Blockchain Dictionary

Allocation of short positions

When the market situation fluctuates greatly and users sell their positions, the range of losses is greater than the margin due to the inability to close transactions based on the price of the positions sold. Therefore, the Ouyi platform adopts a ‘sharing’ system, prioritizing the use of risk reserves for deduction. For the shortfall, each profitable user is allocated an equal proportion of the losses from the short positions.

AMM

AMM stands for Automated Market Maker. Both parties in the transaction are interacting with the on chain liquidity asset pool. Liquidity pools allow users to seamlessly switch between tokens on the chain in a completely decentralized and unmanaged manner. Liquidity providers earn passive income through transaction fees, which are based on their percentage contribution to the asset pool. There are several types of AMMs: constant sum market makers (CSMM), constant mean market makers (CMMM), and advanced mixed constant function market makers (CFMM).

bifurcate

Forks are essentially fragmented in blockchain networks. The internet is an open software, and the code can be freely used. This means that anyone can propose improvement suggestions and make changes to the code. The option to experiment with open-source software is a fundamental component of cryptocurrency and also helps with software updates for blockchain. Blockchain network forks are generally divided into hard forks and soft forks. Hard forks are a complete change to software, requiring all users to upgrade to the latest version of the software. Nodes running on previous versions of software will no longer be accepted by the new version. Soft fork backward compatibility. The upgraded blockchain is responsible for verifying transactions. However, nodes that have not been updated will still consider the new block as valid. This can only be done using one method; The upgraded blockchain will not be able to recognize nodes that have not been updated yet. In order for the soft fork to work, most miners need to upgrade.

Blockchain expansion

Blockchain scalability refers to the means of improving the processing efficiency of blockchain networks through technologies such as isolation witness, lightning network, and sharding. According to different specific expansion methods, it can be divided into two types: on chain expansion and off chain expansion. On chain scalability refers to directly performing surgery on the blockchain - modifying rules, including block size, consensus mechanisms, and so on. For example, expanding the block size of Bitcoin blockchain directly from 1M to 32M, 128M, or even 1G, and for example, the highly anticipated technology solution that Ethereum 2.0 will adopt now - sharding technology, etc; Off chain expansion refers to the establishment of a second layer trading network outside the main chain, hence off chain expansion is also known as “Layer 2”. If on chain expansion is likened to the expansion of roads, then off chain expansion is the construction of new elevated bridges, tunnels, small roads, and so on nearby.

Blockchain expansion

Blockchain scalability refers to the means of improving the processing efficiency of blockchain networks through technologies such as isolation witness, lightning network, and sharding. According to different specific expansion methods, it can be divided into two types: on chain expansion and off chain expansion. On chain scalability refers to directly performing surgery on the blockchain - modifying rules, including block size, consensus mechanisms, and so on. For example, expanding the block size of Bitcoin blockchain directly from 1M to 32M, 128M, or even 1G, and for example, the highly anticipated technology solution that Ethereum 2.0 will adopt now - sharding technology, etc; Off chain expansion refers to the establishment of a second layer trading network outside the main chain, hence off chain expansion is also known as “Layer 2”. If on chain expansion is likened to the expansion of roads, then off chain expansion is the construction of new elevated bridges, tunnels, small roads, and so on nearby.

Burst/Strong Ping

When the user’s holding position is in level 2 or below, and the margin rate is lower than the required maintenance margin rate and closing procedure rate for this level; When the user’s holding position is in level 3 or above, but the margin ratio is lower than the required margin ratio and closing procedure rate for level 1, the system will directly entrust all the positions under the contract (full position situation)/position (position by position situation) to the Strong Ping Engine based on the bankruptcy price (price with zero margin ratio). This early strong leveling mechanism is mainly aimed at avoiding the adverse effects caused by the violent fluctuations of digital currencies, which can lead to consecutive strong leveling and short positions (positions after strong leveling cannot be traded).

Contract premium

Generally, it refers to the situation where spot prices are relatively lower than contract prices under normal supply and demand relationships, and short-term contracts are lower than forward contract prices. Due to the basis relationship between near low and far high contracts reflecting the optimistic expectations of market investors for future market prices, it is also known as a positive market.

Cross bridge chain

It refers to providing a bridge channel between two different public chains, hosting native assets on this bridge, and at the same time, one chain can obtain asset trading information on the other chain through the oracle function, mapping it to the other chain in a 1:1 ratio. The effect of cross chain bridge formation is to allow two chains to circulate the same asset, and the assets that cross are mapped from the native assets.

Cross chain

Narrowly speaking, cross chain is a protocol that solves the transmission, transfer, and exchange of assets and functional states on two or more different chains. Narrowly defined side chain is a protocol that allows assets to be transferred from the main chain to other affiliated blockchains, and can be safely returned to the main chain from other affiliated blockchains. Broadly speaking, both side chain and cross chain are specific solutions to inter chain interoperability protocols, so we collectively refer to all side chain and cross chain protocols as cross chain interoperability protocols.

Currency pair/transaction pair

A trading unit consisting of two different types of digital assets. For example, BTC/USDT is composed of BTC (Bitcoin) and USDT (Teda).

DAO

DAO, sometimes also known as Distributed Autonomous Organization (DAC), is an organization represented by rules encoded as computer programs that are transparent, controlled by shareholders or token holders, and not influenced by central institutions. DAO utilizes blockchain to validate transactions.

Delegation Policy

Limit commission Limit order refers to the number of orders set by the user and the acceptable highest or lowest selling price. When the market price meets the user’s expectations, the system will transact at the optimal price within the limit range. Market price commission Market price commission refers to the immediate execution of buying or selling by users at the current market’s optimal price, in order to achieve rapid transactions. It should be noted that the total market price for a single transaction cannot exceed 100000 USDT. If the total commission price for a single transaction exceeds 100000 USDT, the commission will fail. Plan delegation “Planned commission” refers to the trading strategy in which the user sets the commission price and quantity, as well as the trigger price for the commission. When the latest transaction price in the market reaches the trigger price, the system automatically places the commission based on the user’s pre-set commission price and quantity. Plan delegation will not freeze account assets. When the “plan delegation” is triggered, if the current available asset balance of the user is less than the delegated quantity, the quantity that can be issued based on the balance shall prevail; If the current available balance of the user is less than the minimum transaction quantity, the delegation fails. Advanced price limit commission Advanced limit orders have added three optional effective mechanisms compared to regular limit orders: “Make Only”, “Fill Or Kill All”, and “Immediately Or Cancel Remaining”. The default effective mechanism for regular limit orders is “Always Effective”. Stop profit and stop loss Stop profit and stop loss refers to the user’s ability to pre-set trigger prices and commission prices. When the market price reaches the trigger price, the system will automatically place orders based on the user’s set commission price and quantity. Unidirectional stop loss or stop loss can be set with unilateral stop loss or stop loss; Double sided profit and loss stop can be set, with one side triggered and the other side invalidated. This commission will freeze account assets in advance. Tracking delegation “Tracking entrustment” refers to the strategy of sending pre-set entrustments from users into the market in the event of a significant downturn in the market. When the latest market price reaches the highest (lowest) market price set by the user (1 ± the user set callback amplitude), the user set strategy will be triggered, and the user’s pre-set commission will be sent to the market at the market price. The callback amplitude cannot be greater than 5% or less than 0.1%. Iceberg Commission “Iceberg entrustment” refers to the automatic splitting of large orders into multiple orders by users during large-scale transactions, in order to avoid causing too much impact on the market. Small orders are automatically placed based on the current latest buy/sell price and the user’s set price strategy. When the previous order is fully executed or the latest price significantly deviates from the current order price, it is automatically re placed.

Delivery/perpetual contract

U-based margin contract/currency based margin contract; Perpetual contract/delivery contract Virtual contracts are the buying and selling objects of contract transactions, which are uniformly formulated by contract exchanges and specify standardized contracts for delivering a certain quantity of goods at a specific time. According to the type of margin, it can be divided into USDT margin contracts and currency based margin contracts; According to whether there is a delivery date, it can also be divided into perpetual contracts and delivery contracts. Delivery contracts can be further divided into different contract trading products such as current week, next week, current quarter, and next quarter based on the length of the delivery period.

due date

Each delivery contract has a fixed expiration and delivery date, and the delivery price is the arithmetic average of the BTC (LTC and other currencies) US dollar index in the last hour, which is used as the delivery price to close all open weekly contracts. A perpetual contract has no delivery date and will never expire.

Exercise date

The spot contract stipulates the date on which the delivery of goods must be fulfilled. On the day of exercise, if the buyer of the option wishes to apply for the exercise of the right to exercise the provisions of the option contract, the seller of the option must exercise it in accordance with the provisions of the option contract. For American options: Within the period specified in the option contract, the buyer can apply for exercise on any day.

Flat delivery/Flat delivery

When the contract expires (such as every Friday at 4:00 pm when the contract expires), the system uses the arithmetic average of the BTC (LTC and other currencies) US dollar index in the last hour as the delivery price to close all open contracts for the week. The profit and loss generated after closing the position will be added to the realized profit and loss.

Full warehouse margin

In the full position mode, margin is shared between positions. All balances transferred by the trader to the contract account and the profits and losses generated by all contracts will be used as the holding margin for the contract.

Gradient margin

The gradient maintenance margin rate system refers to the minimum margin rate required by users to maintain their current positions. When the margin rate is less than or equal to the user’s current maintenance margin rate+closing procedure rate, it triggers a liquidation. Position by position: Margin ratio=(fixed margin+unrealized profit and loss)/Position value, Position value=face value/latest marked price Full position: Margin ratio=(balance+realized profit and loss+unrealized profit and loss)/(position value+leverage ratio of frozen margin), position value=face value * number of sheets/latest marked price In order to prevent market liquidity from being impacted and resulting in significant short selling losses when large positions are sold out, Euroeasy implements a tiered maintenance margin ratio system. That is, the larger the user’s position, the higher the margin ratio maintained, and the lower the maximum leverage ratio that the user can choose.

Gratuitous loss

Unconventional losses refer to the losses faced by funds in the liquidity pool. This loss typically occurs when the proportion of tokens in the liquidity pool becomes imbalanced. However, impermanent losses will not be realized until tokens are withdrawn from the liquidity pool. This loss is usually calculated by comparing the value of tokens in the liquidity pool with the value of simply holding them.

Grid trading

Grid trading is an active trading strategy that utilizes market volatility to profit. Its essence is to use the repeated price movements of investment targets within the grid range during a period of volatility to increase and reduce positions, in order to achieve the goal of maximizing investment returns. Simply put, it means establishing different quantities Different sizes of grids should build positions when breaking through the grid and reduce positions when returning to the grid, striving to capture the trend of price fluctuations and achieve profitability.

halve

“Halving” refers to the process of reducing the rate of new Bitcoin production. Bitcoin miners confirm transactions on the blockchain by solving complex mathematical problems. Every 10 minutes, new Bitcoin blocks containing transaction information confirmed by miners will be generated. By generating new Bitcoin blocks, miners will receive job rewards. The initial reward for miners is 50 BTCs per block. After each “halving” of Bitcoin, the reward amount obtained by miners will be reduced by half. Approximately every 210000 blocks (which takes about four years), a “halving” will occur. So far, there have been a total of three Bitcoin “halving” events, which occurred in 2012, 2016, and 2020, respectively.

Hanging orders/eating orders

Hang order, also known as maker, refers to the operation of providing liquidity to the market in order book mode transactions. Order taking, also known as taking, refers to the operation of extracting market liquidity in order book mode transactions. Due to the opposite impact of placing orders and taking orders on market liquidity, most trading platforms have set different levels of fee standards for placing orders and taking orders. Generally speaking, the fee rate for placing orders is lower than that for taking orders.

interest arbitrage

Arbitrage, also known as spread trading. Usually refers to a trading strategy where a physical or financial asset (in the same or different markets) has two prices and is bought at a lower price and sold at a higher price to obtain returns. In the digital asset market, common arbitrage methods include futures and spot arbitrage, fund rate arbitrage, futures arbitrage, brick shifting arbitrage, and other different arbitrage strategies. In general, arbitrage exchanges involve much smaller fluctuations in contract price spreads than single contract price fluctuations, and have a much higher probability of profitability. At the same time, arbitrage is a two legged approach, so arbitrage trading is often the main investment choice for traders with large amounts of funds or a stable style. In practice, based on the stable returns and the ability to accommodate a large amount of funds, large investment institutions often choose arbitrage trading as their main trading strategy.

Introduction to Unified Trading Account

The Unified Account is a new generation trading system launched by Ouyi for a wide range of users. It supports the use of multi currency assets in one account to simultaneously trade spot and various derivatives. This will provide great convenience for users to trade, eliminating the need for fund transfers between multiple accounts; And the profits and losses of different business lines can offset each other, effectively improving the utilization rate of users’ funds. The unified trading account provides four new account models: Simple, Single currency margin, Multi currency margin, and Portfolio margin, which can meet the different trading habits and demands of users.

key

We often say that your control over the funds in the wallet depends on the ownership and control of the corresponding private key. In blockchain transactions, the private key is used to generate the necessary signature for payment currency to prove ownership of funds. The private key must always be kept confidential, because once leaked to a third party, it is equivalent to surrendering the assets protected by the private key. The private key is not actually stored in the network, but is generated by the user and stored in a file or simple database, known as a wallet. The private key stored in the user’s wallet is completely independent and can be generated and managed by the user’s wallet software, without the need for blockchain or network connectivity. The user’s wallet address is generated by encrypting the private key with an elliptic curve to generate a public key, which in turn generates the address.

layer2

Layer 2 technology is commonly referred to as an “off chain” solution, which aims to expand the performance of blockchain while retaining the decentralized advantages of distributed protocols. In order to build a good blockchain ecosystem, we need to do something in the architecture to balance the requirements of security, decentralization, and scalability. The Layer 2 platform and protocol process data in a way that reduces the burden on the main chain, enhancing the scalability of the entire blockchain network by transferring some data processing from the main chain to Layer 2. Taking ETH as an example, the Layer 2 technology system is a system connected to Ethereum, using Ethereum as the foundation layer for security and ultimate certainty.

liquidity pool

Liquidity pools are essentially token pools locked in smart contracts. They facilitate trading by providing liquidity and are currently widely used in decentralized exchanges.

Margin

In the virtual contract market, traders only need to pay a small amount of funds at a certain ratio based on the contract price as financial guarantee for fulfilling the contract, and can participate in the buying and selling of the contract. This type of funds is called virtual contract margin. Ouyi provides two types of margin systems, full margin and individual margin. In full position mode: opening margin=face value/latest marked price/leverage, and the user’s opening margin will change with price changes. In the position by position mode: opening margin=face value/average opening price/leverage, and the opening margin remains fixed.

Margin for each warehouse

In the position by position mode, the margin allocated to a certain position is limited to a certain amount. If the margin of a position falls below the level of maintaining the margin of the position, the position will be forcibly closed. Under this mechanism, traders can still increase or decrease the margin for this position.

Margin ratio

The margin ratio is a risk measurement indicator for a currency asset in an account. Margin ratio=(balance in the entire position of the currency+full position return - number of orders sold in the currency - number of options purchased in the currency - number of orders opened in each position - all order renewal fees)/(margin maintenance+liquidation fees). Maintaining margin refers to the sum of four parts, including leveraged borrowing margin, delivery margin, perpetual margin, and option margin, which are considered for holding orders; The liquidation fee is the sum of four parts, including leverage borrowing fee, delivery fee, perpetual fee, and option fee, which are considered for placing orders. This setting is to avoid a sudden change in the risk level of the account after trading orders, which may lead to the risk of account liquidation.

Mark price/index price/commission price

Mark price In order to improve the stability of the contract market and reduce unnecessary forced liquidation in case of abnormal market fluctuations, we use marked prices to calculate the unrealized profit and loss of users. Marked price=spot index price+basis moving average Basis moving average=moving average (contract midpoint - spot index price)=moving average (contract selling price+contract buying price)/2- spot index price) The marking price takes into account both the spot index price and the moving average of the basis. The moving average mechanism smoothly filters short-term contract price fluctuations and reduces unnecessary forced liquidation caused by abnormal fluctuations. Index price Currency based margin contracts adopt the corresponding USD index of the underlying currency. To ensure that the spot index price reasonably reflects the fair spot market price of each currency, we will select currency pairs from three or more mainstream exchanges for each contract currency as index weight components, and design exception handling logic to ensure that when a single exchange price deviates significantly, the index fluctuation is within the normal range. Logic for calculating spot index prices: a. Real time acquisition of the latest transaction prices and volumes of all index components of the currency exchange currency pairs b. Exchanges that have not been updated in terms of system maintenance or the latest transaction price and volume for a period of time are considered invalid and will not be included in the calculation this time c. Currency pairs priced in BTC, multiplied by the Euronext BTC USD Index, are converted to USD prices d. Determine how many valid exchange data are currently available: =3 companies, weighted equally based on effective exchange data (if the price of a certain exchange deviates by more than 3% from the median of all exchange prices, the price of that exchange is calculated based on the median of 0.97 or 1.03) =2 companies, weighted equally for effective exchange data =1 company, directly take the price of the remaining valid exchange as the index price Commission price In trading commission strategies such as limit orders, traders need to specify the buying and selling price of the trading commission when placing an order. The order will only be executed when the market price meets the commission price, which is the commission price.

married deal

The system will match based on the principle of price first and time first. “Buy long” and “buy flat” are the buying directions, while “sell short” and “sell flat” are the selling directions. The buying direction has the highest price, with the earliest being the first in the buying sequence, the lowest in the selling direction, and the earliest being the first in the selling sequence. When the first price in the buying sequence is greater than or equal to the first price in the selling sequence, the transaction can be matched.

MEME

MEME refers to the ideas, behaviors, or styles that spread between people in the same cultural atmosphere. In the digital asset market, it specifically refers to the MEME community boom led by dogecoin.

Mnemonic words

Mnemonic words are another manifestation of plaintext private keys, first proposed by the BIP39 proposal, with the aim of helping users remember complex private keys. Mnemonic words are generally composed of 12, 15, 18, and 21 words, all of which are taken from a fixed vocabulary and generated in a certain algorithm. Therefore, users do not need to worry about randomly entering 12 words to generate an address. Anyone who receives your mnemonic can effortlessly take away your assets. So after users backup mnemonics, they must pay attention to three points: Use physical media as much as possible for backup, such as writing with a pen on paper, etc. Do not take screenshots or take photos and place them in networked devices to prevent hackers from stealing; Verify multiple times whether the backed up mnemonic words are correct. If one or two words are copied incorrectly, it will bring huge difficulties to retrieve the correct mnemonic words in the future; Properly store the backed up mnemonic words and take anti-theft and anti loss measures

Opening/closing positions

open a granary to provide relief Opening a position, also known as building a position, refers to the operation of a trader buying (opening long) or selling (opening short) a certain amount of digital asset contracts. Closing position Closing refers to the operation of a trader who already holds a contract position to buy or sell a certain amount of digital asset contracts that are short or long. Only after closing the position, the gains/losses of the contract position will be finally settled.

Options

Short Choice Trading/Professional Trading An option is a right that can be exercised at some point in the future. After purchasing the option, if the exercise of the right on the expiration date is beneficial to the buyer, the buyer will receive corresponding income through exercise, and the seller needs to cooperate with the buyer to make corresponding expenses during exercise. If the exercise of the right on the due date is unfavorable to the buyer, the buyer may choose not to exercise the right, and the seller does not need to cooperate with the exercise to make corresponding expenses.

parallel chain

Parallel chain is a blockchain parallel to the Poca network, where each parallel chain can independently design its own architecture according to different business needs. Parallel chains can also be used for concurrent transactions to improve scalability, ensuring their security by connecting relay chains. The relay chain is connected to the Boca network. The relay chain ensures the security of parallel chains and enables communication between parallel chains, which can involve transactions or any form of data.

point to point

Peer to peer, abbreviated as P2P, also known as peer-to-peer technology. It is an internet system without a central server and relying on user groups (peers) to exchange information. Its function is to reduce the number of nodes in previous network transmissions and reduce the risk of data loss.

Premium

The price at which investors buy or sell options.

Realized profits and losses through liquidation

The settlement will be conducted at 4:00 pm every day, and the system will automatically transfer the realized profits and losses of each contract to the user’s balance. This amount can be used for opening positions and withdrawals.

reduce one's position size

When the user’s position is at level 3 or above, if the margin ratio of the position is lower than the required margin ratio and closing fee rate for the current position, but still higher than the minimum margin ratio and closing fee rate, the user’s entire position will not be forcibly balanced. The system will calculate the number of reduced positions required to lower the position by two levels and perform a partial reduction. After successful downshifting, if the margin ratio meets the maintenance margin ratio requirements for the new level, partial reduction of positions will be stopped; If the requirement for maintaining the margin ratio for the new level is still not met, the partial reduction process will continue to circulate.

Relay chain

Relay chain, also known as a relay, aims to construct a third-party public chain that connects other chains in the blockchain network through cross chain messaging protocols. A simple explanation is that by adding a channel to two chains, a specific data structure is created within the channel, allowing the two chains to interact with each other through the data structure within that channel. This added channel is called a relay chain.

risk reserve

When the user triggers strong liquidation, the system’s strong liquidation engine takes over the liquidation at the bankruptcy price, and the resulting liquidation surplus will be injected into the risk reserve. When a user triggers a strong balance, if there is a short position loss, it will be deducted from the risk reserve first. If it cannot be fully deducted, all net profit users on the day will participate in the allocation.

side chain

The sidechain protocol is essentially a cross blockchain solution. Through this solution, digital assets can be transferred from the first blockchain to the second blockchain, and can be safely returned from the second blockchain to the first blockchain at a later point in time. The first blockchain is usually referred to as the main blockchain or main chain, while the second blockchain is referred to as the side chain.

Slippage

Sliding point generally refers to the deviation between the actual transaction price and the preset transaction price, which generally moves in a direction unfavorable to the trader, resulting in additional losses in the transaction. It mainly appears in the entry and stop loss operations, and will not appear in the exit after profit. When prices rise rapidly, investors hope to enter the market in a timely manner and follow the market direction to go long, resulting in many orders being crowded in the long direction, while competitors are reluctant to sell and will not easily short or sell their long orders. Therefore, in a rapidly rising price trend, there is often a noticeable sliding point in the price range of the long entry, as the price range of the trader who entered the market the previous second is rapidly rising. Short selling or selling multiple trades at this time will quickly close, and the transaction price can be at the preset level. When there is a price slide when entering the market, traders can accept it, but if there is a stop loss slide, the resulting losses and psychological burden on traders are relatively more severe. Stop loss slippage refers to the situation where the actual stop loss price is not triggered at the set stop loss point, but rather deviates, resulting in a greater actual stop loss amplitude than the originally set stop loss amplitude, leading to increased losses.

Strong equilibrium surplus

When a user is liquidated, the system will forcibly close the position based on the liquidated price, but there may be deviations from the liquidated price during matching transactions. The surplus caused by price deviations is called liquidated surplus, which will be injected into the platform’s risk reserve for liquidation allocation.

Unrealized gains and losses

The profit or loss generated by the user’s current position, also known as floating profit or loss.

Unrealized gains and losses in liquidation

The settlement will be conducted at 4:00 pm every day. If a user holds a position for the following week, current quarter, or next quarter contract, the system will automatically transfer the unrealized gains and losses from the position to the realized gains and losses.

UTXO

UTXO is the abbreviation for Unspent Transaction Output, which means unused transaction output and can be simply understood as unused receipts.

wallet

A wallet is a software program or hardware device that stores digital assets. Formally, similar to an online banking account (but fundamentally different from a bank account), it also has customer identification, account number, and password. The password of a digital wallet is the “private key”, and only through it can the wallet be opened and operated.