Drift Protocol v2

โŒ˜K
๐Ÿ‘พWelcome to Drift Protocol
๐ŸงฎDrift DEX
๐Ÿ‘‹Getting Started
๐Ÿ“ˆPerpetual Futures
๐Ÿ“ŠSpot Margin Trading
๐ŸฆBorrow & Lend
๐Ÿ›๏ธStaking
๐ŸชMarket Makers
๐Ÿ”ฌTechnical Explanations
๐Ÿ“Accounting and Settlement
โž—Borrow Interest Rate
๐Ÿ“œDelisting Process
โ›ฒDrift AMM
๐ŸƒJust-In-Time (JIT) Auctions
๐Ÿ“šKeepers & Decentralised Orderbook
โ˜ ๏ธLiquidators
๐Ÿ’งLiquidity Providers (LPs)
๐Ÿ“‹Protocol Guard Rails
๐Ÿ“Risks
๐Ÿ–ฅ๏ธDeveloper Resources
๐Ÿ“”Program/Vault Addresses
โŒจ๏ธSDK Documentation
โŒจ๏ธTutorial: Bots
โš ๏ธTroubleshooting
๐Ÿ› ๏ธKeeper Bots
๐Ÿ› ๏ธTrading Bots
โŒจ๏ธHistorical Data (v1)
โŒจ๏ธAPI
๐Ÿ›ก๏ธSecurity
๐Ÿ›ก๏ธAudits
๐Ÿ›ก๏ธBug Bounty
โš–๏ธLegal and Regulations
๐Ÿ“Terms of Use
๐Ÿ“Disclaimer
๐Ÿ“Privacy Policy
๐Ÿ“Competition Terms and Conditions
๐Ÿ“šGlossary
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4min

Glossary

General

Term

Definition

Clearing House

margin/accounting engine of the protocol

AMM

means an Automated Market Maker is Drift's source of constant liquidity that is based on the constant product formula x*y=k balancing the reserves.

Keeper Network

refers to the network of Keeper Bots on Drift that facilitates the exchange of liquidity. For more information, read ๏ปฟKeeper Bots๏ปฟ

JIT

means to Just-In-Time.

JIT Auction

a "Just-in-Time" Auction refers to the dutch auction mechanism that lets Market Makers provide liquidity to Takers.

a "Just-in-Time" auction refers to the dutch auction mechanism that lets Market Makers provide liquidity to Takers

a "Just-in-Time" auction refers to the dutch auction mechanism that lets Market Makers provide liquidity to Takers

a "Just-in-Time" auction refers to the dutch auction mechanism that lets Market Makers provide liquidity to Takers

Market Makers / Makers

refers to parties on the platform that provides liquidity to the exchange. Liquidity 'provided' by Market Makers can be 'taken' by Takers. Market Makers includes parties that place orders on Drift with the 'Post-Only' function. This means the order will be placed on the decentralised orderbook and will only add to the liquidity available. Market Makers also include parties that provide liquidity via the JIT mechanism.

Takers

refer to users on the platform that 'take' liquidity from the exchange. Takers take liquidity made available by Market Makers or Drift's AMM.

LPs

Liquidity Providers (LPs) are users who hold LP Shares in a particular Perpetuals Market and increase the AMM's liquidity. These users receive positions pro-rate: e.g. their share amount of the AMM's constant product invariant (k). Adding/Removing LP shares increases/decreases the AMM's k

Longing

means you are speculating on the price of the asset going up.

Shorting

means you are speculating on the price of the asset going down.

TWAP

means Time Weighted Average Price which is the average price of the Oracle over a specified period of time. This approximation is calculated on-chain during program interactions with the account.

Market Info

Term

Description

Example

Index / Oracle Price

is the price of the underlying asset (currently: as reported by Pyth).

$201.01

Mark Price

is the price of the relevant market.

$201.05

Funding Rate

refers to 1/24 the average premium every hour. if positive, longs pay shorts. if negative, shorts pay longs. see for more details

.0012%

Open Interest

refers to the total size of all positions (long and short) in the relevant market.

181 SOL

24h Volume

refers to the total volume traded in the past day in the relevant market.

$1.04M

Position Table

Term

Description

Example

Market

means a base / quote asset pair.

SOL/USD

Direction

means the position's bet on price change.

LONG,SHORT

Size

means the position's base asset value.

2.3555 SOL

Notional

means the position's quote asset value.

$1,000

Entry Price

means the average price paid (cost basis) for acquiring position.

$200

Exit Price

means the average price realised if closing entire position.

$200

Liquidation Price

means the soft estimate of price where liquidation of the account will occur.

None

P&L (Profit & Loss)

means the Profit and/or Loss of position. Calculated on difference between EXIT PRICE and ENTRY PRICE.

$0

Action

๏ปฟOpens modal for reducing/closing position.๏ปฟ

ClosePosition

Term

Description

Example

Total Collateral

means the total available USD value of weighted collateral and P&L for margin trading

101.01

Unrealised P&L

means the sum of P&L available in all open positions that have not been realised (settled) by the user yet.

1

Unrealised Funding P&L

means the unrealised amount collected/paid for funding payments. (will be automatically realised upon next user action)๏ปฟ

.01

Free Collateral

means the value of collateral that can be used to open new risk-increasing positions.

0.5

Leverage

means Total Notional Position Size / Total Collateral.

5x

Margin Ratio

means Total Collateral / Total Notional Position Size.

20%

Maintenance Margin Req.

is the margin ratio at which users will liquidate back up to the liquidation buffer.

5%

maintenanceRatio

maintenanceMarginReq / Total Collateral

๏ปฟ

AMM Specific

Term

Definition

K

is the curve invariant, currently for constant product. k = base_asset_reserve * quote_asset_reserve

Base Asset Reserve

means the virtual base reserves for a market (SOL reserves).๏ปฟ

Quote Asset Reserve

means the virtual quote reserves for a market (e.g. USDC reserves in a SOL/USDC virtual pool).

Peg Multiplier

means 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.

Reserve Price

in the AMM, is defined as (quote_asset_reserve * peg_multiplier) / base_asset_reserve. It is the true reserves price prior to any spread logic.

Bid Price

is the Price available to sell from the AMM, before slippage.

Ask Price

is the Price available to buy from the AMM, before slippage.

๏ปฟMark Price๏ปฟ

means the Market Price. Average of current Bid and Ask Price.

๏ปฟOracle Price๏ปฟ

means the latest composite price from oracles. Oracle price is interchangeable with index price.

Repeg

means modifying the peg multiplier which means re-pegging the curve such that the mark price is closer to the oracle price.

Adjusting K

means 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

means the mark price if all users atomically closed their positions and no repegs/k adjustments occurred (should be equal to the peg multiplier if all k adjustments were done during a balanced market).๏ปฟ

Users

Term

Definition

๏ปฟbase asset amount๏ปฟ

The amount of base currency (e.g. SOL-PERP) held by a single user.

๏ปฟnet user position ๏ปฟ

Current longs - shorts in a given market.

๏ปฟ

Updated 21 Feb 2023
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