Glossary of Key Terms and Acronyms

AMM (Automated Market Maker): A type of decentralized exchange mechanism that uses liquidity pools and algorithms to facilitate asset swaps without order books. Examples include Uniswap and Curve. (Relevant to StableUnit in context of LP tokens and the LLAMMA liquidation concept in Curve’s crvUSD.)

APY (Annual Percentage Yield): The normalized rate of return earned over a year, taking into account compounding interest. If you see a yield of 5% APY, that’s the effective interest earned over a year with compounding, as opposed to APR which doesn’t include compounding.

CDP (Collateralized Debt Position): A loan position backed by collateral. In StableUnit, when you deposit collateral and borrow USD Pro, you create a CDP (also simply called a “vault”). The CDP holds your collateral and tracks your debt until you repay. The term originated from MakerDAO.

Circuit Breaker: A security mechanism that halts or limits certain activities if abnormal conditions are detected. StableUnit’s Circuit Breaker monitors large fund outflows (withdrawals, liquidations, etc.) and if a threshold (like 15% of TVL in 24h) is exceeded, it temporarily restricts further withdrawals. This helps prevent catastrophic drains in case of hacks or bank runs, similar to how stock markets pause trading on huge swings.

Collateralization Ratio: The ratio of the value of collateral to the value of debt in a loan. For example, if you have $150 worth of ETH backing $100 of USD Pro debt, the collateralization ratio is 150%. StableUnit requires that this ratio stays above a minimum (liquidation ratio) for each collateral type to ensure loans are sufficiently backed.

DAO (Decentralized Autonomous Organization): An organization governed by smart contracts and community voting rather than centralized leadership. StableUnitDAO governs the StableUnit protocol using SuDAO tokens and NFT Passports for voting, making decisions on upgrades, parameters, and treasury use collectively.

DEX (Decentralized Exchange): A peer-to-peer exchange that allows users to trade cryptocurrencies without an intermediary. They often use smart contracts (as AMMs or order books) on blockchain. Uniswap, SushiSwap, and Curve are examples. StableUnit relies on DEX liquidity for USD Pro (e.g., to maintain its peg).

Debt Ceiling: In StableUnit (and MakerDAO), the maximum amount of stablecoins that can be generated from a particular collateral type. For example, there might be a debt ceiling of 10 million USD Pro for staked ETH collateral, meaning once 10M USD Pro are borrowed against stETH in aggregate, no further USD Pro can be minted with stETH until some debt is repaid or the ceiling is raised. This limits exposure to any single asset.

EVM (Ethereum Virtual Machine): The runtime environment for smart contracts on Ethereum and EVM-compatible chains (like Polygon, BSC, Avalanche C-Chain, etc.). Saying an L1 or L2 is EVM-compatible means contracts written for Ethereum can run there with minimal changes. StableUnit is deployed on EVM chains.

EURʜᴏʟᴅᴇʀs / EUROPro: The planned Euro-pegged stablecoin in the StableUnit system (similar concept to USD Pro but for Euros). “EURʜᴏʟᴅᴇʀs” might be a stylized name like EURPro (to be confirmed by governance). It will function like USD Pro but targeting €1 value, enabling borrowing and holding in Euros.

Frax (FRAX): A stablecoin protocol which issues FRAX, an algorithmic stablecoin that is partially collateralized by assets (like USDC) and partially stabilized by its governance token FXS. Mentioned in comparison as Frax has different design trade-offs (centralization through USDC and algorithmic component via FXS).

FXS (Frax Share): The governance and value accrual token of the Frax protocol. FXS benefits from fees and seigniorage in the Frax system. Frax relies on FXS as part of its collateralization (when FRAX is under-collateralized, the remainder of backing is the implied value of FXS).

GHO: The native USD-pegged stablecoin introduced by Aave. GHO is minted by users who borrow it against collateral supplied in the Aave protocol. Aave’s governance (AAVE token holders) sets parameters for GHO. Mentioned in comparison as Aave’s entrant in the decentralized stablecoin space.

Immunefi: A bug bounty platform commonly used in DeFi. Projects like StableUnit may host their bug bounty programs on Immunefi, where security researchers can report vulnerabilities for rewards. (Relevant since StableUnit has a bug bounty program planned.)

Insurance Fund: A reserve fund in StableUnit that accumulates value (in USD Pro or other assets) to cover unexpected losses, such as bad debt from collateral liquidation shortfalls. The Insurance Fund ensures the stablecoin remains fully backed even if some borrowers default beyond their collateral. StableUnit’s insurance system includes a general fund and optional asset-specific sub-funds.

Liquidation: The process of closing a under-collateralized CDP by selling its collateral to repay the debt. If a borrower’s collateral value falls below the required threshold, the protocol will liquidate the position: collateral is taken and sold (or auctioned) for USD Pro to cover the debt and a penalty. In StableUnit’s case, this is done via the async MEV-resistant module to minimize loss.

Liquidation Penalty: A fee or extra collateral taken during liquidation to cover the system’s costs or to incentivize liquidators. For example, if your vault is liquidated, you might lose an additional 5–10% of collateral on top of what’s needed to repay debt, which goes to liquidators and the Insurance Fund. This exists to discourage users from allowing liquidation and to compensate those securing the system. (StableUnit’s efficient liquidations strive to keep this penalty low.)

LLAMMA (Lending-Liquidation AMM Algorithm): The novel mechanism used by Curve’s crvUSD stablecoin for managing liquidations. It continuously swaps between collateral and debt using an AMM curve, rather than discrete liquidation events. StableUnit doesn’t use LLAMMA, but is mentioned in comparison: StableUnit sticks to a more traditional vault model but is flexible to adopt such innovations if proven beneficial​.

LST (Liquid Staking Token): A token that represents staked cryptocurrency (like ETH) which continues to earn staking rewards while being tradable/usable in DeFi. Examples: stETH, rETH, csMATIC. StableUnit accepts LSTs as collateral, recognizing them as yield-bearing assets.

LRT (Liquid Restaking Token): A newer type of token from “restaking” protocols (like EigenLayer) where staked assets are pledged to additional networks or services. An LRT typically represents a stake that is providing security in multiple places and retains liquidity. StableUnit is forward-looking in potentially accepting LRTs as collateral, acknowledging the evolving staking landscape​.

LP Token (Liquidity Provider Token): A token you receive when you provide liquidity to a DEX or DeFi platform. It represents your share of the pool. For instance, if you provide ETH and USDC to Uniswap, you get an LP token that you can later redeem for your share of assets plus fees. StableUnit allows certain LP tokens (especially from stable or blue-chip pools) as collateral, effectively letting you borrow against liquidity positions.

LUSD: The USD-pegged stablecoin issued by the Liquity protocol, solely backed by ETH collateral. LUSD is mentioned in comparisons; it’s known for its decentralized nature (no governance, 0% interest loans) but limited collateral type.

MKR: The governance token of MakerDAO. MKR holders govern the system and also act as the backstop for DAI (if the system is undercollateralized, MKR can be minted and sold to cover the shortfall). In Maker, MKR accrues value through stability fees paid by borrowers (often via buy/burn or revenue sharing to MKR stakers in newer models). In comparisons, it’s noted that benefits in Maker go to MKR, not to DAI holders​.

Morpho: A peer-to-peer lending protocol that improves rates on top of platforms like Aave/Compound by matching users directly. It’s mentioned to compare philosophies; while not a stablecoin, Morpho’s goal is maximizing user yields which aligns with StableUnit’s user-centric yield distribution. Morpho’s innovation lies in reducing inefficiencies in lending markets.

NFT (Non-Fungible Token): A unique digital asset on the blockchain, often representing art or collectibles, but also used for identity and governance. StableUnitDAO uses an NFT Passport (an ERC-721 token) to confer governance rights alongside the fungible token. Each NFT might represent membership or specific voting power that cannot be replicated.

Offboarding – The process of removing a collateral asset from the StableUnit system. Offboarding involves disabling new loans with that asset, giving existing borrowers time to wind down positions, and eventually preventing the asset from being used altogether. This is done if the asset is no longer deemed acceptable risk or for strategic rebalancing. It’s usually gradual to avoid market disruption.

On Watch – A status indicating a collateral asset has elevated risk and is under special monitoring. When an asset is “On Watch,” the team may take interim protective measures and will likely propose changes to parameters or even consider offboarding. It’s essentially an alert to the community that this asset’s risk has spiked beyond normal bounds.

Oracle: A system that provides external data to the blockchain, commonly used for price feeds. StableUnit uses price oracles (Chainlink, Uniswap TWAP) to determine the real-time value of collateral assets. Oracles are critical and their security is paramount (to prevent price manipulation attacks). The Oracle Aggregator in StableUnit pulls data from multiple sources and applies sanity checks.

Overcollateralization: The practice of requiring collateral value to exceed the value of the loan (often significantly) to ensure loans can be repaid even if collateral prices drop. For example, a 150% overcollateralization means $150 of collateral for $100 loan. StableUnit is an overcollateralized stablecoin system (unlike algorithmic or fractional stablecoins) – this makes USD Pro more secure but means users can’t borrow the full value of their assets.

Peg: The target value of a stablecoin. USD Pro’s peg is $1 USD. Maintaining the peg means keeping the market price of USD Pro as close to $1 as possible. Peg stability is achieved through collateralization, arbitrage incentives, and potential direct interventions. De-pegging refers to a stablecoin’s price drifting significantly from $1 (or its target).

PoS (Proof of Stake): A blockchain consensus mechanism where validators stake coins to secure the network (rather than Proof of Work’s mining). Ethereum is now PoS. In context, StableUnit’s liquidation randomness is likened to Ethereum’s PoS proposer randomness​. PoS is also relevant to many collateral types (LSTs come from PoS chains).

Protocol-Owned Liquidity (POL): Liquidity that is owned and controlled by the protocol itself, rather than by external liquidity providers. A protocol might acquire POL via bonding mechanisms or by directing part of its revenue to hold assets in AMM pools. POL ensures more stable liquidity. StableUnit’s design, by rewarding USD Pro holders, might indirectly foster POL as the protocol could accumulate some USD Pro or collateral over time, but currently liquidity is likely provided by users. (Mentioned conceptually in comparisons as StableUnit doesn’t need to constantly emit tokens to incentivize liquidity​.)

RWA (Real World Asset): Tokenized real-world financial assets (like bonds, real estate, invoices). MakerDAO has integrated RWAs as collateral for DAI (e.g. tokenized short-term bonds, loans). While RWAs can add stability, they introduce centralization/trust. In StableUnit, the focus is on crypto-native collateral first; RWA could be added by governance, but the documentation emphasizes crypto assets to avoid issuer risk​.

RAI: A decentralized stable asset by Reflexer Labs that is not directly pegged to USD, but instead floats based on a governance-minimized control system. RAI is backed only by ETH and its target price moves slightly over time to counteract market demand (using a PID controller model). RAI’s goal is stability without a fiat peg. In comparisons, StableUnit targets fiat pegs (USD, EUR) but with decentralization similar in spirit to RAI (no reliance on fiat or centralized collateral).

Recapitalization – Refers to restoring the protocol’s capital position after a loss. If the insurance funds are exhausted by bad debt, the DAO may choose to recapitalize the system. This can be done by using DAO Treasury funds, or by minting and selling governance tokens (in MakerDAO, for example, they would mint MKR to cover Dai shortfall). It essentially means injecting new value to cover debts and bring the system back to solvency. This is the final backstop in the risk waterfall.

Risk Score (R) – The composite score from 0 to 10 assigned to a collateral asset by the Risk Framework. 0 indicates negligible risk (purely theoretical, no asset is actually 0 risk) and 10 indicates extremely high risk. It is derived from multiple risk factors including market volatility, liquidity, technical risk, etc. A lower R leads to more lenient parameters (lower collateral requirements, lower fees, higher debt ceilings), whereas a higher R leads to stricter parameters.

Safety Module: (General DeFi term) A reserve or staking module that protocols like Aave use to insure against shortfalls. For example, AAVE token stakers in the Safety Module put up funds that can be slashed if there’s a deficit. Maker’s analog is MKR mint/burn. StableUnit instead uses an insurance fund (funded by fees) as the first line of defense, rather than requiring immediate staking from SuDAO holders (though governance could choose to sell SuDAO tokens if Insurance Fund needed bolstering in extreme cases).

Smart Contract: Self-executing code on the blockchain that defines protocol rules. In StableUnit, various smart contracts manage vaults, oracles, USD Pro token logic, etc. Smart contracts enable trustless operation of StableUnit, but they must be secure (hence audits and formal verification efforts).

Stablecoin: A cryptocurrency designed to maintain a stable value relative to an external reference (usually a fiat currency like USD). USD Pro is a stablecoin pegged to USD. Stability is achieved through collateral and system design in the case of StableUnit, as opposed to centralized IOUs (USDC) or purely algorithmic approaches (older projects like UST, which failed​). StableUnit also plans for multi-currency stablecoins (like EUROPro).

Stability Fee: The interest rate charged on borrowed stablecoins in an overcollateralized system. In StableUnit, if you borrow USD Pro, you accrue a stability fee (annualized percentage) on your debt. It’s analogous to borrowing interest. MakerDAO sets a stability fee per collateral type, and StableUnit does similarly based on risk (as reflected in the Collateral Risk Table). Paying back a loan means you pay the principal USD Pro plus any accumulated stability fees.

SuDAO Token: The governance and utility token of StableUnit (often just called SU or SuDAO). It allows holders to vote in the StableUnitDAO and may also have a role in the liquidation system (e.g., staking for liquidator selection) as hinted by “exclusive access to liquidations” in the token overview​. SuDAO has a fixed supply issuance over 4 years, distributed among investors, team, and community as per the tokenomics section. It is not required to use the StableUnit protocol as a borrower or holder of USD Pro, but it is central for governance decisions.

TVL (Total Value Locked): The total value of assets deposited in a DeFi protocol. For StableUnit, TVL would include all collateral locked in vaults (in USD terms) and possibly any other assets in the system (like Insurance Fund holdings). It’s a measure of the size and trust in the protocol. The Circuit Breaker uses TVL to gauge withdrawal limits (15% of TVL in 24h, for example). Higher TVL generally indicates more usage and confidence in the system.

TWAP (Time-Weighted Average Price): A price average taken over a specified time window, used to smooth out volatility or manipulation. Uniswap V3 provides a TWAP oracle that projects like StableUnit can use as a backup price feed. By using a 10-minute or 1-hour TWAP, the protocol avoids reacting to momentary spikes or dips that could be caused by flash loans. TWAPs are part of oracle risk mitigation, ensuring price feeds are robust against manipulation​.

USD Pro (USDʜᴏʟᴅᴇʀs): The primary stablecoin of StableUnit, pegged to the US Dollar. “USD Pro” is the ticker/name (sometimes stylized as USDʜᴏʟᴅᴇʀs in documentation). It is fully backed by crypto collateral within StableUnit vaults. USD Pro is yield-bearing; simply holding it yields income distributed from the protocol’s revenue. It’s an ERC-20 token (on EVM chains) with additional logic to increase balances or value over time as yield is distributed. USD Pro cannot be frozen or blacklisted by design, and every unit is redeemable via paying back a CDP (or potentially via governance mechanisms) for collateral.

USDC / USDT / BUSD: Prominent centralized USD-pegged stablecoins: USDC (issued by Circle/Coinbase), USDT (Tether), BUSD (Binance/Paxos). These tokens are backed by off-chain reserves like cash and bonds. They carry custody and censorship risk (their issuers can freeze balances​, and their solvency depends on centralized reserves). StableUnit’s USD Pro is positioned as a decentralized alternative without those drawbacks​ – its backing is on-chain and transparent, and no one can freeze USD Pro globally.

Value-at-Risk (VaR) – A statistical measure used in risk management that quantifies the worst expected loss over a given time frame at a certain confidence level. For instance, “95% 1-week VaR of $5M” means there is a 95% chance that the worst loss over one week will not exceed $5 million (and 5% chance it will exceed $5M). We use VaR to help size insurance funds, ensuring they cover most loss scenarios for each asset.

Vault: Another term for a CDP – an account in the protocol where a user’s collateral is locked and their debt (minted stablecoins) is tracked. “Opening a vault” means creating a new collateralized position to borrow stablecoins. MakerDAO calls them Vaults now (they used to be called CDPs). In StableUnit’s front-end and docs, vault and CDP are used interchangeably.

Each term above is relevant to understanding how StableUnit works and how it compares to other DeFi systems. This glossary can be used as a reference as you read through the documentation or encounter concepts in the StableUnit app. If you come across other jargon or acronyms not listed here, feel free to ask the community – DeFi has a lot of lingo, but the StableUnit community is here to help everyone get on board with the future of decentralized stablecoins.