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.