Glossary

Account Abstraction (AA): A blockchain technology that allows for more flexible account types and transaction handling. It enables the creation of smart contract wallets with customizable security features and user-friendly interfaces, making blockchain interactions more accessible to mainstream users.

AMM (Automated Market Maker): A type of decentralized exchange system where prices are determined by a mathematical formula. Instead of matching buy and sell orders (like in a traditional exchange), users trade against a pool of tokens. This pool is funded by other users who earn fees for providing their tokens.

Arbitrum Nitro Stack: An Ethereum scaling solution that increases transaction speed and reduces gas fees by processing transactions off the main Ethereum chain and then reporting the results back.

Blockchain: A decentralized, distributed ledger technology that records transactions across multiple computers. It ensures transparency and security without the need for a central authority.

Capital: Financial assets or resources that can be used to generate income or invested to create more wealth. In traditional finance, this often refers to money, property, or equipment. In DeFi, capital typically refers to cryptocurrencies or tokenized assets that can be deployed in various protocols to earn yields, provide liquidity, or serve as collateral for loans. Efficient use of capital is a key concern in both traditional and decentralized finance, aiming to maximize returns while managing risk.

Capital Efficiency: The ability to maximize returns or output from a given amount of capital. In decentralized finance (DeFi), this refers to strategies that allow for higher yields with less locked-up collateral.

CASP (Crypto-Asset Service Provider): Companies or individuals that offer services related to cryptocurrencies. This could include exchanges where you can buy or sell crypto, wallet providers that help you store crypto, or advisors who provide guidance on crypto investments. Also known as a VASP (Virtual Asset Service Provider)

CEX (Centralized Exchange): A cryptocurrency exchange run by a company that oversees all transactions. Users typically need to create an account and verify their identity to use these platforms. Examples include Coinbase and Binance.

Collateral Markets: Financial markets where assets are used as security for loans. In Millicent One, these markets allow for overcollateralized lending using diverse asset classes, including real-world assets (RWAs).

Composability: In DeFi, this refers to the ability to combine different financial services or products. For example, you might be able to take a loan from one protocol and immediately use that loan in another protocol to earn interest, all in one transaction.

Compliance: Adherence to laws, regulations, and guidelines. For blockchain platforms like Millicent One, compliance involves implementing systems that meet regulatory requirements without compromising user privacy.

Crypto-Asset: Any digital asset that uses cryptography, peer-to-peer networking, and a public ledger to regulate the creation of new units, verify transactions, and secure the transactions without the intervention of any middleman.

Decentralization: The distribution of power and control away from a central authority, ensuring that no single entity has complete control over the network.

Decentralized Finance (DeFi): A financial ecosystem built on blockchain technology that operates without central intermediaries. It offers services like lending, borrowing, and trading through decentralized applications (dApps) and smart contracts.

Derivatives: Financial instruments whose value is derived from underlying assets, indices, or interest rates. Examples include futures and options contracts.

DEX (Decentralized Exchange): A peer-to-peer marketplace where cryptocurrency traders can transact directly without intermediaries, maintaining control over their funds and private keys.

EOA (Externally Owned Account) Wallets: The most common type of cryptocurrency wallet, controlled directly by a user's private key. Popular examples include Metamask and Trust Wallet. Unlike smart contract wallets, EOAs cannot execute code and have simpler functionality. They're the traditional method for interacting with blockchains, where each transaction must be manually signed using the account's private key. While EOAs offer direct control, they lack some of the advanced features and flexibility of smart contract wallets, such as social recovery or multi-signature capabilities.

Ethereum: A decentralized, open-source blockchain platform that enables the creation and use of smart contracts and decentralized applications (dApps). Launched in 2015, Ethereum introduced the concept of a blockchain that can run complex programs, going beyond simple value transfers. It uses its native cryptocurrency, Ether (ETH), for transaction fees and as a store of value. Ethereum has become the foundation for much of the decentralized finance (DeFi) ecosystem, hosting thousands of tokens and applications.

Ethereum Rollup: A scaling solution that processes transactions off the Ethereum main chain (Layer 1) and submits them back as a single transaction, increasing throughput and reducing fees.

Flash Loans: Uncollateralized loans in DeFi where borrowing and repayment must occur in the same blockchain transaction. They're often used for arbitrage or collateral swaps.

FIFO (First-In-First-Out): In the context of Arbitrum's transaction ordering system, FIFO refers to the default method of processing transactions. Transactions are ordered based on when they were received, with earlier transactions processed first. This approach aims to provide fair and predictable transaction ordering.

Futures: Financial contracts obligating the buyer to purchase, or the seller to sell, an asset at a predetermined future date and price.

Gas Fees: The cost to perform a transaction or execute a contract on a blockchain network. These fees are paid to network validators for processing transactions.

Gasless Transactions: A feature of Account Abstraction that allows third parties to pay for a user's transaction fees. This can significantly improve user experience by removing the need for new users to acquire cryptocurrency specifically for gas fees. It enables applications to sponsor transactions for their users, similar to how web applications typically cover their own server costs rather than charging users directly.

Governance Token: A cryptocurrency that gives holders voting rights in a blockchain project. Holders can influence decisions about the project's future, such as protocol upgrades or how to use treasury funds.

Governance-Gated Contract Deployment: A security measure where new smart contracts must be reviewed and approved by the community or network governance before being deployed. This reduces the risk of malicious code while retaining the spirit of decentralization.

Government Treasuries: Debt securities issued by a government to fund its operations. They're considered low-risk investments due to government backing. Types include Treasury Bills (T-Bills) for short-term (≤1 year) and Treasury Notes or Bonds for longer terms.

Hedging Strategies: Financial techniques used to offset potential losses in investments by taking an opposite position in a related asset.

Integrated Identity Layer: A system within a blockchain network that manages user identities securely and privately. It allows for compliance with regulations without exposing personal data.

KYC/KYB (Know Your Customer/Know Your Business): Regulatory processes requiring businesses to verify the identity of their clients to prevent illegal activities like money laundering and fraud.

Liquidity Pool: A collection of funds locked in a smart contract. Used by AMMs to facilitate trading by providing liquidity.

Liquidity Provision: The act of supplying assets to a market or exchange to facilitate trading. Liquidity providers (LPs) often earn fees or rewards for their contributions.

MEV (Maximum Extractable Value): The maximum amount of profit a miner or validator can make through their ability to include, exclude, or re-order transactions within the blocks they produce. While some forms of MEV can be harmful (like frontrunning), others can be beneficial to the network (like arbitrage that corrects price discrepancies). MEV is an important consideration in blockchain design and can impact network efficiency and user experience.

MiCA (Markets in Crypto-Assets Regulation): A regulatory framework proposed by the European Commission to regulate crypto-assets and their service providers in the European Union.

Millicent One: An incentivized blockchain platform designed for composable onchain finance using tokenized real-world assets (RWAs). It integrates financial primitives and an identity layer to enable sophisticated cross-asset strategies.

Money Market (Crypto): In decentralized finance (DeFi), a money market refers to a protocol or platform that facilitates the lending and borrowing of cryptocurrencies. These protocols allow users to deposit their crypto assets to earn interest (as lenders) or to borrow assets by providing collateral (as borrowers). Unlike traditional finance, crypto money markets operate 24/7 and often use over-collateralization to manage risk. Interest rates are typically determined algorithmically based on supply and demand. Examples include Aave, Compound, and Millicent One's mLEND protocol. These platforms play a crucial role in providing liquidity and enabling capital efficiency in the DeFi ecosystem.

Money Market Fund (Traditional Finance): A type of mutual fund that invests in short-term, highly liquid financial instruments such as cash, cash equivalent securities, and high-credit-rating, short-term debt-based securities such as U.S. Treasury bills and commercial paper. These funds aim to offer investors high liquidity with a very low level of risk, while providing returns similar to short-term interest rates. Money market funds are typically used by investors for cash management or as a safe haven during volatile market conditions.

Non-Custodial: A characteristic of blockchain wallets or platforms where users retain full control over their private keys and assets without relying on third-party custody.

Non-Transferable Tokens: Tokens that cannot be transferred or sold to other users. In Millicent One, popMILLI tokens are non-transferable and are earned through positive contributions to the network.

Options: Financial derivatives that give the holder the right, but not the obligation, to buy or sell an asset at a predetermined price within a specific time frame.

Oracle: Infrastructure that connects blockchains to external systems, thereby enabling smart contracts to execute based upon inputs and outputs from the outside world.

Oracle-less Options: Onchain options contracts that do not rely on external data feeds to determine asset prices, reducing reliance on third-party data and potential vulnerabilities.

Overcollateralized Lending: A lending practice where borrowers provide collateral that exceeds the value of the loan, reducing the lender's risk in case of default.

Passkey Logins: Secure authentication methods that use device-specific credentials or biometrics instead of traditional passwords or seed phrases. This enhances user security and convenience.

Perpetual Futures: A type of derivative contract popular in cryptocurrency markets. Unlike traditional futures, perpetual futures have no expiry date and can be held indefinitely. They use a funding rate mechanism to keep the contract price close to the underlying asset's spot price. Traders can take long or short positions with leverage, making them a popular tool for speculation and hedging in crypto markets.

popMILLI Tokens: Non-transferable tokens in the Millicent One ecosystem, awarded to users for positive contributions and participation. These tokens accrue yields from network cashflows.

Proof-of-Participation: Millicent's system for rewarding users who actively engage with the network. It uses tokens that represent shares of network fees and can only be earned, not bought.

Private Blockchains: Closed networks where access is restricted to authorized participants. They offer greater control and privacy but lack the openness and community benefits of public blockchains.

Public Blockchains: Open networks accessible to anyone, where data is transparent and participants can interact without permission. They may face challenges with scalability and compliance.

RWA (Real World Asset): Traditional assets like real estate, commodities, or stocks that have been tokenized on a blockchain, allowing them to be traded or used in DeFi applications.

Rollups: Layer 2 solutions that increase blockchain scalability by processing transactions off-chain and submitting aggregated transaction data back to the main chain.

Seed Phrases: A set of words generated by a cryptocurrency wallet that allows users to recover their funds if they lose access. Millicent One replaces seed phrases with more secure passkey logins.

Session Keys: Temporary cryptographic keys that grant specific permissions for transactions or interactions within a blockchain network. They enhance usability while maintaining security.

Smart Contract: A self-executing contract with the terms of the agreement directly written into code. They automatically enforce and execute the terms of an agreement when predetermined conditions are met.

Stablecoin: A type of cryptocurrency designed to maintain a stable value, often pegged to a specific fiat currency like the US dollar.

Timeboost: A feature in Arbitrum's transaction ordering system that allows users to pay an additional fee to prioritize their transactions. By using timeboost, a transaction can "jump the queue" and be processed more quickly than it would under the default FIFO system. This provides flexibility for users who need faster transaction processing and are willing to pay for it.

Tokenization: The process of converting rights to an asset into a digital token on a blockchain. This can be applied to both tangible assets (like real estate) and intangible assets (like voting rights).

Tokenomics: The study and design of the economic systems and incentives within a blockchain project, including token distribution, utility, and supply mechanisms.

TradFi: Short for "Traditional Finance," referring to the established, centralized financial industry, including banks, stock exchanges, and investment funds.

Treasury Bills (T-Bills): Short-term debt securities issued and backed by the U.S. government, typically with maturities of one year or less. They're considered among the safest investments due to their government backing. T-Bills are sold at a discount and don't pay regular interest, with the yield being the difference between the purchase price and face value. In DeFi contexts, efforts are being made to tokenize T-Bills for use as high-quality collateral or in yield-generating strategies.

USDC (USD Coin): A fully backed stablecoin pegged to the U.S. dollar. It is used in Millicent One as the native gas token to simplify transactions and enhance compliance.

Verifiable Credentials: Digital versions of physical credentials like driver's licenses or diplomas. In blockchain systems, they allow users to prove certain information about themselves without revealing unnecessary personal data.

Vertical Integration: A business strategy where a company controls multiple stages of production or distribution within the same industry. In Millicent One, this refers to integrating core financial applications directly into the network.

Web2: The current state of the internet characterized by centralized platforms, user-generated content, and interactive web applications.

Web3: The next generation of the internet focusing on decentralization, blockchain technologies, and user-owned data and assets.

Yield Farming: A practice in DeFi where users lend or stake their cryptocurrency tokens, earning rewards in the form of additional cryptocurrency.