- Algo-stable or Algostable
- An algorithmic stablecoin. This is a token that is controlled by code, with the goal of maintaining a pre-determined price. Typically, the pre-determined price that an algo-stables is meant to maintain (see “pegged”) is a currency, such as the US Dollar, or another token, such as ETH, BNB, AVAX, FTM, etc.
An algo-stable does not always succeed in maintaining the price they are meant to.
- An audit is the process by which a project hires a neutral third party to review their code and ensure it is free of bugs and not vulnerable to exploits or hacks. Some audit providers also ensure that the code is also safe for investors, in that the team cannot manipulate the code to cause investors to lose funds. Most audit providers compile a report detailing their findings and any changes the project team has made to make the code safer.
Audit providers typically host their reports on their website or in a Github repository.
We have seen projects create fake audit reports for themselves. If a project provides you with a link to a PDF report, instead of a link to the audit on a website or GitHub the audit provider controls, check directly with the audit provider to ensure they did in fact audit the code in question.
- Some tokens are coded in such a way that they charge a “tax” on each transfer (see transfer tax), and some or all of that tax is used to provide additional liquidity for the token on whichever DEX it is listed on. This process happens automatically, in the background.
- A DEX is a “decentralized exchange” where users can buy, sell and provide liquidity for an asset. Rather than trading a token through on a centralized exchange like Binance or KuCoin, where Binance and KuCoin are in control of all the assets, with a DEX there is no one person or entity is controlling the token prices or liquidity.
When a token is sold, it’s price goes down a bit, depending on how much liquidity there is. When a token is bought, it’s price goes up a bit depending on how much liquidity there is.
DEXs charge a small fee for executing trades, a portion of this fee is typically given to liquidity providers.
- See “yield farming.”
- Technically, a fork is a copy of an existing protocol’s code with changes. However, this term has come to include not just copies with edits, but direct copies with no edits.
A “Tomb fork” would use the code from Tomb, and may or may not have edits to the code from the original Tomb code.
- Governance Token
- A governance token is a regular token that can be bought and sold, but also gives the holder voting rights for its associated protocol.
- The maximum amount of funds the team can collect in a presale. If they are selling 100 tokens at 2 $USDC each, the hardcap would be 200 $USDC. Not all projects meet their hardcap goal.
- A project with KYC has revealed the identity of one or several of their team members to a “KYC Provider.” In the event of a rugpull, “hack” or other scenario where the team acts maliciously in such a way that investors lose funds, the KYC provider will take action against the individual(s) who’s identity they have.
Different KYC providers use different methods to verify the identity of the KYC’d individual(s), and different KYC providers take different action when a rugpull occurs. You need to check the policies of each KYC provider to see exactly how their process works.
- A token’s liquidity is the amount of funds that are housed on a DEX which a user can use to trade the token. When a protocol or an individual creates liquidity for a token, they provide pair the protocol’s token and another token (often AVAX, BNB, FTM, USDC, etc.) together through the DEX’s “Add Liquidity” interface.
Having a large amount of liquidity – millions of dollars worth, for example, causes less volatility in the price of an asset versus a token with a much smaller amount of liquidity.
- Liquidity Pairs or LPs
- When liquidity is provided for a token, there are actually two tokens that are deposited at the DEX – the token itself, and a second token that it is paired with (often AVAX, BNB, FTM, USDC, etc.). Each token has it’s own address on the blockchain, and when two tokens are paired for liquidity, those paired tokens have yet another address on the blockchain.
If you provide liquidity at a DEX, you will deposit the two tokens and receive a third token back as a “receipt” for your deposit and those tokens, referred to as LPs, use that third address on the blockchain to identify and track them.
Many yield farms accept LPs (the receipt tokens) for deposit.
- Liquidity Provision
- When a token has been sold to investors in a presale, IDO, seed round, liquidity bootstrap event or some other means, the team will at some point make the token available for public purchase via a DEX such as Uniswap, PancakeSwap, SpookySwap, TraderJoe, etc. This process is known as “adding liquidity,” “liquidity launch,” or “liquidity provision,” and it means that anyone can purchase the token on the open market.
- Listing Rate
- The price a token will be listed at when liquidity is provided at a DEX.
- Move to Earn or M2E
- Similar to play to earn, these are protocols that reward users with tokens or some other asset for movement. Typically these projects use a mobile app to track a user’s movement, similar to Pokemon Go.
- NFT stands for “non-fungible token.” That means that unlike a token such as USDC, where every USDC token is identical to every other USDC token, each NFT is unique. Most NFTs will have an image or graphical component, so you can “see” what your NFT looks like when you connect your wallet to an NFT marketplace like OpenSea or MagicEden.
Most NFTs can be bought and sold on NFT marketplaces, assuming there is a willing buyer.
We think of NFTs as having 3 categories: art, utility and gaming:
Art NFTs exist solely for aesthetics. They don’t have any inherent utility. Investors purchase them because they like the artwork, as a status symbol, or because they believe other people will value the artwork and that will cause the price to go up.
Utility NFTs do something for the holder. You might see a yield farm that offers NFTs that give a % bonus or boost to the holder’s yield. Another example of a utility NFT is an NFT that can be staked, and it directly earns tokens that you can harvest and sell.
Gaming, or play-to-earn NFTs are made specifically for use in a blockchain game. Typically, these are your character or hero that represents your avatar in the game. Some P2E (play-to-earn) games will have equipment or other in-game assets in the form of NFTs, so you might have a hero NFT (your character), a sword NFT that is your character’s weapon, and a chainmail NFT that serves as your amor.
- Pegged or Peg
- When a token is pegged to another token, the first token is meant to have the same price as the second token. So a token pegged to ETH should have approximately the same price as ETH at any given time.
- Play to Earn or P2E
- These are blockchain games that reward the player somehow, most often with tokens. These tokens can be bought and sold, or used in-game for equipment, power-ups, etc.
Some P2E games require an initial investment, such as buying a hero NFT, while others require no up-front purchase to play.
- During a presale, investors can purchase tokens, NFTs, etc. directly from the protocol at a fixed price, rather than later on in the open market.
As it pertains to Ape O’Clock listings, any event we call a “presale” is open to the general public, meaning anyone can participate.
See Whitelist Presale and Public Sale also.
- Public Sale
- A public sale is the sale of a blockchain asset from the protocol directly to investors, after a whitelist sale (or private sale, or seed sale) has taken place. Public sales are open to anyone.
You’ll typically see a whitelist presale having the lowest price for an asset, the public sale price is a bit higher, and then listing price higher still.
For Ape O’Clock event listings, a project will be referred to as a public sale when there was a previous, limited sale not open to the public.
- A token who’s ownership has been renounced cannot be edited or manipulated by the protocol’s team. Investors often look for renounced token contracts because renouncing the contract means that the team cannot mint new tokens and sell them, crashing the price and causing investors to lose funds.
Some protocols choose not to renounce contracts because doing so also removes the team’s ability to make changes or edits that could be required in the future for the health of the project.
- Organizations that look at a protocol’s code for free with an eye towards investor safety, but do not conduct a full scale audit, provide a review. Some entities that provide reviews are RugDoc, JagoSafer, Interfi Network, SpyWolf, ContractChecker, etc.
Reviews are not as thorough as an audit.
- Risk to Earn or R2E
- These are a mix of staking and gaming. Most often, R2E protocols involve the purchase of an NFT, staking the NFT for rewards, and then leveling up the NFT’s potential for rewards with add-ons, power ups or equipment.
- ROI dApp
- ROI dApps are true ponzis – the profits one makes in a ROI dApp come solely from those depositing in the dApp after you. Once you deposit into an ROI dApp, you cannot withdraw that deposit. Instead, you collect “interest” each day; most ROI dApps will tell you how much interest you get per day. If no one deposits into the protocol after you, you will not be able to regain the amount you deposited.
- Staking involves depositing your tokens in a protocol to earn more of that token, or to earn a second token.
Some staking protocols charge a deposit fee, others “lock” your tokens for a pre-determined amount of time so you can’t withdraw them, and some have no restrictions at all.
Staking is differentiated from yield farming in that staking involves the deposit of one token, whereas yield farming involves depositing of liquidity pairs, although in common use the two are often used interchangeably.
- The minimum amount of funds a team can collect in a presale for the project to move forward. If a presale doesn’t meet the softcap, the team will usually refund investors. For an example, if a project is selling 100 tokens at 2 $USDC each with a softcap of 100 $USDC, they must sell at least 50 tokens for the project to proceed (50 tokens x 2 $USDC each = 100 $USDC).
- Whitelist Presale
- A whitelist presale is similar to a presale (see above), except that an investor must be pre-approved to participate. Like a presale, investors can purchase the assets directly from the protocol at a fixed price.
To participate in a whitelist presale, one might need to invite users to the project’s Discord, or participate daily in the general chat, or be an early follower on Twitter. Each project sets it’s own rules for how to qualify for their whitelist presale.
Ape O’Clock does not list whitelist presales, because most of our audience won’t be able to participate in them.
- Yield Farming
- A typical yield farm involves depositing your tokens into a protocol in exchange for earning the protocol’s tokens.
Some yield farms charge a deposit fee (most often 4%), which means if you deposit 100 USDC, your deposit fee would be 4 USDC.
You are typically able to withdraw the tokens you deposited (minus any deposit or withdrawal fees) at any time, and you are typically able to harvest your rewards (the tokens you’ve earned) at any time – which you can then sell, or hold on to.
Yield farming is differentiated from staking in that staking involves the deposit of one token, whereas yield farming involves depositing of liquidity pairs, although in common use the two are often used interchangeably.