Glossary
Short definitions for terms used in the Mento V3 docs. For full context, see Overview and FPMMs.
AMM (automated market maker)
A pool that sets swap price by a rule (e.g. formula or oracle) rather than an order book.
CFMM (constant-function market maker)
An AMM whose trading function depends only on reserves (e.g. constant product xy = k). Price is derived from reserves and moves only when someone trades; no oracle in the rule. LVR and slippage arise from this design.
CDP (collateralized debt position)
A position where you deposit collateral and borrow a stablecoin. Used for synthetic Mento stables.
Circuit breaker
A rule that can halt trading when conditions are abnormal (e.g. oracle stale, price move too large). In V3, BreakerBox and OracleAdapter gate when the pool accepts swaps.
DEX (decentralized exchange)
A place to swap tokens without a central custodian; trades are executed by smart contracts.
FPMM (Fixed-Price Market Maker)
An AMM where the swap price is fixed to an external oracle rate (minus fee). No reserve-based curve; no curve slippage; no LVR from a stale pool price.
FX (foreign exchange)
Exchange of one currency or currency-like asset for another at a rate (e.g. USDC/USDm, EUR/USD).
Invariant
A quantity the protocol keeps unchanged by every allowed operation. In V3 FPMMs: I = V / S (value at oracle per LP share). This holds under all operations when we ignore fees and incentives; in practice, swap fees and the rebalance incentive affect the exact accounting.
Liquidity strategy
A smart contract allowlisted by a pool that can call the pool's rebalance function (e.g. Reserve, CDP).
LVR (loss-versus-rebalancing)
In curve-based AMMs, loss to LPs when arbitrageurs trade against a stale pool price. In an FPMM the pool always quotes the oracle, so LVR from a stale curve is zero.
Mento stables
Mento stablecoins: USDm, EURm, GBPm, and others. Track fiat; obtainable via swap (FPMM) or borrow (CDP).
Oracle
An external price feed the protocol trusts. In V3, each pool uses an oracle to set the swap rate.
Rebalance
When the pool's reserve ratio drifts from the oracle, an allowlisted liquidity strategy can take one token from the pool and return the other at the oracle rate (capped incentive).
Reserves
The two tokens held by a pool. Swaps change composition; value at oracle is preserved (minus fees).
TradingLimitsV2
Mento V3 mechanism: caps on per-token net flow over 5-minute and 1-day windows. Limits how much the pool can be drained in one go. (TradingLimits v1 applied to Mento V2.)
Value protection
Rule that every swap must not decrease the pool's reserve value at the oracle (after fees). If the oracle is wrong and trading is not halted, value can still be extracted.
See also: Overview · FPMMs · Oracles & circuit breakers.
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