Glossary

vAsset - Virtual representation of the underlying asset in Denaria’s perpetual markets. It tracks the price of the real asset through an oracle but is never directly exchanged onchain.

vStable - Virtual stable asset used as the quote token in each perpetual pair. Always valued at 1 USD and used to calculate PnL, fees, and collateral balances.

Collateral Vault - Smart contract holding user deposits. It supports only stablecoins.

PnL (Profit and Loss) - Difference between the amount of vStable borrowed to open a position and the amount obtained when closing it, adjusted for fees and funding payments.

Leverage - Multiplier that determines the notional exposure of a position relative to the collateral provided.

Notional Value - Total USD-denominated size of a position. Formula: Notional = Position Size × Price of Underlying.

Funding Rate / Funding Payments - Periodic payments exchanged between long and short positions to maintain market balance. Positive funding rates mean longs pay shorts; negative means the opposite.

Exposure - Net imbalance between total long and short positions in the system. The protocol uses this metric to compute the dynamic funding rate.

Liquidity Provider (LP) - User supplying vAsset and/or vStable to the AMM pool. LPs passively take the opposite side of traders’ positions and earn fees plus funding payments.

LP Shares - Representation of an LP’s proportional ownership of the pool’s vAssets and vStables, tracked dynamically through Denaria’s two-share algorithm.

Imbalanced Deposit - Liquidity addition where the ratio between vAsset and vStable differs from the market price. These deposits may incur specific LP fees.

MR (Margin Ratio) - Ratio between a position’s account value and its total notional value. Formula: MR = Account Value / Position Value. Used to determine liquidation thresholds.

Liquidation - Process that closes a position whose margin ratio falls below required levels. Positions are sold to liquidators at a discount to maintain solvency.

Dynamic vAMM - Denaria’s automated market maker that constantly re-centers its curve around the real-time oracle price. This ensures minimal slippage while allowing independent funding rate computation.

Partial Liquidation Bands - Range of margin thresholds defining how much of a position can be liquidated progressively, preventing full liquidation shocks.