Glossary
Core Concepts
Acquisition Price (): The verifiable price at which an issuer acquires a real-world asset. Recorded on-chain via cryptographic attestation and serves as the floor for token sales.
Asset-backed Token: Collection model where each asset mints a fixed number of tokens (e.g., 1,000 tokens per watch). Supply scales linearly with asset count.
CL AMM (Concentrated Liquidity Automated Market Maker): An AMM that allows liquidity providers to concentrate liquidity within specific price ranges, adapting its curve based on market conditions.
Collection: A curated set of authenticated real-world assets represented by fungible on-chain tokens. Can be asset-backed or fund-variable issuance.
Custodian: Third-party entity that physically holds and verifies real-world assets, providing the bridge between legal truth (off-chain) and economic truth (on-chain).
Economic Truth: Provable facts about tokens, supply, trades, and prices that live on-chain in blockchain state and smart contracts. Fully verifiable and composable.
Fund with Variable Issuance: Collection model where tokens are minted proportional to acquisition NAV. Supply scales with contributed value, not item count.
Guarded Pool Price: Manipulation-resistant price reference calculated as . Used as a safe starting point for new issuance.
Issuer: Whitelisted entity that acquires real-world assets, tokenizes them, and launches collections on Rarity. Acts as active market maker post-launch.
Legal Truth: Off-chain facts about ownership, custody, and authenticity that live in physical documents and legal registries. Not directly verifiable on-chain.
Price Discovery
Mark-to-Truth Auction: Mechanism to re-anchor market price to fundamentals when drift occurs. Uses committed capital (not opinions) to discover objective value.
NAV (Net Asset Value): Total asset value minus liabilities. For asset-backed tokens: .
Objective Price: Price that reflects verified acquisition values and current executable liquidity. Emerges from the intersection of proof (attestations) and market activity.
Pool Price (): Current mid-price from the AMM, representing real-time market consensus based on supply and demand.
RWAP (Reserve-Weighted Average Price): Price weighted by liquidity depth at various levels. Captures what's actually executable rather than what traded once.
Spot Price: Current traded price on the AMM, reflecting immediate market conditions.
TWAP (Time-Weighted Average Price): Price averaged over time to smooth out momentary volatility and resist manipulation.
Supply Management
Dutch Auction: Supply management mechanism where tokens start at a high price and decrease over time until demand meets supply or current pool price is reached.
Floor Price (): Minimum allowed price for newly minted tokens at a given time. Calculated algorithmically from guarded pool price.
Hold Period: Time buffer during which newly minted tokens are locked before trading. Prevents immediate dumps and allows market absorption.
Open Interest: Pre-committed buy orders that express demand before supply arrives. Enables fair price discovery and crowdsources liquidity for new assets.
Release Curve: Supply management mechanism that controls when and how quickly newly minted tokens can enter circulation. Uses convex schedules to release gradually.
Release Floor: Minimum price at which tokens can be released into the pool. Tracks the guarded pool price and never undercuts live liquidity.
Supply Management Mechanism: Protocol-enforced rules that control how newly minted tokens enter circulation to prevent disorderly price movements.
The Three Primitives
Proof: Cryptographic evidence that assets exist, are authentic, and were acquired at stated prices. Transforms subjective claims into verifiable facts.
Flow: The rate and manner in which newly minted tokens enter circulation. Prevents supply shocks and enables orderly market absorption.
Depth: Measurement of executable liquidity at various price levels. Provides manipulation-resistant pricing and stability.
Market Participants
Arbitrageur: Sophisticated trader who exploits price discrepancies between Rarity pools and external markets or between related collections.
Collector (Token Holder): User who acquires and holds collection tokens, gaining fractional ownership exposure to underlying assets.
External Asset Owner: Individual or entity who owns real-world assets and tokenizes them via custodian verification without selling to an issuer.
Liquidity Provider (LP): Participant who deposits tokens and stablecoins into the AMM to earn trading fees.
Trader: Participant who buys and sells tokens on the AMM for speculation, arbitrage, or portfolio rebalancing.
DeFi Primitives
Cross-Collateral: Ability for one deposit to back multiple positions simultaneously (loans, orders, futures) in the permissioned pool.
Liquidation: Risk management tool that trims underwater positions. Executed in slices to respect AMM depth and minimize market impact.
LTV (Loan-to-Value): Ratio of borrowed amount to collateral value. In Rarity, calculated from TWAP/RWAP windows with volatility buffers.
Perpetual Futures: Leveraged positions without expiration dates. Rarity's futures are oracleless, using internal AMM pricing (TWAP/RWAP) as reference.
Snapshot LTV: Practice of locking borrowing limits at the moment a position is opened or adjusted. Policy changes don't retroactively tighten existing positions.
Protocol Mechanics
Bonded Minting: Supply management mechanism where tokens are minted against deposited collateral, creating a price floor and redemption mechanisms.
Commit-Reveal Scheme: Privacy mechanism where participants commit to actions cryptographically before revealing them, preventing information leakage.
Cryptographic Attestation: On-chain proof of off-chain data (e.g., acquisition price) that can't be altered after the fact.
Privacy-Preserving Minting: Supply management mechanism using commit-and-reveal with banded disclosure to prevent panic selling while maintaining transparency.
Raredrop: Initial offering mechanism where newly issued tokens are listed at acquisition value on a CL AMM during a controlled launch period.
Slashing: Penalty mechanism where economic bonds are forfeited for misrepresentation or protocol violations.
Whitelisting: Permissioned issuance layer where only approved, reputable entities can launch collections. Trading remains permissionless.
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