Glossary
Automated Market Maker
An automated market maker is a smart contract on Ethereum that holds liquidity reserves. Users can trade against these reserves at prices determined by a fixed formula. Anyone may contribute liquidity to these smart contracts, earning pro-rata trading fees in return.
Asset
While a digital asset can take many forms, Ring primarily works with ERC-20 assets. In Ring's current architecture, original ERC-20 assets may also be wrapped into FewToken before being used in trading or integrations.
Concentrated Liquidity
Liquidity that is allocated within a determined price range.
Constant Product Formula
The automated market making formula commonly used by AMMs. In Ring Swap (v2), this follows the familiar x*y=k model.
Core
Smart contracts that are considered foundational and essential for Ring to exist.
ERC20
ERC20 tokens are fungible tokens on Ethereum. Ring supports all standard ERC20 implementations.
Factory
A smart contract that deploys a unique trading contract for a token pair.
Flash Swap
A trade that uses the tokens purchased before paying for them.
Invariant
The “k” value in the constant product formula X*Y=K
Liquidity Provider / "LP"
A liquidity provider is someone who deposits ERC20 tokens into a given liquidity pool. Liquidity providers take on price risk and are compensated with trading fees.
Liquidity
Digital assets that are stored in a Ring pool contract, and are able to be traded against by traders.
Mid Price
The price between the available buy and sell prices. In Ring Swap (v2), this is the ratio of the two token reserves in the pool.
Observation
An instance of historical price and liquidity data of a given pair.
Pair
A smart contract deployed from the Ring Swap (v2) factory that enables trading between two ERC-20 assets.
Periphery
External smart contracts that are useful, but not required for Ring to exist. New periphery contracts can always be deployed without migrating liquidity.
Pool
A contract-based liquidity venue that pairs two assets for trading. In the current Ring docs, the term "pool" is most often used when referring to Uniswap v4 or other non-v2 liquidity environments.
Position
An instance of liquidity defined by upper and lower tick. And the amount of liquidity contained therein.
Price Impact
The difference between the mid-price and the execution price caused by your trade size relative to the pool’s liquidity. This is an expected result of the constant product formula in AMMs.
Protocol Fees
Fees that are rewarded to the protocol itself, rather than to liquidity providers.
Range
Any interval between two ticks of any distance.
Range Order
An approximation of a limit order, in which a single asset is provided as liquidity across a specified range, and is continuously swapped to the destination address as the spot price crosses the range.
Reserves
The liquidity available within a pair or pool.
Slippage
The total difference between the expected price at the time of submitting a transaction and the actual execution price, which may include price impact and other market movements that occur before the transaction is mined.
Spot Price
The current price of a token relative to another within a given pair.
Swap Fees
The fees collected upon swapping which are rewarded to liquidity providers.
Tick Interval
The price space between two nearest ticks.
Tick
The boundaries between discrete areas in price space.