Definitions
Altcoin derivatives glossary
Plain-language definitions for perpetuals, options, leverage, margin, collateral, custody, and DeFi market structure.
- Auto-deleveraging
- A venue mechanism that can reduce profitable opposing positions when bankrupt liquidations cannot be closed without remaining losses.
- Automated market maker
- A smart-contract or algorithmic mechanism that prices trades against pooled liquidity rather than relying only on a traditional order book.
- Basis
- The difference between a derivative price and the relevant spot or reference price.
- Call option
- A contract giving the buyer a right to benefit from upside above a strike under specified terms.
- Cash settlement
- Settlement by a cash amount rather than delivery of the referenced token.
- Clearing
- The process for managing, guaranteeing, and settling contractual obligations between market participants.
- Collateral factor
- The percentage of an asset’s market value credited toward margin after a haircut.
- Correlation
- A statistical description of how two returns move together; it can change across market regimes.
- Cross margin
- An account mode that shares collateral and profit or loss across multiple positions.
- Depeg
- A market price moving away from an intended reference value or redemption relationship.
- Delta
- An option’s estimated price sensitivity to a small move in the underlying.
- Funding rate
- A recurring transfer between long and short perpetual positions under a venue’s formula.
- Gamma
- The rate at which an option’s delta changes as the underlying price changes.
- Governance
- The people, keys, votes, and processes authorized to change a protocol or its parameters.
- Hardware wallet
- A device designed to keep private keys isolated while signing transactions.
- Hedge
- A position intended to reduce a defined risk in another position; every hedge can contain basis or timing mismatch.
- Implied volatility
- The volatility input consistent with an option’s market price under a pricing model.
- Initial margin
- Collateral required to establish or support a leveraged position at opening.
- Isolated margin
- Margin allocated specifically to one position rather than shared across the account.
- Keeper
- An actor or service that submits protocol operations such as price updates, order execution, or liquidations.
- Liquidation
- Forced reduction or closure after account equity falls below required margin.
- Liquid staking token
- A transferable representation of staked assets and related claims under a protocol design.
- Maintenance margin
- Minimum equity required to keep a leveraged position open.
- Mark price
- A risk-engine price used for profit and loss or liquidation, often derived from an index and basis calculation.
- MEV
- Value related to including, excluding, or ordering blockchain transactions.
- Notional
- The face amount of market exposure controlled by a derivative position.
- Oracle
- A system that supplies external or derived data, such as market prices, to smart contracts.
- Perpetual future
- A derivative without an expiration date that commonly uses recurring funding to stay near a spot-based index.
- Price impact
- The change in execution price caused by the size of an order relative to available liquidity.
- Private key
- A secret credential used to authorize blockchain transactions and control assets.
- Put option
- A contract giving the buyer a right to benefit from downside below a strike under specified terms.
- Redemption queue
- A waiting process before staked or wrapped assets can be converted into the underlying asset.
- Reference rate
- A defined benchmark used to value or settle a derivative contract.
- Restaking
- Using staked assets or related claims to secure additional services and accept additional obligations.
- Risk tier
- A margin schedule that can increase requirements as position size or concentration grows.
- Slashing
- A protocol penalty that can reduce staked assets for specified validator behavior.
- Theta
- An option’s estimated sensitivity to the passage of time.
- Token approval
- Permission allowing a smart contract to transfer tokens up to a specified amount.
- Vega
- An option’s estimated sensitivity to a change in implied volatility.