Glossary

Terms

Asset

Digital tokens used in Shadow Exchange. These include ERC-20 tokens for trading and ERC-721 NFTs that represent concentrated liquidity positions.

Automated Market Maker

A smart contract on Sonic that holds liquidity reserves. Users can trade against these reserves at prices determined by a fixed formula. Anyone can contribute liquidity to earn emissions and liquidity incentives.

Concentrated Liquidity

A liquidity provision mechanism where providers can specify custom price ranges for their assets. Learn more here.

Core

Essential smart contracts for Shadow's functionality. Contracts that handle critical functions like swaps, liquidity management, and fee collection. View the core contracts here.

ERC20

Fungible token standard.

Factory

The smart contracts responsible for deploying new trading pairs and pools.

Gauge

A smart contract that distributes rewards to staked LP tokens based on voting distribution.

Invariant

The k in x*y=kand x³y*y³x≥k formula. Learn more here.

Liquidity

Assets in Shadow pools/pairs available for trading.

Liquidity Provider / "LP"

Users who pair and pool ERC20 tokens. Liquidity providers assume price risk and are compensated with emissions and liquidity incentives.

Pair

A smart contract created by Shadow's V2 factory that enables ERC20 trading. Learn more

Periphery

Smart contracts that interact with Shadow's core contracts to provide additional functionality. These include routers, position managers, and other utility contracts. View the periphery contracts here.

Pool

A smart contract created by Shadow's V3 factory that enables trading between two ERC20 tokens. Each token pair can have multiple pools with different fee tiers, which adjust dynamically based on market volatility. Learn more here.

Position

A liquidity allocation in a V3 pool defined by a specific price range and amount. Each position is represented as an NFT and can be managed independently. Learn more here.

Price Impact

The effect a trade has on an asset's price due to the size of the order relative to pool liquidity. Larger trades typically result in higher price impact.

Range

An interval between two ticks of any distance.

Range Order

Limit order approximation using single-asset liquidity provision. Learn more here.

Slippage

Price change between trade submission and execution.

Spot Price

The current exchange rate between two assets in a pool, calculated from the pool's reserves before any trade occurs.

Swap Curve (Uni-v2 or Correlated)

The AMM formula that determines trade prices in pairs. Shadow uses two curves: volatile (x*y=k) for standard token pairs, and stable (x³y*y³x≥k) for correlated assets. Learn more here.

Swap Fees

Trading fees paid to xSHADOW stakers. Fees vary algorithmically.

Tick

Discrete boundaries in price space.

Vote Incentive

Rewards offered to xSHADOW holders to incentivize voting on gauges. These incentives help direct emissions to desired liquidity pools.