A glossary of terms related to Gamma, liquidity, and cryptocurrency.
Alpha (α) is a term used in investing to describe an investment strategy's ability to beat the market or its "edge." Alpha is thus also often referred to as “excess return.” Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over some period.
Providing liquidity to Gamma’s vaults is not “guaranteed” alpha. It is simply one strategy available in the cryptocurrency market and can be used as an alpha source, a hedge, or to protect against volatility.
Analytics are the tools (visual representations, data, filters), that allow a user to analyze their position. Analytics are a critical tool for liquidity providers due to the complicated nature of providing liquidity.
Gamma is working with several partners to develop sophisticated analytical tools that provide users with everything they want to know about their position. This includes DeFiLlama, Zapper, Debank, TokenTerminal, and more.
The annual percentage rate (APR) is a way of measuring the return on investment. APR does not consider the compounding of interest within a specific year.
APR = [(Periodic rate) x (Number of periods in a year)]
Gamma's APRs can be interpreted as the fees collected for the amount deposited into each vault or on the protocol. Higher APRs signal higher fee production for a given period.
The annual percentage yield (APY) is a way of measuring the return on investment. Unlike APR, APY does take into account the compounding interest within a specific year.
APY = [(1 + Periodic Rate)Number of periods in a year] – 1
Gamma calculates a Staking APY, that is the fees earned by GAMMA stakers, projected annually with compounding.
Arbitrum is a technology suite designed to scale Ethereum. You can use Arbitrum chains to do everything you do on Ethereum — use Web3 apps, deploy smart contracts, etc., but your transactions will be cheaper and faster. The flagship product, Arbitrum Rollup, is an Optimistic rollup protocol that inherits Ethereum-level security.
Gamma is currently operating vaults on Arbitrum.
Automated market makers (AMMs) allow the trading of digital assets in a permissionless and automatic way by using liquidity pools rather than a traditional market of buyers and sellers. AMM users supply liquidity pools with crypto tokens, whose prices are determined by a constant mathematical formula. Uniswap, Quickswap, Sushiswap, and Pankcakeswap are examples of AMMs.
Gamma builds vaults on top of liquidity pools on AMMs. Supported AMMs include Uniswap V3 and QuickSwap V3.
Beta (β) is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Cryptocurrencies have large amounts of Beta.
One of the main challenges for Gamma’s is extracting lucrative concentrated trading fees while avoiding volatility and impermanent loss.
Beta testing refers to a web application or interactive feature being in a testing mode. Caution must be exercised while using a beta version of a protocol. Usually, limits are put in to prevent the user from exposing themselves to unnecessary risks.
Gamma is in a perpetual state of testing and releasing new product features. Any feature marked as beta testing will be indicated in an announcement or within the feature itself.
BNB Chain is crypto exchange Binance’s layer 1 blockchain. Binance Smart Chain combines elements of proof-of-stake and proof-of-authority consensus methods known as Proof-of-Staked Authority (PoSA). BNB Chain is primarily aimed toward decentralized app developers, whether they're seeking a new platform to work on or want to migrate a project from Ethereum. Binance Chain's creators decided to shift since it does not support Ethereum-based apps. They created the Binance Smart Chain, programmable using the Ethereum Virtual Machine (EVM).
Gamma is currently waiting for the Uniswap V3 deployment to begin operating vaults on BNB Chain.
Block explorers are applications for visualizing blocks, transactions, and blockchain network metrics. Reputable layer 1 and layer 2 networks have block explorers.
Gamma's docs have a variety of links to relevant block explorers to evaluate on-chain activity, contracts, and token attributes.
A Web cache (or HTTP cache) is a system for optimizing the World Wide Web. It is implemented both client-side and server-side. Caching multimedia and other files can result in less overall delay when browsing the Web.
Due to frequent updates, it's important to routinely clear your cache before using Gamma's web application. It is the first step to resolving errors.
A centralized exchange (CEX) is a business that provides you with a multitude of services, such as a crypto trading platform (buy and sell transactions), account services (account funding and withdrawal), and customer support services. Centralized exchanges have a variety of technology and features ranging from highly sophisticated to fraudulent.
Gamma does not provide services to centralized exchanges, nor is GAMMA officially listed on a centralized exchange.
Compounding is when an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.
Gamma uses compounding as a tool for optimizing concentrated liquidity. Gamma's vaults offer an automatic compounding feature that doesn't require rebalancing. This feature is a "zeroBurn" event on the vault contract.
Concentrated liquidity is a form of liquidity designed to increase capital efficiency. Concentrated liquidity allows liquidity providers to set a relatively small range. This allows the liquidity to be applied more efficiently, resulting in higher fees for the LP. This also can expose them to higher losses as well. Applying concentrated liquidity is a challenging endeavor for trained professionals.
Gamma's primary focus is providing concentrated liquidity services to professional and non-professional LPs and protocols seeking management.
The console is a web browser tool that allows the user to see the code of a web page or web application. User interface and frontend errors will often be flagged here. Consoles are activated by press F12 in the browser.
Gamma provides a guide on using your console to evaluate errors and clear problems while using the app.
A cryptocurrency, crypto-currency, or crypto is a collection of binary data designed to work as a digital asset wherein individual coin ownership records are stored in a ledger which is a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership Cryptocurrency is a misnomer, as not all cryptocurrencies are intended to function as a medium of exchange (a traditional currency).
Gamma is a protocol that works with cryptocurrencies and has its own cryptocurrency: GAMMA.
A decentralized autonomous organization (DAO) is an organization represented by rules encoded as a transparent computer program, controlled by the organization members, and not influenced by a central government. A DAO's financial transaction record and program rules are maintained on a blockchain. The precise legal status of this type of business organization is unclear.
Gamma currently does not operate a DAO.
A decentralized application (DApp,dApp, Dapp, or dapp) is a computer application that runs on a decentralized computing system.DApps have been popularized by distributed ledger technologies (DLT) such as the Ethereum blockchain, where DApps are often referred to as smart contracts.
Gamma's main product is a decentralized application.
Decentralized finance (DeFi) is an open and global financial system that emerged in the late 2010s. Decentralized finance seeks to rectify problems related to centralization and over-reliance on trusted third parties (middlemen) in legacy financial systems. Using blockchain technology (an immutable public ledger), DeFI seeks to reinvent many essential financial services and products. These include banking, trading, loans, credit ratings, investing, monetary policy, fiscal policy, and much more.
Gamma contributes to the DeFi ecosystem by providing a direct pathway for liquidity providers to interact and profit off the world's largest decentralized exchanges while providing a necessary function for its existence.
Delta (γ) is the change in the value of your position with a change in the price of the underlying asset. This position’s delta tells you how much value your position loses as the price moves.
Delta is a critical component to providing liquidity on Gamma, as changes in asset prices affect the overall value of your position.
Dual-sided deposits are a method of depositing assets into a liquidity pool or Gamma vault. Users deposit two tokens proportionally to each other at the same time. This method is considered the safest way of depositing, as it minimizes the chance of manipulation and keeps the pool/vault balanced.
Gamma offers dual-sided deposits on all its vaults.
The ERC-20 token is a standard tradable token on the Ethereum blockchain. The token’s rules and model are standardized, so they are exchangeable on the chain. Most wallets that can hold Ethereum can also hold ERC-20 tokens.
The GAMMA and xGAMMA tokens are ERC-20 tokens. Gamma's LP tokens created by it's vaults are also ERC-20 tokens.
Gamma (δ) measures how your delta changes as the price of the underlying assets change. For an LP position, gamma is always negative, as any movement from the current price increases your exposure to further price changes.
Using innovative strategies, Gamm’s liquidity management seeks to eliminate or minimize gamma entirely. Gamma was named after this term.
Gas refers to the cost required to perform a transaction on the blockchain. Gas fees can range from very high (Ethereum in an active market) to very low (layer 2 networks). Gas fees are a considerable sunk cost to liquidity providers and Gamma's protocol.
Gamma uses gas to power all vault activities, such as rebalances, compounds, and withdrawals. Gas costs are significantly lower on layer 2 networks.
Gnosis Chain is one of the first Ethereum sidechains and has stayed true to its values. By allowing contributors around the globe to easily run a node, Gnosis Chain is secured by over 100k validators. Its diverse validator set and the community governance ensure Gnosis Chain remains credibly neutral at a much lower price point than mainnet.
Gamma is currently waiting for the Uniswap V3 deployment to begin operating vaults on Gnosis Chain
Impermanent loss (IL) happens when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss. In this case, the loss means less dollar value at the time of withdrawal than at the time of deposit. Pools with assets that remain in a relatively small price range will be less exposed to impermanent loss. Stablecoins or different wrapped versions of a coin, for example, will stay in a relatively contained price range. These pools will generate fewer fees, though.
Gamma is a protocol designed to provide a variety of vaults for liquidity providers that use a strategy to extract the most fees while mitigating the risk of impermanent loss.
Layer 2 is a collective term for solutions designed to help scale an application by handling transactions off the Ethereum Mainnet (layer 1) while taking advantage of the robust decentralized security model of Mainnet. Transaction speed suffers when the network is busy, making the user experience poor for certain types of DApps. As the network gets busier, gas prices increase as transaction senders aim to outbid each other. This can make using Ethereum very expensive. Layer 2 solutions required their liquidity sources.
Gamma builds on layer 2 networks like Polygon, Optimism, and Arbitrum.
Liquidity management or liquidity provisioning describes how a liquidity provider manages their funds. It is a term closely tied to strategy. "Active" liquidity management is more hands-on and adaptable. "Passive" liquidity management is focused on providing liquidity without adjustments.
Gamma’s services include liquidity management for protocols. Gamma is focused on active strategies.
Liquidity mining is a kind of yield farming in which users of a decentralized finance (DeFi) product earn an additional token on top of the regularly expected yield for putting assets into a liquidity pool. This is a way to incentivize and attract liquidity.
Gamma's internal and external rewards programs are liquidity mining programs.
A liquidity pool is a collection of funds locked in a smart contract. Liquidity pools facilitate decentralized trading, lending, and more functions. Liquidity pools are the backbone of many decentralized exchanges (DEX), such as Uniswap. Liquidity pools generate fees for liquidity providers depending on how much is traded (volume). Liquidity pools are usually tied to pairs of tradable assets.
Gamma builds vaults that manage user funds in a liquidity pool.
Liquidity pool/provider (LP) tokens are ERC-20 fungible tokens users receive for depositing assets into a Gamma vault. LP tokens can be used for liquidity mining rewards, collateral, and other decentralized finance applications.
Each Gamma vault has a unique LP token that identifies the proportional ownership of the vault. LP tokens will not increase with fees. The token's value relative to other assets (USD, ETH) will increase.
Moonbeam is much more than just an EVM implementation: it’s a highly specialized Layer 1 chain that mirrors Ethereum’s Web3 RPC, accounts, keys, subscriptions, logs, and more. The Moonbeam platform extends the base Ethereum feature set with additional features such as on-chain governance, staking, and cross-chain integrations.
Gamma is currently waiting for the Uniswap V3 deployment to begin operating vaults on Moonbeam
Network refers to various blockchains on a web application and is a synonym for blockchain in the application context. Changing networks allow a user to look at a variety of different blockchains on the same interface. Usually, network changes are accompanied by changes to the indicated network on a crypto wallet.
Gamma has a variety of networks that it supports. All networks are accessible from the web application.
Non-fungible tokens (NFTs) are a special class of tokens that has individual and unique properties. Each NFT is unique, can only have one owner, and cannot be duplicated. NFTs can be used to represent ownership of unique items. They let us tokenize things like art, collectibles, real estate, and much more.
Uniswap V3 uses NFTs to represent liquidity positions. Gamma does not use NFTs but rather fungible LP tokens.
Optimism is a fast, stable, and scalable L2 blockchain built by Ethereum developers for Ethereum developers. Built as a minimal extension to existing Ethereum software, Optimism’s EVM-equivalent architecture scales your Ethereum apps without surprises. If it works on Ethereum, it works on Optimism at a fraction of the cost
Gamma is currently operating vaults on Optimism.
Pairs refer to a pair of assets tied together in a liquidity pool. Liquidity for the GAMMA token is stored in a GAMMA-ETH pool. GAMMA is traded against ETH and vice-versa. Any other digital asset traded for GAMMA is converted into ETH first.
Gamma’s vaults are identified by the pair they are constructed from.
The range of an LP position describes which asset valuations that the user chooses to provide liquidity for. In non-concentrated liquidity, these ranges were infinite. In concentrated liquidity, the ranges are finite. Choosing a range size is one of the core concepts in concentrated liquidity management.
Gamma's strategies provide set ranges for a variety of vaults. Range choice is a key decision when determining a profitable strategy.
Rebalancing is dissolving a liquidity position and creating a new one. This is usually done to optimize fees in a new range. Rebalancing "locks" impermanent loss and is generally expensive fee-wise.
Gamma uses rebalances as a tool to optimize concentrated liquidity. Rebalancing events compound fees (along with compounding events) and can be identified by a "rebalance" event on the vault contract
Single-sided deposits are a method of depositing assets into a liquidity pool or Gamma vault. Users deposit one token regardless of the pool pairing. This method is considered a less safe way of depositing, as it increases the chance of manipulation and requires extra swaps (gas fees) to conduct.
Gamma currently does not offer single-sided deposits on its vaults.
A smart contract is a computer program or a transaction protocol that is intended to automatically execute, control, or document legally relevant events and actions according to the terms of a contract or an agreement. The objectives of smart contracts are the reduction of need in trusted intermediaries, arbitrations, and enforcement costs, fraud losses, as well as the reduction of malicious and accidental exceptions.
Gamma uses a variety of smart contracts in its protocol.
Staked ether is a cryptocurrency token that aims to represent an Ethereum token that is "staked" or deposited to support blockchain operations. Staked ether (stETH) was introduced in 2020 in anticipation of Ethereum's shift to the proof-of-stake consensus mechanism. It is designed to function as a liquidity token, where you can deposit your ETH into a smart contract on the Lido blockchain and receive an equal amount of stETH that can be traded, exchanged, borrowed against, or used for any other liquidity purposes. Other staking platforms have come onto the market, such as RocketPool, Frax, and Coinbase.
Gamma provides vaults specifically for staked ether assets.
Staking is where users deposit (and sometimes lock) their assets in a contract to participate in the incentive program, governance voting system, or other DeFi application. It can mean other things to other projects, such as being a validator, enabling voting, providing liquidity, and more.
In Gamma, those who stake their GAMMA tokens are rewarded with fees from vaults. Gamma also staking to distribute rewards programs. Users stake their LP tokens in reward contracts.
A staking token is a special token that represents the user's funds in a staking pool. Instead of staking a token and issuing awards to each wallet staking (thousands of transactions), the fixed number of staking tokens grows in value, not in quantity.. This functionality was developed to reduce transaction costs and provide users with frequent staking rewards. GAMMA uses a staking token (xGAMMA) in its staking system.
By staking GAMMA, your xGAMMA balance will not change, but each xGAMMA will grow in value as fees are awarded. When unstaking, you would wind up with a larger balance of GAMMA.
StarkNet is a permissionless decentralized Validity-Rollup (often referred to as ZK-Rollup). It operates as an L2 network over Ethereum, enabling any dApp to achieve unlimited scale for its computation – without compromising Ethereum's composability and security.
Gamma is currently waiting for the Uniswap V3 deployment to begin operating vaults on StarkNet
Total value locked (TVL) is the total amount of funds in a platform's combined pools. TVL is a good indicator of the usage and interest in a platform. Higher TVL will attract larger investors, provide stability, and grow a platform.
Gamma has a posted TVL, the total value of all the funds in its vaults.
Treasury refers to an allocation of tokens or currency that a protocol uses to conduct operations, pay expenses, and deal with all financial matters. A large challenge in cryptocurrency is the security and sustainability of the treasury.
Gamma has a protected treasury that it uses for all financial matters related to the protocol.
Token vesting is the process and schedule of locking and releasing tokens to certain individuals. Token vesting usually targets team members, venture capital, early investors, influences, and others who receive a large allocation of the token supply in exchange for work, connections, expertise, or risk.
Gamma has a token vesting scheme for GAMMA for both its team members and the venture capital firms that invested in it. The vesting program is near completion as of 2023.
A transaction is a deposit, withdrawal, approval, wrapping, burning, or other signed action where a user approves an action on a blockchain. Transactions can fail, and they must be reauthorized.
Gamma uses many transaction types, including wrapping tokens, approving deposits, depositing tokens, and withdrawing tokens.
Uniswap V3 is the latest iteration of Uniswap, a decentralized exchange protocol. Uniswap is the largest AMM/DEX in the world by use. Version 3 (V3) utilizes concentrated liquidity, which created the entire problem of liquidity management for individuals and protocols.
Gamma operates vaults on Uniswap V3.
Venture capital (VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth (in terms of a number of employees, annual revenue, the scale of operations, etc). Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake.
Gamma has been invested in by several large and reputable VC firms.
A white paper is a report or guide that informs readers concisely about a complex issue and presents the issuing body's philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision.
Gamma, like many other protocols in cryptocurrency, drafted a whitepaper to explain the basic mechanisms of its protocol.
Wrapped tokens are a way to use crypto assets on blockchains other than the blockchain they were initially built on or to use the native asset. Wrapped tokens are backed 1:1 by their underlying asset, which is stored in a digital vault. Commonly wrapped tokens on ethereum include WBTC (another blockchain) and WETH (native asset). Likewise, on Polygon, WMATIC is a native asset found wrapped.
Gamma's vaults make extensive use of wrapped tokens on all networks.
Yield farming is a catch-all term for describing various incentive programs. Yield farmers evaluate opportunities and complete the required actions to acquire incentives. These incentives can take the form of tokens, whitelisting, yield, fees, or other rewards.
Gamma's LP reward programs and staking are classified as yield farming opportunities.