# Glossary

Canonical page: https://docs.denaria.finance/additional/glossary

Status: current

### The Denaria PWA Explained - Pt.1

![](https://docs.denaria.finance/img/additional/01_PWA_Explained.png)

### The Denaria PWA Explained - Pt.2

![](https://docs.denaria.finance/img/additional/02_PWA_Explained.png)

**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: <code className="code-orange">Notional = Position Size × Price of Underlying</code>.

**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) - R**atio between a position’s account value and its total notional value. Formula: <code className="code-orange">MR = Account Value / Position Value</code>. 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.