This is a glossary of commonly used terms throughout ScoutX and the Litepaper
- Traders: buy, sell, redeem player tokens on the AMM. Pay transaction fees.
- Liquidity Providers: provide liquidity in exchange for some upside on the platform.
- Management: create, deploy, manage software. They may be paid through tx fees directly or by holding governance tokens providing rewards and upside potential.
- Governance: owners of the governance token that can vote on relevant policies and parameters for the platform, invested in the growth of the platform.
- Scout Token: A scout token will be utilised for governance purposes. While the exact properties, features, and benefits of it are undefined at this stage the important thing to note is that it will be different from a player token or a stable coin (for eg. USDC) used to purchase a player token.
- Player Token: A player token denotes a position in a player belonging to a specific sport. A player token can be of two types - Long and short. Buying a long-player token denotes a holding in that player, whereas buying a short player token denotes a short position in that player. A player token can only be purchased with a stable coin (for eg. USDC)
- Tournament: A tournament is a set of matches that a player can be a part of. If he participates in a tournament, the relevant matches would appear for him on the platform and by extension, it would also have an impact on that player’s tokens. A tournament is different from a tour.
- Tour: A tour can be used interchangeably with season or market. A tour can be looked at as a set of tournaments that further include a set of games. A tour is considered to be a unique market for which there will be separate trading volume and liquidity for eg. Player X CAN be a part of the PGA tour 2022-23 and the European tour 2022-23. The player token prices can vary across tours and will have different liquidity. At the end of the tour, the player tokens will expire and automatically be sold back to the AMM at the expiry price i.e. based on end of season earnings. For eg. If Jon Rahm earns a total of $10 million by the end of PGA and before the season ends his price is $99, his player token will expire (automatically sold) at $100 at the end of the season.
- Shorts: As the name suggests if the user has a short position in a player token, he is said to have shorted that player. This is also different from a holding because the user sold the player token without buying it and collateral is involved here.
- Market Order: A market order is the default type of buy or sell order which executes at the current market price.
- Limit Order: A limit order is the type of order where a user can specify a limit price when creating this order. This order will remain open and will only get executed when the limit price is reached. For eg. If the Long token price of Nadal is $50 and the user places a limit order to buy Nadal with a limit price of $45, this means that the order will only get executed when the price of Nadal falls to $45. Orders not filled will remain open and will expire after 30 days (TBD).
- Transaction Deadline: Transaction deadline is the time period within which if the order is unable to be placed for some reason, it will expire. This is not to be confused with a limit order and limit order expiry. A transaction deadline is on order placement while the limit order expiry is on order execution.
- Slippage Tolerance: A slippage tolerance defines the slippage/price movement from the best price you’re willing to accept for the execution of this order. For e.g., if a user is trying to buy an Ashleigh Barty token for $100 and he sets slippage tolerance as 1%, this means he’s willing to accept a price deviation of 1% with the maximum buy price of $101 for this token.
- Customer Funds Escrow: All funds paid in to buy the player tokens goes into this escrow, and this escrow is used to pay back funds when tokens are sold to the platform. (may want to figure out how to make it more capital efficient, but this will introduce risk).
- Player Token Reserves: Tokens for each player are “stored” here and tokens leave this reserve when a trader buys and enter this reserve when a trader sells. Assuming there is some maximum number of token sets (each set is one token per player) allowed to be sold, the store for some player’s tokens could be empty if all sold out. It may be necessary to adjust the maximum number dynamically (e.g., as a function of the estimated risk and amount of funds locked in the insurance liquidity pool). If the super-set of all possible players is not a 100% known at the beginning of the season, we should create a “default/other” token that can account for any players that may join mid-season (for whom new tokens may need to be introduced, or for simplicity, they are simply captured in this category, this would also let us limit the number of player tokens to say the top 100 players).
- Insurance Liquidity Pool: This pool stores funds needed to guarantee that all traders can be paid back in the worst case. LP’s that provide funds to this pool get LP tokens that can be potentially converted to governance tokens. Here also, capital efficiency could be improved by allowing the possibility of lending, but will introduce risk and complexity to the system.
- Transaction Fee Pool: This pool stores the transaction fees charged on buy and sell trades. It is the principal source of guaranteed revenue for the platform, and potentially a source of rewards for governance token holders.
- Automated Market Maker (AMM): An Automated Market Maker (AMM) is a market participant that makes sure there are always some outcome tokens for every outcome in its inventory and that there is always a price that can be offered for an outcome.
- AMM Pricing Function: This is an on-chain module that updates the prices for all tokens as they are bought and sold. It maintains a spread between buy and sell prices to minimize arbitrage and risk. It has parameters that govern the tradeoff between slippage and risk (that may need to be updated even after deployment). It can use information from an Oracle about player winnings throughout the season to put a lower bound on the price for each token.
- Oracle: Provides information to the AMM pricing function on winnings to date by each player as the season progresses.
- Polygon: Polygon is a protocol and a framework for building and connecting Ethereum-compatible blockchain networks. Aggregating scalable solutions on Ethereum supporting a multi-chain Ethereum ecosystem.
- Decentralized Finance (DeFi): Decentralized finance (DeFi) is an emerging financial technology based on secure distributed ledgers similar to those used by cryptocurrencies. The system removes the control banks and institutions have on money, financial products, and financial services.
- Gas / Transaction Fee: A gas fee is something all users must pay in order to perform any function on the Ethereum blockchain.