Glossary
Automated Market Maker
An automated market maker (AMM) is a smart contract that holds liquidity reserves. Users can trade against these reserves at prices determined by a fixed formula. Anyone may contribute liquidity to these smart contracts, earning trading fees in return.
Orderbook
An order book system is similar to what you will see on traditional centralized exchanges. It shows buyers and sellers with amounts and the value of bids on one table.
Asset
A token which can be traded on the DEX.
Deposit
Used to deposit a token pair into the DEX to receive LP tokens and earn on protocol fees.
Redeem
An act of reclaiming liquidity which was provided to a liquidity pool earlier plus protocol fees.
Refund
Cancellation of an order which hasn't been yet settled.
Constant Product Formula
The automated market-making algorithm used by Spectrum Finance, x*y=c. where x and y are deposits on tokens X and Y respectively and c is their product which has to remain constant after swap operations. CFMMs provide liquidity across the entire price range.
Liquidity
Digital assets that are stored in a pool contract and can be traded against by traders.
Liquidity Provider (LP)
A liquidity provider is someone who deposits tokens into a liquidity pool. Liquidity providers take on price risk and are compensated with trading fees.
Pair
A pool containing 2 tokens that are available to trade against each other.
UI Fee
Fees that the UI provider is rewarded with.
Miner Fees
Fees that are rewarded to miners for confirming the transactions.
Execution Fees
Fees that are charged for execution by the AMM bots.
Output
When performing a swap, this is the range of expected output you will receive depending on slippage.
Nitro
Maximum DEX fee multiplier.
Reserves
The liquidity is available within a pair of tradeable tokens.
Slippage
The amount the price moves in a trading pair between when a transaction is submitted and when it is executed.
Protocol fees
Fees which liquidity providers are rewarded with. Charged in assets of a pool.
Concentrated Liquidity
The liquidity which is allocated within a determined price range.