Glossary
This is a glossary of terms commonly seen within DAMM mechanics.
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DAMM
Term | Definition |
K | The curve invariant, currently for constant product k = base_asset_reserve * quote_asset_reserve |
Base Asset Reserve | The virtual base reserves for a market (SOL reserves) |
Quote Asset Reserve | The virtual quote reserves for a market (e.g. USDC reserves in a SOL/USDC virtual pool). |
Peg Multiplier | The magnitude of the quote asset reserve. For instance, one virtual quote asset reserve is a peg multiplier amount of the quote asset. A peg multiplier ensures that the base asset reserve and the quote asset reserve are balanced at the initialisation of the curve while ensuring that the starting price of the pool is equivalent to the oracle price of the base asset at initialisation. |
Mark Price | Mark price is defined as the last market price. In the DAMM, this is defined as (quote_asset_reserve * peg_multiplier) / base_asset_reserve. |
Oracle Price | The latest composite price from oracles. Oracle price is interchangeable with index price. |
Repeg | Modifying the peg multiplier means re-pegging the curve such that the mark price is closer to the oracle price. |
Adjusting K | Modifying the curve's invariant k by scaling the base/quote asset reserves. For instance, this modifies the default slippage of a swap. |
Terminal Price | Terminal price is the mark price if all user's closed their positions (equal to peg multiplier if all k adjustments were done during balanced market). |
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Users
Term | Definition |
base asset amount | The amount of base currency (e.g. SOL-PERP) held by a single user |
net user position | Current longs - shorts in a given market |
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