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Glossary

Ethereum Fundamentals​

Vitalik​

Founder of Ethereum and a core thinker behind decentralized computation and on-chain economics.
Vitalik proposed Ethereum in 2013 to extend blockchain utility beyond simple payments by introducing programmable smart contracts.

Ethereum (ETH)​

A programmable blockchain supporting smart contracts and decentralized applications.
Cypher is deployed on Ethereum Layer 1 (L1), inheriting L1 security and finality.

Smart Contract​

Self-executing code stored on Ethereum. Once deployed, it runs as written without intermediaries.
Cypher's AMM, Factory, Launchpad, and incentive systems are implemented as smart contracts.

Gas​

The fee paid to execute transactions or calls on Ethereum. Costs vary with network demand.
All Cypher interactions (swaps, launches, claims, locks) require gas.

EVM (Ethereum Virtual Machine)​

The execution environment that runs Ethereum smart contracts. Ensures deterministic behavior across nodes.

Wallet​

A cryptographic key manager that lets users hold tokens and sign transactions (e.g., MetaMask, Rabby, Frame).
Required for swaps, launches, locking, and claims in Cypher.

Layer 1 vs Layer 2​

  • Layer 1 (L1): Ethereum mainnet with maximum security and decentralization.
  • Layer 2 (L2): Scaling networks that settle to L1. Lower fees and higher throughput, secured by L1.
    Cypher focuses on Ethereum L1.

Market Structure and MEV​

MEV (Maximal Extractable Value)​

Economic value that block producers or builders can extract by reordering, inserting, or excluding transactions.
MEV commonly arises from arbitrage, liquidations, and sandwichable trades around AMMs.

Why it matters: MEV affects execution quality and final prices paid/received by users.

Searchers, Builders, and Relays​

  • Searchers: Identify profitable opportunities (e.g., arbitrage) and submit bundles.
  • Builders: Assemble transaction bundles into candidate blocks to maximize value.
  • Relays / Outsourced Building: Validators often use external builders; validators propose the built blocks.

Common MEV Patterns​

  • Arbitrage: Profiting from price differences across pools/venues.
  • Liquidations: Closing undercollateralized lending positions.
  • Sandwiching: Placing transactions around a user swap to extract value from price impact.

Practical MEV Mitigations (User Basics)​

  • Set appropriate slippage limits.
  • Prefer deeper liquidity pools to reduce price impact.
  • Consider private transaction submission (trusted private RPCs/relays) for sensitive trades.
  • For large orders, consider TWAP/splitting to reduce market footprint.

DeFi Core Concepts​

DeFi (Decentralized Finance)​

Open, programmable financial primitives on Ethereum. Protocols interoperate permissionlessly.
Cypher extends DeFi toward a capital-markets layer focused on liquidity, launches, and sustainable incentives.

DEX (Decentralized Exchange)​

On-chain exchange using smart contracts. Users trade directly from wallets.
Cypher is a DEX on Ethereum offering V2 and V4-style liquidity architectures.

AMM (Automated Market Maker)​

On-chain liquidity model where users trade against pools rather than order books.
Prices update based on pool reserves and the chosen formula.

Liquidity Pool (LP)​

A smart contract holding token pairs used for trading.
LPs earn a share of trading fees and may receive additional incentives.

Impermanent Loss (IL)​

LP value can underperform holding assets when prices diverge.
Incentives and pool selection help manage IL, but it cannot be fully eliminated.

Yield Farming​

Earning rewards by supplying liquidity or participating in campaigns.
On Cypher, yields are tied to real activity (fees, curated incentives, protocol earnings).

Real Yield​

Revenue sourced from actual protocol usage (e.g., swap fees, launch fees) rather than pure token emissions.
Distributed to eligible participants per protocol design (e.g., xCYPH lockers).

Bonding Curve​

Deterministic price function used in token launches.
As demand increases, price adjusts algorithmically. Supports transparent price discovery.

Cypher Protocol Components​

V2 Pools​

Constant-product pools (x * y = k). Simple, battle-tested structure suitable for many pairs.

V4 Pools​

Modular, hook-capable architecture enabling programmable liquidity behaviors and future strategy integrations.

The Factory​

Permissionless token launcher on Ethereum.
Deploys an ERC-20, initiates a bonding-curve launch, and seeds post-launch liquidity into the Cypher AMM.

Launchpad​

Curated launch venue for approved partners and larger raises.
Supports fixed-price sales, auctions, or whitelisted bonding-curve structures with integrated liquidity migration.

LP Incentive System​

In-house campaign engine for LP rewards.
Combines on-chain metrics with efficient Merkle-based claiming; supports V2 and V4 pools.

Merkle Root​

Compact cryptographic commitment used for scalable, verifiable reward claims via proofs of inclusion.

Genesis Pools/Farms​

Early-stage pools to bootstrap liquidity.

Protocol Earnings​

Fees and revenues generated by Cypher components (e.g., swap fees, launch-related fees).
Distributed to eligible participants per protocol design (e.g., xCYPH lockers) to support real-yield alignment.

Broader Ecosystem and Metrics​

TVL (Total Value Locked)​

Total on-chain value deposited in a protocol. Indicates scale and adoption but should be weighed alongside liquidity depth and volume.

Liquidity Depth​

Capital available at/around current prices. Deeper pools generally reduce slippage and improve execution quality.

Price Impact and Slippage​

  • Price impact: How much the trade moves the pool price.
  • Slippage: Allowed deviation between quoted and executed price.
    Tighter settings protect users but can cause reverts in volatile markets.

Oracles and TWAP (High-Level)​

  • Oracles: Provide price data to contracts.
  • TWAP: Time-weighted average price used to smooth short-term volatility.
    Useful for integrations and risk controls; separate from instantaneous pool spot price.

Risk and Operational Hygiene​

Approvals​

ERC-20 approvals allow contracts to move tokens on a user's behalf.
Best practices: Approve only what's needed - periodically review/revoke unused approvals via reputable tools.

Contract Risk​

Any on-chain interaction carries smart contract risk.
Favor audited, widely used components when possible and understand campaign parameters before participating.

Phishing and Impersonation​

Always verify URLs, contracts, and signatures.
Never sign transactions or messages you do not understand.