Glossary
Understanding the terminology used in GRID Token documentation. This glossary provides clear definitions of key concepts from DeFi, trading, and blockchain technology.
Trading Terms
Grid Trading
A trading strategy that places multiple buy and sell orders at predetermined intervals (grid levels) above and below the current market price. As price moves, orders are executed automatically, capturing profits from volatility.
Example: If SOL is at $100, grid orders might be placed at $99, $98, $97 (buys) and $101, $102, $103 (sells).
Delta
A measure of how much a position's value changes when the underlying asset price changes by $1. Delta ranges from -1 to +1, where positive delta means the position gains value as price rises.
In GRID: We maintain near-zero delta to eliminate directional market risk.
Delta Neutral
A portfolio strategy where the total delta equals zero, meaning the position's value is not affected by small price movements in the underlying asset. Profits come from other factors like volatility or time decay.
Implementation: GRID achieves this through balanced liquidity provision and perpetual futures hedging.
Gamma Scalping
A trading technique that profits from the rate of change of delta (gamma) by continuously rebalancing positions as price moves. This captures value from volatility while maintaining delta neutrality.
GRID Application: Automatic rebalancing when positions approach range boundaries.
Realized Volatility
The actual historical price movement of an asset, calculated from past price data. Measured as the standard deviation of returns over a specific period (e.g., 24 hours).
Usage: GRID uses 24h realized volatility to determine optimal position ranges.
Slippage
The difference between the expected price of a trade and the actual executed price. Usually occurs due to market movement between order placement and execution.
Protection: GRID limits slippage to 2.5% maximum on all trades.
Concentrated Liquidity
A liquidity provision mechanism where capital is deployed within specific price ranges rather than across the entire price curve. This increases capital efficiency and fee earnings within the chosen range.
Benefit: Higher fee generation per dollar of capital deployed.
DeFi Concepts
Liquidity Provision (LP)
The act of depositing assets into a decentralized exchange's liquidity pool to facilitate trading. Liquidity providers earn fees from trades that use their liquidity.
GRID Context: The bot provides liquidity to SOL/USDC pairs on Orca DEX.
Impermanent Loss
The temporary loss experienced by liquidity providers when the price ratio of deposited assets changes compared to when they were deposited. Becomes permanent only when liquidity is withdrawn.
Mitigation: GRID's delta-neutral strategy minimizes impermanent loss impact.
Automated Market Maker (AMM)
A type of decentralized exchange that uses mathematical formulas to price assets instead of order books. Trades happen directly against liquidity pools rather than between buyers and sellers.
Example: Orca is an AMM where GRID provides liquidity.
Total Value Locked (TVL)
The total value of all assets deposited in a DeFi protocol. For GRID, this represents the total value of all assets managed by the trading system.
Calculation: Sum of all SOL and USDC under management at current prices.
Annual Percentage Yield (APY)
The rate of return earned on an investment over a year, accounting for compound interest. APY assumes all earnings are reinvested.
Formula: APY = (1 + daily_rate)^365 - 1
Smart Contract
Self-executing code deployed on a blockchain that automatically enforces agreement terms without intermediaries. GRID's smart contracts handle token minting, burning, and fund management.
Security: All GRID contracts are audited and open-source.
Technical Terms
Actor System
A concurrent programming model where "actors" are independent units that communicate through message passing. Each actor maintains its own state and processes messages sequentially.
GRID Implementation: Each trading position runs as an independent actor.
Write-Ahead Logging (WAL)
A technique where all modifications are written to a log before being applied to the main data structure. Ensures data integrity and enables recovery from failures.
Purpose: Guarantees GRID can recover from any system failure.
Oracle
A service that provides external data to blockchain applications. GRID uses Pyth Network as its price oracle for accurate market data.
Importance: Reliable price data is critical for volatility calculations.
RPC Node
Remote Procedure Call nodes that allow applications to interact with the blockchain. They process requests like reading data or submitting transactions.
Redundancy: GRID uses multiple RPC nodes for reliability.
Priority Fees
Additional fees paid to ensure transactions are processed quickly during network congestion. Similar to "gas" fees on Ethereum.
Usage: GRID uses priority fees for time-sensitive rebalancing operations.
MEV Protection
Maximum Extractable Value protection prevents bots from front-running or sandwich attacking transactions. GRID uses Jito bundles for MEV protection.
Benefit: Ensures fair execution prices for all trades.
Financial Terms
Net Asset Value (NAV)
The total value of all assets minus liabilities, divided by the number of outstanding shares/tokens. For GRID, NAV per token = Total AUM / Total Token Supply.
Transparency: GRID's NAV is calculated on-chain in real-time.
Assets Under Management (AUM)
The total market value of assets that an investment company manages on behalf of investors. For GRID, this includes all SOL and USDC in the trading system.
Growth: AUM increases through new deposits and trading profits.
Basis Points (bps)
A unit of measure equal to 1/100th of 1 percent (0.01%). Commonly used in finance to describe small percentage changes or fee rates.
Example: 20 basis points = 0.20%
Sharpe Ratio
A measure of risk-adjusted returns, calculated as (return - risk-free rate) / standard deviation. Higher ratios indicate better risk-adjusted performance.
Target: GRID aims for Sharpe ratio > 2.0
Drawdown
The peak-to-trough decline during a specific period. Measures the largest drop from a historical high point to a subsequent low point.
Risk Management: GRID's delta-neutral approach minimizes drawdowns.
Compound Interest
Interest calculated on the initial principal and accumulated interest from previous periods. GRID automatically reinvests all earnings for compound growth.
Effect: 0.2% daily = 107% APY when compounded
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