| Basis point (bps) |
One hundredth of a percent; 100 bps = 1%. The unit for spreads, fees, and thresholds |
| Fair value |
The sanity-gated market price derived from live exchange feeds; the reference every quote is priced from |
| Spread / margin |
The gap between the desk's quoted rate and fair value; the desk's gross compensation per trade |
| Firm quote |
A persisted price commitment with a validity window, backed by reserved inventory and hedge budget |
| HTLC |
Hashed timelock contract: an escrow openable by a secret and refundable after a deadline; the settlement mechanism |
| Hashlock / timelock |
The two locks on an escrow: the secret's fingerprint, and the refund deadline |
| Solver |
The off-chain operator (Abyss) that observes orders, decides whether to fill, and executes settlement |
| Position |
Any holding whose value moves with a price |
| Long / short |
Positioned to gain when a price rises (long) or falls (short); a hedge holds a short to offset the move that would reduce inventory value |
| Leg |
One side of a trade: the token received or the token paid out. Each leg carries its own exposure and gets its own hedge |
| P&L (realized / unrealized) |
Profit and loss. Realized: locked in by completed trades, net of costs actually paid. Unrealized: the paper value of open positions, which still moves with the market |
| Directional exposure / delta |
Dependence of the desk's result on which way a price moves; market-neutral means near zero |
| Hedge |
The offsetting exchange position that neutralizes the exposure a fill creates |
| Perpetual future (perp) |
An exchange contract tracking a token's price, holdable indefinitely; the standard hedging instrument |
| Funding |
The periodic payment for holding a perp; a real cost priced into the spread |
| Notional |
A position's total value in dollars; the unit of every risk limit |
| Margin / collateral |
The money deposited on an exchange that backs open positions; "free margin" is the unused part, and the desk sizes its hedge budgets from it |
| Mark price |
An exchange's official reference price for a contract; the desk bounds hedge execution against it so a thin market cannot fill it far from that price |
| Exposure budget |
The per-asset cap on unhedged value, sized from live exchange collateral, enforced at quote time |
| Concentration cap |
The maximum (and minimum) share of total inventory value one asset may hold |
| Liquidation |
An exchange force-closing a leveraged position whose collateral ran too low; monitored and pre-empted automatically |
| Reduce-only |
An order that can only shrink a position, never grow one; the desk's risk-reducing exits are always allowed through |
| Slippage |
The gap between the expected price of an order and the price it actually executes at |
| Fail closed |
Refusing to act when confidence is insufficient: no price, no quote, no fill |
| Hot / cold wallet |
A hot wallet's keys are online so the system can trade; cold storage keys live on offline hardware and sign only in an operator's hands |
| Viewing key |
A derived key that can see a wallet's balances but cannot spend; all monitoring uses these |
| Rebalance ticket |
A system-proposed, human-approved, cold-storage-executed movement of capital between pools |
| Shielded / unshielded |
Midnight's private and transparent balance forms; tracked separately, never combined |
| DUST / NIGHT |
DUST is Midnight's fee resource, regenerating from held NIGHT (the network token); each desk wallet keeps NIGHT as its fee generator, and Abyss sponsors the user's claim fee |