Glossary
Glossary is the place where we show the words that frequently appear on the Sigmaswap Docs to provide better a understanding to users and readers of the entire content.
Automated market maker (AMM)
An automated market maker is an operational algorithm implemented by a set of smart contracts to manage liquidity reserves on the network (Hedera). Users can trade against these reserves at prices set by an automated market making formula.
Constant product formula
The automated market making algorithm used by Sigmaswap, derived from Uniswap.
The formula is x*y=k.
Hedera Token Service (HTS)
The Hedera Token Service enables the configuration, management, and transfer of both native fungible and non-fungible tokens on the public Hedera network. On top of ERC20 tokens that are widely known in many EVM blockchains, HTS provides a greater scale of advantages in many dimensions. Read more
Hence, Sigmaswap supports all standard HTS fungible token implementations.
Token Association
Before any interaction from users or contracts (including receiving a token) with any tokens on Hedera, involved accounts and contracts are required to sign an association.
Rent
Subject to Hedera Policy, there is a certain amount of fees charged on data storage for smart contracts. All contracts of SigmaSwap are auto–renewals. Entity Auto-Renewals and Expiry Window
Factory
A smart contract that deploys a unique smart contract for any HTS trading pair.
Pair
A smart contract deployed from the Sigmaswap Factory that enables and facilitates trading between two HTS tokens.
Pool
Liquidity within a pair is pooled across all liquidity providers.
Liquidity provider / LP
A liquidity provider is someone who deposits an equivalent value of two HTS tokens into the liquidity pool as a pair. Liquidity providers will face price risk and are compensated with a trading fee.
Mid price
The price between the best price of the sellers and the best price of the buyers which simply means the average price of the current buying and selling price being quoted which users can buy and sell tokens at that time. In Sigmaswap, this represents the ratio of the two HTS token reserves.
Price impact
The difference between the mid-price and the execution price of a trade. Price impact would not be effective or cause any effect unless swap function is called and executed.
Slippage
The changes of the price that move along in a trading pair when a transaction is submitted and when executed.
Core
The smart contracts that are essential for Sigmaswap to function. To upgrade the new version of core will significantly require a liquidity migration.
Periphery
External smart contracts that are useful, but not required for Sigmaswap to function. New periphery contracts can always be deployed without migrating liquidity.
Flash swap
A trade that uses the tokens being purchased before paying for them.
x * y = k
The constant product formula.
Invariant
The "k" value in the constant product formula.