Glossary

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.

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%.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.