Glossary
Comprehensive glossary of MegaFi terminology. Quick reference for understanding protocol concepts and technical terms.
A
AMM (Automated Market Maker): Algorithm that prices assets and enables trading without traditional order books. In MegaFi, see DEX.
APR (Annual Percentage Rate): Annualized return rate. Example: 30% APR means earning 30% per year at current rate.
Arbitrage: Profiting from price differences between markets. MegaETH's speed makes micro-arbitrage viable.
At-the-Money (ATM): Option where strike price equals current underlying price.
B
Basis Point (bp): 0.01%. Example: 30 basis points = 0.3%.
Block Explorer: Website to view blockchain transactions and addresses. MegaETH: explorer.megaeth.io
Bridge: System for transferring assets between blockchains. Used to move tokens to MegaETH.
C
Call Option: Right to buy token at strike price. Bullish instrument.
Capital Efficiency: How effectively capital generates returns. Concentrated liquidity improves this.
Collateral: Assets locked to secure a position. Required for selling options.
Concentrated Liquidity: Providing liquidity in specific price ranges. Core feature of MegaPools.
Continuous Execution: MegaETH's architecture processing transactions immediately rather than in blocks.
D
Delta: Options Greek measuring price sensitivity. Delta 0.5 means option moves $0.50 per $1 underlying move.
DeFi (Decentralized Finance): Financial services on blockchain without intermediaries.
DEX: MegaFi's trading interface for token swaps and routing.
E
ERC-20: Token standard on Ethereum and compatible chains. Most tokens are ERC-20.
ERC-721: NFT standard. LP positions are ERC-721 tokens.
Expiration: Date when options become invalid if not exercised.
EVM (Ethereum Virtual Machine): Execution environment for smart contracts. MegaETH is EVM-compatible.
F
Fee Tier: Trading fee percentage for a pool. MegaFi tiers: 0.05%, 0.3%, 1%.
Finality: Point when transaction is confirmed and irreversible. MegaETH: < 10ms.
Front-Running: Placing transaction ahead of another to profit. Minimized on MegaETH by speed.
G
Gamma: Options Greek measuring delta sensitivity. High gamma means delta changes rapidly.
Gas: Fee paid to execute blockchain transactions. On MegaETH: < $0.005 typically.
Greeks: Options risk metrics. Delta, gamma, theta, vega, rho.
H
Hedging: Reducing risk by taking offsetting positions. Options commonly used for hedging.
I
IL: See Impermanent Loss.
Impermanent Loss: Difference between holding tokens vs providing liquidity. Caused by price divergence.
In-the-Money (ITM): Profitable option. Call: price > strike. Put: price < strike.
Intrinsic Value: Option's immediate exercise value. ITM options have intrinsic value.
L
Layer 2 (L2): Blockchain built on top of Ethereum to improve speed/cost. MegaETH is an L2.
Leverage: Using borrowed or leveraged capital to amplify returns (and risks).
Liquidity: Available tokens for trading. More liquidity = less slippage.
DEX: MegaFi's core AMM functionality. Swaps and liquidity provision.
Liquidity Provider (LP): User who deposits tokens into pools to enable trading.
Liquidity Zone: Price range where liquidity is concentrated. Called "range" on other protocols.
LP NFT: Non-fungible token representing liquidity position. Unique to each position.
M
Mainnet: Production blockchain network. Opposite of testnet.
Margin: Collateral required to maintain a position. Options sellers must maintain margin.
MEV (Maximal Extractable Value): Profit extracted by reordering transactions. Reduced on MegaETH.
MegaETH: High-performance L2 blockchain. 100k+ TPS, < 10ms finality.
MegaPool: Liquidity pool in MegaFi. Uses concentrated liquidity model.
N
NFT (Non-Fungible Token): Unique blockchain token. LP positions are NFTs.
Notional Value: Total value controlled by position. May exceed actual capital (leverage).
O
Option: Right (not obligation) to buy/sell token at specific price. Calls and puts.
Oracle: System providing external data to smart contracts. Price feeds are oracles.
Out-of-the-Money (OTM): Non-profitable option. Call: price < strike. Put: price > strike.
P
Pool: Collection of tokens enabling trading. Each pair/fee combo is separate pool.
Position: Your active investment. LP position, option position, strategy position.
Premium: Price paid for option. Buyer pays, seller receives.
Price Impact: How trade affects pool price. Large trades have higher impact.
Protocol Fee: Fee charged by protocol itself. MegaFi: 0%.
Put Option: Right to sell token at strike price. Bearish instrument.
R
Rebalancing: Adjusting position parameters. Strategies rebalance Liquidity Zones automatically.
Hedge: MegaFi's options and hedging functionality.
RPC (Remote Procedure Call): Connection to blockchain. Primary: rpc.megaeth.io.
S
Sequencer: MegaETH component ordering transactions. Enables real-time execution.
Settlement: Finalizing transaction or options exercise. Near-instant on MegaETH.
Slippage: Difference between expected and actual execution price. Set tolerance to protect.
Smart Contract: Self-executing code on blockchain. MegaFi is built with smart contracts.
Stablecoin: Token pegged to stable asset (usually $1). USDC, USDT, DAI.
CLM: MegaFi's automated liquidity management functionality.
Strike Price: Price at which option can be exercised.
T
Testnet: Test blockchain network. Use for testing without real money.
Theta: Options Greek measuring time decay. How much option loses per day.
Tick: Discrete price point in pool. Ticks define Liquidity Zone boundaries.
Tick Spacing: Granularity of ticks. 0.05% pools: 10. 0.3% pools: 60. 1% pools: 200.
Time Decay: Options lose value as expiration approaches. Measured by theta.
TVL (Total Value Locked): Total capital deposited in protocol. Key DeFi metric.
U
Underlying: Asset that option is based on. ETH is underlying for ETH options.
V
Vault: In other protocols, automated strategy. In MegaFi, see CLM.
Vega: Options Greek measuring volatility sensitivity. How much option value changes with IV.
Volatility: Price fluctuation magnitude. Higher volatility = higher option prices.
W
Wallet: Software holding crypto private keys. MetaMask, Rainbow, etc.
WETH (Wrapped ETH): ERC-20 version of ETH. Used in smart contracts.
Wrapped Token: Token representing another asset. WBTC wraps Bitcoin for Ethereum.
Y
Yield: Return on investment. LPs earn yield from trading fees.
Z
Zero-for-One: Swap direction in pool. Swapping token0 for token1.
Terminology Equivalents
MegaFi uses specific terminology. Equivalents from other protocols:
| Other Protocols | MegaFi |
|---|---|
| AMM | DEX / MegaPool |
| Range / Ticks | Liquidity Zones |
| Vault | CLM / Strategy Modes |
| Pool | MegaPool |
| V3 Position | LP NFT |
Abbreviations
APR: Annual Percentage Rate APY: Annual Percentage Yield (includes compounding) bp: Basis Point (0.01%) CEX: Centralized Exchange CLM: Concentrated Liquidity Manager DA: Data Availability DEX: MegaFi's decentralized exchange EVM: Ethereum Virtual Machine IL: Impermanent Loss ITM: In-the-Money LP: Liquidity Provider MEV: Maximal Extractable Value NFT: Non-Fungible Token OTM: Out-of-the-Money P&L: Profit and Loss RPC: Remote Procedure Call TPS: Transactions Per Second TVL: Total Value Locked TWAP: Time-Weighted Average Price
Units
Wei: Smallest ETH unit (10^-18 ETH) Gwei: Gas price unit (10^-9 ETH) Basis Point: 0.01% or 0.0001 Tick: ~0.01% price movement
Next Steps
Explore related concepts:
- Limits and Constraints - Protocol limits
- DEX - Core concepts
Your DeFi dictionary.