Glossary

Arbitrage

Arbitrage exchange is an opportunity swap when a user spots price differences between the same assets on different exchanges and makes an exchange to profit from the difference in price. As a result, the price of assets is stable across exchanges.

Asset Pair

Asset pair consists of the two assets to which the liquidity pool is dedicated. Every liquidity pool is dedicated to one asset pair only. It can be referenced as a token pair as well.

DEX

DEX stands for a Decentralized Exchange. The idea is to offer functionality similar to centralized exchanges with additional guarantees. Trades are carried out directly on the blockchain with no intermediary holding the funds in the meantime.

Agent

The Agent is our solution to the concurrency issue, which restricts AMM DEXes to fulfil only one request per block (1 request / ~20 seconds). That is, of course, an unacceptable bottleneck for a DEX. To work around this limitation, we have trusted Agents which collect all requests that interact with liquidity pools and carry them out in batches.

Agent Fee

Agent fee is a fee to cover the transaction costs for the batch transactions made by the Agents. After the transaction fees are paid, the remainder is kept as a reward for running the Agent, to incentivize a distributed network of Agent hubs.

Agent Hub

The term "Agent Hub" represents an already deployed Agent solution running on a server.

Liquidity Pool

Liquidity pools are crowdsourced reserves of specific asset pairs locked in a smart contract. Liquidity pool contract keeps track of the said reserves and ensures that they are safe whatever happens.

Factory

A factory is a smart contract that keeps track of already existing liquidity pools to prevent the creation of a liquidity pool for already existing asset pairs. Every liquidity pool needs to be created by an interaction with the factory contract.

Pool Oil ADA

Cardano network requires that every transaction output contains at least a small amount of ADA. A liquidity pool is no different. By enforcing that 3 ADA is deposited by the first liquidity provider (the one creating the pool), we fulfil these criteria. It is a negligible cost for the pool creator and suffices Cardano requirements for future liquidity providers.

Request Oil ADA

Request oil ADA is a returnable deposit that needs to be included by the user in every request and is returned fully upon request completion. It is a mechanism we have in place to satisfy Cardano network requirements to include a small amount of ADA alongside any tokens in transaction outputs. Its amount is 2 ADA.

Liquidity Provider Token

Liquidity Provider Token (LP token) is a fungible token that users receive for providing liquidity into a liquidity pool. These tokens represent the size of the liquidity provider's share in the pool and can be redeemed later for the corresponding amount of assets from the liquidity pool.

Slippage

A percentage representing the maximum allowed decrease of the amount of returned assets. Slippage is specified by the user when creating a request. It is a mechanism to protect the user against a last-minute unfair price change. If such a rare event happens, the request will not be carried out and the user can reclaim locked funds from it after the request's deadline.

Staking

Liquidity provided into liquidity pools containing ADA is getting automatically staked on Cardano blockchain. The rewards from staking are then redistributed back into the liquidity pools.

Swap Fee

To ensure a smooth operation of WingRiders and to reward our liquidity providers, all swaps are subject to a set swap volume fee. This fee is deducted from the number of tokens being swapped and is returned into the liquidity pool, increasing the value of individual share tokens.