “guarded launch” refers to a predetermined set of parameters which allow users to interact with, test out, or invest through while operating in a limited scope. This risk management strategy is usually employed in order to allow further testing of the new product.

This may help developers to determine if it is functioning properly, to uncover and repair bugs, and to reduce inherent hazards of exploitation or considerable loss of funds. As time passes and confidence in the product’s functionality increases, the constraints will be relaxed in order to encourage further growth and scaling of the product or protocol.

Hard Cap

A chosen number which creates an artificial cap or limit on the supply of a certain asset to be released to the public. Oftentimes, a hard cap is placed on a newly-released token, either for exclusivity, initial fundraising efforts, or in order to keep investments low while testing and revising protocol code.

Hash rate

A measure of the total computational power being used by a proof-of-work (PoW) cryptocurrency network to process transactions in a blockchain.

ICO

Short for “Initial Coin Offering”, which typically refers to an event where a blockchain or protocol opens up purchasing and investing opportunities to the general public.

Illiquid Asset

Assets that cannot quickly or easily be converted into cash for their fair market value.

Inflation

Generally, inflation is an increase in the prices of goods and services in an economy. Inflation occurs because currencies lose their value over time, which causes the prices of goods and services to rise. In cryptocurrency, inflation is linked to the rate at which new coins or tokens are created (or sometimes, the rate at which pre-minted tokens are released into the public supply).

Some cryptocurrencies are designed to experience inflation in a predictable manner. For example, Bitcoin counteracts inflation by limiting the number of coins that can ultimately exist (21 million), and also ensures the creation of new bitcoin tapers off predictably over time (the output of new coins halves every four years).

Interoperability

Blockchain interoperability refers to the ability of various distinct blockchain networks to interact and exchange data between one another.

Latency

In general computing, latency is the delay in time between an input and the output that is received. In cryptocurrencies specifically, latency can refer to time delays of two two different types. First, is latency inside a blockchain network (the delay observed between the submission of a transaction, and the first confirmation). The second is exchange latency (the time it takes an exchange to process an order, like buying, selling, or canceling).

Layer 1 (L1)

The term Layer 1 refers to a base network or protocol, like Bitcoin, Avalanche, or Ethereum. Layer 1 blockchains can perform all functions needed to operate by themselves, for example validating and finalizing transactions. Unfortunately, this approach has difficulty scaling, which has led to the rise of Layer 2 networks in order to facilitate operation at a truly global scale.

Layer 2 (L2)

Layer 2 denotes a secondary network/protocol, built to work on top of another, “Layer 1” blockchain system. Layer 2’s exist to solve the issues with scaling and transaction speed that the major L1 crypto networks (like Bitcoin and Ethereum) have encountered.

Liquid Asset

A liquid asset can easily be converted into cash in a short amount of time.

Liquid Staking

The ability to stake tokens to verify a network while also being able to leverage your liquidity towards other DeFi actions, like farming.

Liquidity

The availability of liquid assets to a market or company.

Liquidity Pool

A pool of cryptocurrencies or tokens locked in a smart contract that facilitates trades between the assets on a decentralized exchange (DEX).

Liquidity Provider (LP)

A market maker who provides liquidity to a pool for a given return.

Maintainer

A private 3rd party organization, smart contract, or singular entity tasked with operating and maintaining validator nodes. In the case of Yield Yak’s yyAVAX token, Eden Network has been delegated as the maintainer to operate and monitor the staking node infrastructure on the Avalanche Platform (P) Chain.

Maintainer fee

A predetermined service fee paid to the maintainer for running and operating validator nodes.

Market Cap

This is a financial figure represented by the number of tokens in circulation multiplied by the price of that same token.

MEV

Maximal Extractable Value, previously known as Miner Extractable Value, refers to the maximum value that can be extracted from block production in excess of the standard block reward and gas fees by including, excluding, and changing the order of transactions in a block. MEV costs traders millions of dollars in lost value every year.

Miner

Miners conduct cryptocurrency mining, the method of verifying transactions on a digital ledger for a blockchain using machines with extensive computing power. Typically associated with older proof-of-work (PoW) blockchains, such as Bitcoin.

Multisig

A cryptocurrency wallet that requires two or more private keys to sign and send a transaction.

Native Token / Native Asset

The primary token and currency on a blockchain network. For example: AVAX on Avalanche Network, or ETH on Ethereum. This functions as the base currency of the network, used to pay for transaction fees, and smart contract execution.

NGMI

Short for the phrase “Not Gonna Make It”, which may be said of traders and investors who make foolish decisions without understanding the market.

Node Operator

Node operators run and maintain validators on behalf of the DAOs, removing any maintenance requirements.

Oracle

Oracles are platforms used to provide data from external, off-chain sources, so it can be incorporated into the blockchain. In general, the function of this oracle data is to act as triggers for smart contracts. This allows smart contracts to initiate transactions based on external conditions. For example, real-world data like the outcome of a sporting event, or a stock price, could signal an oracle to trigger a smart contract.

Peg

Within cryptocurrency, a peg refers to a specific price which a token is is meant to stay at. Thus, the peg determines the exchange rate between two assets. For example: one USDC token is pegged to the value of one United States dollar. Stablecoins are one of the biggest use cases for a peg.

Peg Stability

Refers to the quality of a peg within cryptocurrency, and the potential for it to fluctuate. Any pegged currency (such as a stablecoin pegged to the US dollar) is designed to keep the peg as much as possible, however, there may be circumstances under which the peg could slip to a certain degree, or fail all together.

Maintaining a fair exchange rate between a native asset and the liquid staking derivative version of it, such as between AVAX and yyAVAX. “Keeping the peg.”

Proof-of-Stake (PoS)

A cryptocurrency consensus mechanism that requires you to stake coins, or set them aside, to be randomly selected as a validator.

Proof-of-Work (PoW)

A form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended.

Protocol

A set of code and smart contracts that executes a specific function. In DeFi, many protocols allow you to trade or lend and borrow with your crypto assets.

ROI

A term that stands for “Return on Investment” and refers to how much an investment of any kind yielded in relation to the amount of money you put into it originally.

Runway (Cash Runway)

The amount of time a protocol or organization has left to remain solvent. Assuming they raise no further funds, this is the estimated length of time in which they can remain in operation with stagnant income, or operating at a loss, before further revenue is necessary.

Sandwich Attack

When a malicious trader sees a pending transaction on a network, for example Ethereum, and places one transaction before and one transaction after it in order to extract some kind of value that impacts the trader of the pending transaction negatively.

Scalability

Offering a network infrastructure that can handle growth such as from new users or executing more transactions on the network.

Slippage

Slippage is the difference between the price you expect to get on a crypto trade and the price that you get when the order executes. Many DEXs give you slippage controls to manage this when trading.

Smart Contract

Programs on a blockchain that run when predetermined conditions are met. Smart contracts allow you to execute different transactions in DeFi.

Staking

In networks utilizing the proof-of-stake consensus mechanism, users ‘stake’ or lock-up their cryptocurrency assets, which secures the chain, and allows it to function. Users that stake their tokens receive a reward, thus creating an incentive to do so, and helping ensure the network continues to operate normally.

Staking as a Service (SaaS)

A protocol offering which allows users who wish to participate in the staking process the ability to do so without coding knowledge or large scale investments to operate their own validator node. While participating in SaaS, investors delegate the responsibility of node operation and upkeep to a third party.

Staking Derivative

In proof-of-stake (PoW) systems, a staking derivative is a secondary asset representative of a native token (such as AVAX or ETH) staked in validator nodes. Staking derivatives are usually minted in order to earn network validation rewards in situations where said rewards would not be earned by holding on to the native asset. They are typically used in the practice of liquid staking. in order to unlock further opportunities of composability in the DeFi ecosystem. In the case of Yield Yak’s liquid staking solution, yyAVAX is a staking derivative of the native AVAX token.

Stablecoin

A stablecoin is a type of cryptocurrency which is designed to maintain a specific value, as they’re pegged to another commodity, financial instrument, or currency (often the US dollar). Due to the degree of volatility within cryptocurrency, stablecoins provide more utility as a medium of exchange. Some of the largest stablecoins include: USDC, USDT, and BUSD.

Subnet

Subnets are a feature of the Avalanche Network, designed to provide a pathway for scaling, by increasing transactions per second, and keeping transaction costs low. On a technical level, a subnet consists of a dynamic group of validators that are working together in order to reach consensus on a set of blockchains. Subnets don’t pull resources away from the primary X, P, and C-Chains, set their own gas prices, and can be created by anyone. Subnets also use their own native tokens rather than AVAX.

Subnet Rewards

Refers to the rewards earned for validating a subnet. Generally, rewards earned by subnet validators are not AVAX tokens, but whichever token has been chosen by the subnet’s creators as the native token. Subnet validation incentives are completely customizable however, and may offer additional tokens in order to attract a greater number of validators.

Subnet Validation

Refers to the process of validating a subnet within the Avalanche network. Subnet validation is handled by normal Avalanche network validator nodes, but only those which meet a subnet’s validator criteria. Meeting this criteria may only require staking the subnet’s native token (in addition to the AVAX that must be staked to become a primary network validator). However, criteria may also be limited to certain geographic regions, organizations, license holders, hardware specifications, etc., as subnet validation requirements may be customized by their creators.

Testnet

An instance of a blockchain powered by the same or a newer version of the underlying software, to be used for testing and experimentation without risking the loss of real funds or issues on the main chain.

Time-to-Finality

A processing speed measurement which tells users how long it takes for a transaction to go from wallet approval to irreversible, logged data on the blockchain’s digital ledger.

TL;DR

Too Long, Didn’t Read. TL;DR sometimes accompanies major article takeaways worth understanding, even if you don’t read the whole article.

Token

A digital unit, and the primary means of transferring and storing value on a blockchain network. Tokens can serve a variety of purposes, but are often used as programmable stores of value, managed by a smart contract.

Tokenomics

A portmanteau of “token” and “economics.” Refers to the underlying technical structure of a cryptocurrency project (like the token supply, or blockchain network used), combined with more speculative concepts (use-case, niche within current market, etc.).

Transaction Finality

The moment when the parties involved in a transaction (whether human or protocol-based) consider a specific transaction to be finalized, irreversible, and documented in the digital ledger. After the occurrence of transaction finality, the ability to revert or alter a transaction is no longer possible and this guarantees that a cryptocurrency transaction cannot be revised or canceled.

TVL

Тotal value locked. A metric which represents the total amount of assets that are currently being staked (“locked-up”) in a specific protocol.

Upgradable Contract

Normally smart contracts are not able to be changed or upgraded in any way. Their code is final, or immutable, once they’re deployed. This may aid decentralization and security initially, but it makes fixing flaws or vulnerabilities difficult, if not impossible. Upgradeable smart contracts consist of a more advanced overall architecture, which enable developers to modify contract functionality after deployment, yet still preserve decentralization and security.

WAGMI

Short for “We’re All Gonna Make It”.

Wallet

Wallets store your private keys, keeping your crypto safe and accessible. They also allow you to send, receive, and spend cryptocurrencies.

Web2

Today’s normal internet experience, often referring to a slow shift from older static websites to ones which allowed social engagement, participatory content additions, and interaction with other online users. However, decentralization is essentially nonexistent, and only a handful of large corporate entities control the data, payment methods, content, etc.

Web3

A catch-all term that has come to represent the idea of an improved, highly-decentralized future internet, built utilizing blockchain technology, cryptocurrencies, and NFTs. This vision of “Web3” is often contrasted against the “Web2” world, where only a few extremely large corporations control the internet.

Yield Aggregator

Yield aggregators are tools used within DeFi, which automate, simplify, and improve yields for users engaging in yield farming. For example, by searching different protocols for the best yield, pooling deposits, batching yield reinvestment transactions, or a combination of all of these strategies.

Yield Farming

Also known as “Liquidity Mining”, yield farming is earning interest by investing crypto in decentralized finance markets.

Yield Optimizer

An automated service that seeks to gain the maximum possible return on crypto-investments.

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