# Glossary

## A

**AMM (Automated Market Maker)** A decentralized exchange mechanism that uses mathematical formulas to price assets instead of order books. BaseCase uses a variant called CPMM during the bonding phase.

## B

**Base** Coinbase's Ethereum Layer 2 network. BaseCase deploys exclusively on Base for low-cost, high-throughput transactions.

**Bonding Curve** A mathematical function that determines token price based on supply. In BaseCase, the bonding curve phase uses a virtual CPMM to bootstrap market liquidity.

**Bonding Phase** The initial market phase where users trade shadow shares against a virtual AMM. Ends upon graduation or deadline expiry.

## C

**CPMM (Constant Product Market Maker)** An AMM variant using the formula `x × y = k`. Price is determined by the ratio of reserves, and the product remains constant across trades.

## E

**ERC-20** Ethereum token standard defining fungible tokens. Post-graduation outcome tokens are standard ERC-20 tokens for Order Book compatibility.

## G

**Graduation** The transition from bonding phase to Order Book trading. Triggered when solvency reaches 100%.

## K

**k (Constant Product)** The invariant in CPMM mathematics: `vYES × vNO = k`. This value remains constant across all trades.

## O

**Order Book** A trading system that matches buy and sell orders at specific prices. Used for post-graduation trading in BaseCase.

**Outcome Token** ERC-20 tokens representing YES or NO claims on a market. Minted at graduation and redeemable for $1 if the outcome wins.

**Optimistic Oracle** UMA's dispute resolution mechanism. Assertions are assumed true unless challenged within the dispute window.

## R

**Refund Mode** Activated when a market fails to graduate before deadline. Users claim pro-rata vault shares.

**Resolution** The determination of a market's outcome (YES or NO wins). Performed by UMA Optimistic Oracle.

## S

**Shadow Shares** Virtual position entries during bonding phase. Not on-chain tokens; converted to ERC-20 tokens upon graduation.

**Slippage** The difference between expected and executed trade price. Increases with trade size in CPMM systems.

**Solvency** The ratio of vault balance to maximum liability. Must reach 100% for graduation.

## U

**UMA** Universal Market Access. Decentralized oracle protocol used for market resolution.

**USDC** USD Coin. Circle's dollar-pegged stablecoin used as BaseCase collateral.

## V

**Virtual Reserves (vYES, vNO)** Mathematical variables simulating AMM reserves. Used for price calculation without real token backing.

**Vault** Central contract holding all USDC deposits. Pays out winners at resolution.