Glossaire
The USDN Protocol
Long Side: This part of the Protocol consists of traders taking leveraged Long positions to amplify their exposure to the underlying asset. It represents the Perpetual Long Only side, enabling traders to bet exclusively on the underlying asset's upward movement while engaging with USDN’s rebalancing mechanisms.
Vault Side/USDN Side: The part of the Protocol where users deposit the underlying asset to obtain USDN, a synthetic dollar whose value hovers around $1, while potentially earning yields.
Collateral: In the USDN Protocol, "Collateral" refers to the portion deposited by users to open Long positions. This is the real and tangible part of the position that a Long trader can withdraw, unlike the Trading Expo, which represents the synthetic exposure created by leverage.
Dip Accumulator: A mechanism designed to rebalance the Protocol during significant underlying asset price drops. It activates under specific criteria and ensures that the Protocol does not experience excessive imbalances. For users, it provides an opportunity to buy underlying asset dips and position themselves at optimal moments.
Funding Rate: A rate is applied between the Long Side and the Vault to rebalance the Protocol based on imbalances. Positive Funding Rates mean Longs pay the Vault, while negative ones mean the Vault pays Longs.
Mint: The creation of new USDN in exchange for underlying asset deposits into the Vault.
Perpetual Long Only: A type of perpetual contract that only allows traders to take Long positions on the underlying asset, with no expiration date. It supports Long trading within the USDN Protocol.
USDN Protocol: The decentralized infrastructure enables the creation, management, and stabilization of the USDN token on the Ethereum blockchain via smart contracts.
Redeem: The action of retrieving the underlying asset in exchange for returning USDN to the Protocol.
Total Expo: The sum of the Collateral and Trading Expo, represents the total exposure of a trader to the underlying asset market.
Trading Expo: The synthetic portion of a Long position's total exposure results from leverage. It cannot be directly withdrawn.
USDN (Ultimate Synthetic Delta Neutral): A decentralized synthetic dollar designed to hover around $1 in value while offering potential yields through a delta-neutral strategy.
Vault: The reserve where the underlying asset deposited to mint USDN is stored. It serves as the counterparty to Long positions within the Protocol.
General
APY (Annual Percentage Yield): The annual rate of return, accounting for compounding interest. Used to estimate potential gains from the underlying asset and Funding Rates within USDN.
Arbitrage: A financial strategy involving profit from price differences of the same asset across multiple markets.
Blockchain Layer 1: The primary network where the USDN Protocol is deployed, such as Ethereum.
Collateral: An asset used as security to back a loan or a position.
Decentralized Finance (DeFi): An ecosystem of decentralized financial services offering lending, borrowing, and trading without intermediaries.
Delta-Neutral: An investment strategy that balances gains and losses to minimize sensitivity to market fluctuations.
Synthetic Dollar: A digital asset designed to replicate the value of the US dollar (USD) without being backed by physical dollar reserves.
Gas Fees: Transaction fees on the Ethereum blockchain paid in ETH.
Leverage: A method to multiply a trader’s position relative to their Collateral.
Liquidation: The forced closure of a Long position when Collateral no longer covers potential losses.
Long Position: A market position where a trader bets on an asset’s price increase.
Market Maker: An entity providing liquidity on trading platforms, stabilizing markets.
Oracle: A service that allows smart contracts to fetch external data, such as asset prices.
Permissionless: A quality of protocols that allows anyone to interact with them without prior authorization.
Rebase: A mechanism that increases the supply of a digital asset when its value exceeds a predefined threshold, adding tokens directly to holders’ wallets.
Short Position: A market position where a trader bets on an asset’s price decrease.
Slippage: The difference between the expected price of a transaction and the actual execution price.
Smart Contract: Self-executing code on a blockchain that automates operations securely.
Smart Contract Audits: Security reviews of smart contracts to identify and fix vulnerabilities.
Stablecoin: A cryptocurrency pegged to a stable asset, such as the US dollar.
Stop-Loss: A mechanism to limit losses by automatically closing a position if the price hits a specified threshold.
Total Value Locked (TVL): The total value of assets deposited in a DeFi protocol.
wstETH (Wrapped Staked Ether): A wrapped version of stETH, used as Collateral in USDN to earn staking rewards.
Yield: Potential returns from depositing or staking assets in a DeFi protocol.
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