📚Glossary

Glossary

A

AMM (Automated Market Maker) A decentralized exchange protocol that uses liquidity pools and mathematical formulas to determine asset prices, rather than traditional order books.

APY (Annual Percentage Yield) The annualized rate of return on an investment, including compound interest.

Audit Trail A chronological record of all transactions and actions, stored immutably on Hedera Consensus Service.

B

Bonzo Finance A lending and borrowing protocol on Hedera (fork of Aave V2) used by SaucerHedge for opening short positions.

C

Collateral Assets deposited to secure a loan or short position. In SaucerHedge, ~21% of your deposit serves as collateral for the hedge.

Concentrated Liquidity A capital-efficient LP mechanism (from Uniswap V3) where liquidity is allocated to specific price ranges rather than the entire curve.

Consensus Service (HCS) Hedera's native service for recording immutable, timestamped messages. SaucerHedge uses it for audit trails.

D

Delegation Scope The set of permissions and limits you define for Vincent abilities to execute actions on your behalf.

DEX (Decentralized Exchange) A peer-to-peer cryptocurrency exchange that operates without a central authority.

E

EVM (Ethereum Virtual Machine) The runtime environment for smart contracts. Hedera supports EVM compatibility.

F

Flash Loan An uncollateralized loan that must be borrowed and repaid within the same transaction. SaucerHedge uses flash loans for gas efficiency.

H

HBAR The native cryptocurrency of the Hedera network, used for transaction fees and network services.

HCS (Hedera Consensus Service) See "Consensus Service"

Health Factor A metric indicating the safety of a leveraged position. Below 1.25 = liquidation on Bonzo Finance.

Hedge A position taken to offset potential losses from another position. SaucerHedge uses short positions as hedges.

Hedge Ratio The proportion of your position dedicated to hedging vs. LP. SaucerHedge uses 21% hedge / 79% LP.

HTS (Hedera Token Service) Hedera's native token service that provides fast, secure, and efficient token operations without smart contracts.

I

Impermanent Loss (IL) The opportunity cost of providing liquidity compared to holding assets. Occurs when the price ratio of tokens changes.

L

Leverage Using borrowed funds to increase position size. SaucerHedge typically uses 2x leverage on short positions.

Liquidation The forced closure of a leveraged position when collateral value falls below the required threshold.

Liquidity Pool A collection of funds locked in a smart contract, used to facilitate trading on DEXs.

Liquidity Provider (LP) A user who deposits assets into a liquidity pool to earn trading fees.

Lit Protocol A decentralized network for access control and programmable signing. Powers Vincent framework.

LP Token A token representing your share of a liquidity pool. In Uniswap V3/SaucerSwap V2, each position is a unique NFT.

M

Market Maker An entity that provides liquidity to trading pairs by offering to buy and sell assets.

MEV (Maximal Extractable Value) Profit extracted by reordering, including, or excluding transactions. Hedera's fair ordering prevents MEV.

O

Oracle A service that provides external data (like prices) to smart contracts. SaucerHedge uses Chainlink oracles.

P

PKP (Programmable Key Pair) A Lit Protocol wallet that can execute transactions programmatically while the user maintains control via their connected wallet.

Price Range In concentrated liquidity, the minimum and maximum prices where your liquidity is active.

Protocol A set of rules and standards that define how data is exchanged in a network.

R

Rebalancing Adjusting position ratios to maintain optimal hedge effectiveness as market conditions change.

S

SaucerSwap The largest decentralized exchange on Hedera, based on Uniswap V3 (concentrated liquidity).

Short Position A bet that an asset's price will decrease. Profits when price goes down, loses when price goes up.

Slippage The difference between the expected price of a trade and the actual execution price.

Smart Contract Self-executing code on a blockchain that automatically enforces agreement terms.

T

Tick The smallest price increment in concentrated liquidity pools. Each tick represents a 0.01% price change.

TVL (Total Value Locked) The total amount of assets deposited in a DeFi protocol.

V

Vincent Lit Protocol's framework for non-custodial automation using PKPs and abilities.

Vincent Ability A programmable action that Vincent can execute on behalf of users, within their defined scope.

Volatility The rate at which an asset's price increases or decreases. Higher volatility = higher IL risk.

W

Wallet Software that stores public and private keys for interacting with blockchains.

Web3 The decentralized internet built on blockchain technology.

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