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Terminology

NOTE: These docs are under active development 👷‍♀️👷

Protocol#

The Flipp3ning#

“The Flippening” tracks the possible future event where the Ethereum market cap overtakes the Bitcoin market capto become the most valuable cryptocurrency. The "Flipp3ning" is based on the Flippening, but with 3x leverage.

EthKillers#

The EthKillers is the intended first synthetic market offered by Float Capital and tracks an equally weighted index comprised of TRON, XRP, and EOS that were nicknamed EthKillers as they were said to be the killers of Ethereum.

Floating Exposure#

Because the value of liquidity locked in the long and short sides respectively may differ, "floating exposure" to the underlying synthetic asset may exist. I.e. If there was $90 in the long side and $100 in the short side, the long side would have 100% exposure and the short side would have ($90/$100), 90% exposure to the underlying synthetic asset. Economic mechanisms exist to incentivize equal liquidity in the long and short sides, hence providing close to 100% market exposure for both sides.

Governance Token#

Token that allows users to govern the direction of the protocol and hence help shape the future of the project. Holders are able to vote on new feature proposals and even change the governance system.

Float Token#

This is the governance token of Float Capital. Float tokens are earned through staking any Float synthetic token in our token contract.

Synthetic asset token#

A token that holds the same market value as an actual asset (e.g Gold). It allows users to get identical exposure to the risk and return benefits of the asset, without having to actually own the underlying asset.

Going long#

Going long refers to buying an asset with the belief the price will go up and you will make returns on the price appreciation.

Going short#

Inversely to going long, going short is usually a more abstract concept to grasp. This usually entails selling an asset that you do not own with the requirement to buy it back at a later stage. Going short allows investors to make returns on the price depreciation of the underlying asset. To new investors this can seem like quite an odd concept but another, somewhat less accurate way of explaining it is that, imagine an investor, Alice, believed the price of an asset was going to go down while Bob, believed the price on an asset is going to go up. Alice, the short seller, could make an agreement with Bob where if the price of the asset went down $100 Bob would have to pay Alice $100 allowing Alice to make money on the price depreciation of the asset, yet inversely if the price went up $100, Alice would have to pay Bob $100. In summary, if an investor believes the price of an asset will go down then they will enter on the short side of the market.

Index#

A collection of assets, for example stocks, that fit a similar theme. These stocks are bundled together in what’s known as a "basket" to mimic an economy, market, or sector, allowing investors to broadly track different securities. Examples of an index would be the S&P 500, the Dow Jones, and the FTSE 100.

To quote John Bogle the founder of Vanguard and investment pioneer

Don't look for the needle in the haystack. Just buy the haystack.

An index allows you to reap the benefits of diversification through owning a large universe of assets

Minting#

Users simply use there dollars to buy a synthetic asset. In fancy terms, spending you DAI (dollars) and minting (receiving) a synthetic asset in return.

Staking#

The act of locking tokens to receive rewards, e.g staking EthKillers long tokens to earn Float tokens.

Over-collateralization#

Used to define a situation where more collateral of an asset/assets value is used than what is needed to cover potential loss.

For example a 200% over collateralization, requires a lock up $200 of collateral to receive $100 worth of a synthetic asset.

Float Capital does not require over-collateralization!

Oracle#

An oracle in the general blockchain sense is a data feed that provides some form of real world data on the blockchain. For Float Capital, oracles provide reliable price data for a market.

Yield enhancement#

A Float platform feature that rewards users by giving them a yield on the underlying collateral (DAI) when they provide liquidity in the market. Users that provide liquidity on the under balanced side of the market are rewarded a higher yield. This is an incentive mechanism to balance the market. The underlying collateral is deposited in Aave.

DAI#

DAI is a stablecoin token pegged to the United States Dollar. Float token uses DAI as the underlying collateral to mint a position.

Liquidity - Good/Bad#

Liquidity#

The availability of liquid assets to a market or company. Liquidity on Float refers to the amount of collateral deposited in the long and short sides of the markets.

Good & Bad liquidity#

Good liquidity refers to liquidity that has been added or removed from the protocol making the balance of long and short positions more balanced, while bad liquidity indicates the opposite.

Liquidation#

Liquidation is simply your assets being converted to cash to cover your position. This is bad for users as it means they lose the funds they have deposited in the system. Your collateral will never be liquidated in Float!

Blockchain#

Smart contracts#

An agreement between two parties in the form of code that is run on a blockchain, and stored on a public ledger that cannot be changed. Transactions are processed by the blockchain and can be sent automatically without a third party, like a bank. The Float protocol smart contracts define the set of rules of the system. The system is governed by code, where code is law.

Blockchain wallet#

A digital wallet that allows users to store and manage cryptocurrencies.

Examples of Blockchain wallets we recommend using:

Polygon (formerly Matic) network#

An EVM compatible blockchain powered by a proof of stake algorithm. Polygon is a growing blockchain with a large ecosystem of projects and is far more affordable on gas/transaction fees.

EVM (Ethereum Virtual Machine)#

EVM is a blockchain-based software platform allowing developers to create decentralized applications (Dapps). EVM blockchains are based on the same architecture of the Ethereum blockchain.

Decentralization#

A structure that allows for digital assets like cryptocurrencies to exist outside the control of governments and central authorities. Essentially the opposite of centralization, meaning no central or single party has control over the system.

DEX (Decentralized Exchange)#

A peer-to-peer marketplace connecting cryptocurrency buyers and sellers.

A great example of a DEX would be Quickswap. A decentralized finance protocol allowing the exchange of cryptocurrencies.

CEX (Centralized Exchanges)#

A type of cryptocurrency exchange operated by an entity or company on its own infrastructure.

An example of a CEX would be Coinbase.

Note: A DEX is usually anonymous, as none of the user’s data is required for trading. Users have full possession of their private keys, and only need a wallet to trade on a decentralized exchange. Whilst a CEX user usually has no control over their private keys.

Dominance#

The measure of a cryptocurrency’s market cap in relation to another cryptocurrency’s market cap (e.g Eth/Btc dominance).