Glossary

Traded Token: Within this Lightpaper, when describing LBPs, refers to the token actively being exchanged or swapped within a transaction in a liquidity pool.

Anchor Token: Within this Lightpaper, when describing LBPs, refers to the token used as a stable measure or benchmark for determining the price of the traded token, such as a Toncoin (TON), a stablecoin or similarly stable asset.

Liquidity Bootstrapping Pool (LBP): A type of automated market maker that allows for the dynamic adjustment of token weights to facilitate fair and efficient price discovery during a token launch.

Market Maker: An entity or mechanism that provides liquidity to a market by consistently offering to buy and sell assets at publicly quoted prices.

Automated Market Maker (AMM): A decentralized exchange mechanism that uses algorithms to price assets within a liquidity pool, enabling continuous trading without the need for an order book.

Token Weight: The proportion of the total pool value assigned to a specific token, which directly influences its price within the pool.

Spot Price: The theoretical price of a token at a given moment, based on the current conditions of the liquidity pool, without considering the impact of any trades.

Effective Price: the future spot price of a token in a liquidity pool after a transaction has occurred., reflecting real-time changes in the pool's token volumes and weights.

Slippage: The difference between the expected price of a trade (spot price) and the actual price (effective price) due to the impact of the trade on the pool’s token balance and weights.

Constant Product Formula: A mathematical formula used in AMMs to maintain a balance between two tokens in a pool by ensuring the product of their quantities remains constant. This is a fundamental concept in decentralized exchanges.

Swap Given In: An operation in an LBP that calculates the amount of one token received based on a specific amount of another token input into the pool.

Swap Given Out: An operation in an LBP that calculates the amount of one token required to be input into the pool to receive a specific amount of another token.

Price Discovery: The process by which the market determines the value of an asset based on supply and demand dynamics. In an LBP, this is facilitated by the gradual adjustment of token weights.

Slippage Tolerance: A parameter set by traders to define the maximum acceptable difference between the expected price (spot price) and the actual price (effective price) at which a trade is executed. This helps mitigate the impact of slippage.

Volume: The total amount of trading activity within a liquidity pool. In LBPs, volume influences liquidity and can affect the extent of price changes and slippage.

Liquidity: The total amount of assets available in a liquidity pool for trading. Higher liquidity generally allows trades to be executed with less impact on the token’s price.

Effective Price: The actual price at which a token is bought or sold during a transaction, taking into account the immediate impact of the trade on the pool’s token volumes and weights.

Spot Price: The theoretical price of a token based on the current state of the liquidity pool, assuming no trades are executed.

Taylor Series: A mathematical method used to approximate complex functions by expanding them into an infinite sum of polynomial terms. Each term in the series is derived from the successive derivatives of the function at a given point