Glossary of Terms

Term	Description
AMM (Automated Market Maker)	A dynamic pricing mechanism that acts as the counterparty for all trades. It uses the IPOR Index and market demand to price interest rate derivatives while managing risk for liquidity providers.
Liquidity Pool (LP)	A collective pool of assets provided by depositors. These assets serve as the counterparty for swaps. LPs earn yield from contract fees, net payouts, and leveraged returns from underlying money markets.
IPOR Index	The benchmark reference interest rate for DeFi. It is sourced from various credit protocols and published on-chain. It serves as the "heartbeat" of DeFi, providing a risk-free rate for assets like USDT, USDC, DAI, and ETH
SOAP (Sum of All Payoffs)	A valuation metric used by the AMM to represent the net value of all outstanding derivative contracts in the pool.
IRS (Interest Rate Swap)	The primary derivative of the IPOR protocol. It allows users to exchange a fixed interest rate for a floating interest rate (or vice versa) without exchanging the underlying principal.
Payer (Pay Fixed, Receive Floating)	A swap position where the user pays a fixed rate and receives the floating IPOR Index rate. This is typically used to hedge against rising interest rates.
Receiver (Receive Fixed, Pay Floating)	A swap position where the user receives a fixed rate and pays the floating IPOR Index rate. This is typically used to hedge against falling interest rates.
IBT (Interest Bearing Token)	A tokenized representation of a position that accumulates interest over time based on the underlying protocol rates.
Spread	The difference between the fixed rate offered by the AMM and the current IPOR Index rate, used to compensate the pool for taking on risk.
Liquidation	The process of closing out a position when the collateral no longer meets the required maintenance margin, ensuring the protocol remains solvent.
IPOR Oracle	The system that delivers the IPOR Index data to the smart contracts on-chain.
Snapshot	A tool used by the IPOR DAO for off-chain voting and community sentiment tracking.
Atomist	A strategy designer or curator who designs the vault's investment logic. They define the "investment universe" by selecting specific assets, markets, and actions via Fuses. Typical Atomists include risk curators, asset managers, DAO treasuries, and protocols. See also here.
Alpha	An off-chain agent (often an automated bot or specialized strategist) responsible for executing a vault's strategy. Alphas monitor market conditions and trigger the rebalancing or movement of assets by calling specific Fuses. They act as the "brain" of the vault but are constrained by the security parameters set in the smart contracts. See also here.
Fuse	Modular, single-purpose smart contracts that allow a Plasma Vault to interact with external DeFi protocols (e.g., Aave or Curve). Each Fuse is designed to perform one atomic action— such as "deposit," "withdraw," or "claim rewards" — making the system highly composable and easy to extend without upgrading the core vault. See also here.
Substrate	The underlying target market or liquidity venue where capital is actually deployed. While a Fuse is the "connector" (the logic that executes the transaction), the Substrate is the "destination" (the specific financial environment). Example: If a Vault wants to earn yield on Morpho, the Fuse is the smart contract code that knows how to talk to Morpho's functions, while the Substrate is the specific Morpho Market (e.g., the USDC/wETH market) where the funds reside.