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Glossary

APY

The variable funding rate of cPerps is determined by the difference between the cashflow on the lending and borrowing legs of a position, which you normally see referenced as borrow APY and supply APY on the money market. That’s why it’s also called APY on the Contango UI. It can be positive or negative:
If it’s positive, it means the trader is receiving money to keep his position opened.
If it’s negative, it means the trader is paying money to keep his position opened.
In other words, Contango’s APY is equivalent to a funding rate, but its sign is inverted compared to other perp venues. It is accrued as PnL and it is settled when closing the position.

Backwardation

When the price of the futures is lower than the spot price of the underlying asset.

Collateral ratio

When borrowing on a money market, either at fixed or variable rates, this is the value of the collateral, in debt terms, relative to the size of the debt.

Composability

Ofter referred as 'money lego' thesis: it refers to the idea of building new DeFi protocols on top of others, e.g. Contango is built on top of money markets, and at the same time it could be leveraged by new protocols to create structured products on top of it.

Contango

When the price of the futures is higher than the spot price of the underlying asset.

Flash loan

A flash loan is a type of DeFi loan where an asset can be borrowed with no upfront collateral as long as it is returned within the same blockchain transaction.

Fixed-rate market

A market that offers the possibility to borrow and lend assets at a fixed rate for a fixed amount of time. E.g Notional or Yield.

Funding fee

Variable interest rate on the underlying debt, charged periodically by derivative exchanges to keep the price of perpetual futures tethered to the index price of the underlying asset. On Contango, funding rates for cPerps are also referred as basis rate.

Leverage

Borrowed capital that allows traders to amplify their buying or selling power.

Liquidity pools

Crowdsourced pools of tokens that facilitate trading without an order book between buyers and sellers. The deeper the liquidity of the pool, the smaller the price impact of each trade.

Margin ratio

This is the value of the margin, posted by a trader, relative to price to open a position.

Price impact

The change in price that is directly caused by the size of a trade. Larger transactions cause higher price impacts. It differs from slippage, which is caused by external broad market movements, unrelated to the trade. See more at 1inch.

Spot market

A market that offers swapping assets at the spot price. eg. Uniswap.

Tokenized NFT position

An ERC-721 Non-Fungible Token that represents ownership of a position. Tokenizing a position allows the independent transfer of its ownership without the need to update Contango's internal accounting. This enhances composability, as positions can be bought and sold on a secondary market or in a private transaction, and potentially used as collateral in third party protocols.

Variable rate markets

A market that offers the possibility to borrow and lend assets at a variable rate indefinitely, e.g. Aave, Compound, Spark.