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. |
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