Dictionary

A page for Definitions of key terms

Concentrated Liquidity: AMMs which allow LPs to choose targeted ranges to provide liquidity to and typically more capital efficient as a result.

Capital Efficiency: The ability of an AMM to give traders better prices on the same amount liquidity.

Liquidity Pools: Holds liquidity, price and fee data that tells users how they can interact with it (i.e., how much they'll get in output on some input). Allows liquidity providers to pool their liquidity together instead of fragmenting it.

Liquidity Fragmentation: When liquidity of the same pairs is spread across numerous exchanges or AMMs. This increases the costs of trying to get the best price on a trade.

Fees: The way LPs charge traders in order to make returns. It is similar to a bid-ask spread on orderbooks.

Bid-ask Spread: The difference between the highest buy price (bid) and lowest sell price (ask).

Market Order: An order to buy/sell some amount of token at the best available price.

Limit Order: An order to buy/sell some amount token at a set price determined by the placer of the order.

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