Glossary
Unified reference of key terms used across all Ratio FX technical documentation.
A
| Term | Definition | Referenced In |
|---|---|---|
| Active Pool | Tier 1 liquidity pool used for live FX execution. Directly debited and credited on every swap. Does not hold permanent market risk; rebalanced to target via Reserve Pool. | FX Engine, Inventory Skew, Reserve Pool VaR, Smart Rebalancing, LP Withdrawals, Liquidity Onboarding, Fee & P&L |
| Active Pool Isolation | The architectural constraint that LP withdrawals never debit the Active Pool. Withdrawals are sourced exclusively from Reserve Pool and Yield Pool. | LP Withdrawals |
| Adjusted MID | Oracle mid-rate after inventory skew offset is applied. Used as the anchor for BID/ASK construction. | FX Engine, Inventory Skew |
| AML/CFT | Anti-Money Laundering / Counter-Financing of Terrorism. | Partner Onboarding |
| Arb Threshold | Maximum tolerable deviation between Ratio's Adjusted MID and external reference price. Calculated as Base Spread + MaxSkew_bps + Safety Buffer. | Inventory Skew |
B
| Term | Definition | Referenced In |
|---|---|---|
| Base Spread | Minimum spread floor covering LP yield, infrastructure, and compliance. Set per corridor in corridor_configs, but can be overridden per transaction size band via the fee tier's spread_override_bps. Never zero. Volatility, Liquidity, and Inventory Skew add-ons are always applied on top. | FX Engine, Fee & P&L |
C
| Term | Definition | Referenced In |
|---|---|---|
| Class A (FX-Only) | Liquidity Intent Class for LPs who opt out of yield. Deposits route 100% to Reserve Pool. Receives kXXX-fx tokens. Zero yield strategy risk. | Liquidity Onboarding, Partner Onboarding, Fee & P&L |
| Class B (Full Participation) | Liquidity Intent Class for yield-seeking LPs. Deposits split between Reserve and Yield Pool per admin ratio. Receives kXXX-full tokens. Full yield exposure. | Liquidity Onboarding, Partner Onboarding, Fee & P&L |
| ClassA Fee Tier Multiplier | A configurable per-partner parameter that adjusts the FX swap fee share for Class A LPs. E.g., 0.3x for strategic issuers, 1.0x for premium partners. | Liquidity Onboarding, Fee & P&L |
| COGS | Cost of Goods Sold. The rebalancing cost when external execution is worse than WAOP. Absorbed by KF (Protocol Treasury). | Fee & P&L |
| Concentration Risk | The risk that an excessive proportion of total Reserve exposure is held in a single corridor, making the position harder to hedge or clear. | Reserve Pool VaR |
| Confidence Multiplier | Statistical multiplier applied to daily volatility in VaR calculation. 1.645 for 95% confidence; 2.326 for 99% confidence. | Reserve Pool VaR |
| CorridorRegistry | Backend service that loads all corridor and protocol configuration from the database at startup. Replaces hardcoded constants. Provides fee tier resolution, corridor config lookup, and protocol parameter access. Adding a new corridor requires only a database insert and registry reload — zero code changes. | Architecture, Fee & P&L |
| Cooldown Period | The minimum lock duration after deposit before an LP can submit a withdrawal request. Varies by pool risk profile. | LP Withdrawals |
| Cooldown Save | An event where natural reverse flow reduces the Reserve Pool position below Soft Threshold during the cooldown, preventing an unnecessary Phase 2 execution. | Smart Rebalancing |
| Cooldown Timer | A configurable delay period that starts when a Reserve Pool crosses the Soft Threshold. Phase 2 only fires if the position remains above Soft when the timer expires. | Smart Rebalancing |
| Critical Deficit | Reserve Pool below 30% of target. Triggers aggressive Yield Pool recall, LP withdrawal queue pause, and Ops escalation. | Smart Rebalancing |
D
| Term | Definition | Referenced In |
|---|---|---|
| Dead Zone | The range of Inventory Ratio values around zero where no skew is applied, preventing micro-oscillations. | Inventory Skew |
| Deposit Routing Engine | The decision layer that reads LP intent class, pool states, and admin config to determine how deposit capital is allocated across Reserve and Yield pools. | Liquidity Onboarding |
| Deposit Ledger | On-chain record of each LP deposit with timestamp and amount. Used to track per-deposit cooldown expiry. | LP Withdrawals |
| Diversification Discount | A percentage reduction applied to the sum of corridor VaRs to account for imperfect correlation between corridors. | Reserve Pool VaR |
| Drawdown | Cumulative unrealised loss on the Reserve Pool's inventory position relative to its WAOP cost basis. | Reserve Pool VaR |
E
| Term | Definition | Referenced In |
|---|---|---|
| Early Withdrawal Fee | Optional penalty (disabled at launch) that allows LPs to bypass cooldown or queue by paying a fee. | LP Withdrawals |
| Effective Weight | Equity × ClassA_fee_tier_multiplier. Used for proportional distribution within Transaction and Global LP buckets. | Fee & P&L |
| EMI | Electronic Money Issuer. Licence category in Malaysia (BNM) and other jurisdictions. | Partner Onboarding |
| Equity (LP) | LP's USD-denominated deposit value + accumulated kUSD profits. Updated daily. Drives compounding of rewards. | Fee & P&L |
| Emergency RFQ | An immediate, unscheduled external quote request triggered by a VaR threshold breach. Bypasses the normal daily batch cycle. | Reserve Pool VaR, Smart Rebalancing, LP Withdrawals, Partner Onboarding |
| Emergency Threshold | The Reserve Pool deviation level (or VaR > 80%) that triggers Emergency RFQ via Reserve Pool VaR. All smart trigger logic is bypassed. | Smart Rebalancing |
| Emergency Tolerance | The maximum bps below WAOP that the protocol is willing to accept on an emergency clearance. Starts at 50 bps; widens on retries. | Reserve Pool VaR |
| External RFQ | Request for Quote submitted to external market makers (Binance, Wintermute, OTC partners) when Active Pool depth is insufficient for the requested size. | FX Engine, Partner Onboarding |
F
| Term | Definition | Referenced In |
|---|---|---|
| Fee Tier | A transaction size band with its own fixed fee, variable fee rate, and base spread override. Each corridor has multiple fee tiers — larger transactions hit higher tiers with lower fees. Configured per corridor in the fee_tiers database table. | Fee & P&L |
| Fee Tier Override (Partner) | A per-partner customisation of fee tier rates for a specific corridor. Allows strategic partners to receive lower fees than the standard tier schedule. Stored in partner_fee_tier_overrides. | Fee & P&L, Partner Onboarding |
| FIRM Quote | A binding, executable quote that locks inventory and carries a hard expiry timestamp. | FX Engine |
| Fixed Fee (toToken) | The flat fee component of the platform fee, denominated in the destination currency (e.g., 10,000 IDR for USD→IDR). Converted to source currency at oracle rate and deducted from the input amount. Varies by fee tier. | Fee & P&L |
G
| Term | Definition | Referenced In |
|---|---|---|
| Global Fee Pool | The 20% share of swap profit distributed to LP pools NOT involved in a swap's corridor. Accumulated in Fee Contract; distributed via periodic harvest. | Fee & P&L |
| Gross Inventory Exposure | Total USD-equivalent value of all stablecoin inventory held in the Reserve Pool across all open batches. | Reserve Pool VaR |
H
| Term | Definition | Referenced In |
|---|---|---|
| Hard Threshold | The Reserve Pool deviation level above which Phase 2 fires immediately with no cooldown. Position is too large to wait for reverse flow. | Smart Rebalancing |
| Hypercare Period | The first 30 days post-go-live with enhanced monitoring, daily reconciliation, and weekly performance calls. | Partner Onboarding |
I
| Term | Definition | Referenced In |
|---|---|---|
| INDICATIVE Quote | A wide reference price for display or planning purposes only. No inventory reservation or expiry commitment. | FX Engine |
| Inventory Ratio (IR) | (CurrentBalance − TargetBalance) / TargetBalance. Measures how far the Active Pool is from its target, expressed as a fraction. | Inventory Skew |
| Inventory Skew Offset | A directional adjustment to the mid-rate (in bps) designed to attract flow that reduces pool imbalance. | FX Engine, Inventory Skew |
K
| Term | Definition | Referenced In |
|---|---|---|
| k (Sensitivity Constant) | Controls the steepness of the skew response to inventory deviations. Higher k = more aggressive skew for the same IR. | Inventory Skew |
| KF (Protocol Treasury) | The 50% share of swap profit retained as protocol revenue. Absorbs losses by burning kUSD. Acts as protocol insurance layer. | Fee & P&L |
| kToken (kUSD, kIDR, kSGD, kMYR) | Rebasing LP tokens representing an LP's share of a pool. Balances auto-compound as fees are distributed via the Liquidity Index. | FX Engine, LP Withdrawals, Liquidity Onboarding, Partner Onboarding, Fee & P&L |
| kUSD | USD-denominated reward token minted to LPs as profit. Realisable via OffRamp or FX Engine conversion. | Fee & P&L |
| KYB | Know Your Business. Identity and compliance verification of corporate entities. | Partner Onboarding |
| kXXX-fx | FX-only kToken variant (e.g., kIDR-fx, kUSD-fx). Separate Liquidity Index that accrues FX swap fees only. No yield exposure. | Liquidity Onboarding |
| kXXX-full | Full participation kToken variant (e.g., kIDR-full, kUSD-full). Separate Liquidity Index that accrues both FX swap fees and Yield Pool profits. | Liquidity Onboarding |
L
| Term | Definition | Referenced In |
|---|---|---|
| Large Withdrawal | Withdrawal between $50K and $200K. Requires 24-hour advance notice and is processed in tranches via Yield Pool. | LP Withdrawals |
| Liquidity Index | The rebasing multiplier used by the Vault Contract to track cumulative fees and yield. Increases over time; kToken balances auto-compound. | LP Withdrawals, Liquidity Onboarding, Fee & P&L |
| Liquidity Intent Class | A classification (Class A or Class B) declared at deposit time that determines routing, fee tier, yield exposure, and kToken variant. Immutable per deposit. | Liquidity Onboarding |
M
| Term | Definition | Referenced In |
|---|---|---|
| Mark-to-Market PnL | Unrealised profit or loss calculated as the difference between current oracle mid-rate and WAOP, multiplied by inventory units. | Reserve Pool VaR |
| MaxSkew_bps | Per-corridor hard cap on the magnitude of the inventory skew offset, preventing extreme mid-rate distortion. | Inventory Skew |
| Mild Deficit | Reserve Pool between 60–80% of target. Triggers Ops alert and pauses new Yield Pool deployments. | Smart Rebalancing |
| MOU / MSA | Memorandum of Understanding / Master Service Agreement. Commercial agreements governing partnerships. | Partner Onboarding |
| MPI | Major Payment Institution. Singapore MAS licence for payment services. | Partner Onboarding |
| MSB | Money Services Business. US federal licence for money transmission. | Partner Onboarding |
O
| Term | Definition | Referenced In |
|---|---|---|
| Off-Peak Hours | Time periods when bilateral offsetting flow is less likely. Cooldown duration is reduced. | Smart Rebalancing |
| Orakl | Kaia-native pull-based oracle. One of two primary Web3 price sources. | FX Engine, Reserve Pool VaR |
| Overflow Capital | Class B Reserve overflow redirected to Yield Pool, tagged for priority recall during Smart Rebalancing deficit recovery. | Liquidity Onboarding |
| OTC Coordination | An off-protocol alternative for Whale withdrawals where Ops arranges direct stablecoin sourcing to minimise pool impact. | LP Withdrawals |
P
| Term | Definition | Referenced In |
|---|---|---|
| Peak Bilateral Hours | Time periods when bilateral offsetting flow is most likely (e.g., Asia business hours). Cooldown duration is at maximum. | Smart Rebalancing |
| Pending Queue | A FIFO staging queue for deposits that cannot be routed because target pools are at capacity. Auto-processes when admin raises capacity. | Liquidity Onboarding |
| PEP | Politically Exposed Person. Individual holding prominent public function; requires enhanced due diligence. | Partner Onboarding |
| Phase 1 (Internal Settlement) | The first rebalancing phase: Reserve Pool sends USDT to Active Pool and takes IDRX at oracle rate. Runs hourly or on threshold trigger. | Reserve Pool VaR, Smart Rebalancing, LP Withdrawals |
| Phase 2 (External Clearance) | The second rebalancing phase: Reserve Pool clears accumulated inventory via external RFQ or OTC. Runs daily or on inventory limit. | Reserve Pool VaR, Smart Rebalancing |
| Pool Health Gate | A check on Reserve Pool balance (as % of target) that determines whether the withdrawal queue operates normally, slowly, or is paused. | LP Withdrawals |
| Price Floor | The minimum acceptable execution rate for an Emergency RFQ. Set at WAOP minus Emergency Tolerance. | Reserve Pool VaR |
| ProtocolConfig | Smart contract storing core protocol parameters (revenue split ratios, cooldown periods, withdrawal thresholds). Admin-adjustable with role-based access control. Works alongside the CorridorRegistry (database) which stores corridor-specific parameters, fee tiers, skew calibration, and rebalancing thresholds. | Fee & P&L, Architecture |
| PSP | Payment Service Provider. | Partner Onboarding |
| Pyth | Push-based oracle providing ~400ms FX price updates. One of two primary Web3 price sources. | FX Engine, Reserve Pool VaR |
Q
| Term | Definition | Referenced In |
|---|---|---|
| QBR | Quarterly Business Review. Structured partner performance and relationship review. | Partner Onboarding |
R
| Term | Definition | Referenced In |
|---|---|---|
| Rebalance Amount | The volume sent to Phase 2 for external execution: Current Deviation minus Target Residual. | Smart Rebalancing |
| Reserve Pool | Tier 2 pool that absorbs inventory risk from the Active Pool during Phase 1 internal rebalancing. Holds market risk until cleared via Phase 2 external RFQ/OTC. | FX Engine, Inventory Skew, Reserve Pool VaR, Smart Rebalancing, LP Withdrawals, Liquidity Onboarding, Fee & P&L |
| Reserve Pool Capital | Total USD-equivalent value of all assets in the Reserve Pool. Used as the denominator for VaR ratio calculations. | Reserve Pool VaR |
| Reserve Pool Health | The Reserve Pool's current balance as a percentage of its target. Four tiers: Healthy (>80%), Mild Deficit (60–80%), Significant Deficit (30–60%), Critical Deficit (<30%). | LP Withdrawals |
| Residual Factor | Multiplier applied to the Soft Threshold to calculate the Target Residual buffer left in the Reserve Pool after Phase 2 execution. | Smart Rebalancing |
| RESTRICT | System state where maximum spread is applied and only one trade direction ermitted per corridor. | FX Engine |
S
| Term | Definition | Referenced In |
|---|---|---|
| Significant Deficit | Reserve Pool between 30–60% of target. Triggers Yield Pool recall, slows LP withdrawal queue, and starts deficit cooldown timer. | Smart Rebalancing |
| Skew Effectiveness Ratio | Volume attracted in skew direction divided by total volume for corridor. Target > 55%. | Inventory Skew |
| Soft Threshold | The Reserve Pool deviation level that starts a cooldown timer. Below Soft, no action is taken. At or above Soft, the system waits for cooldown to expire before potentially firing Phase 2. | Smart Rebalancing |
| SOL | Stablecoin Orchestration Layer. Ratio's core infrastructure layer. | Partner Onboarding |
| Standard Withdrawal | Withdrawal under $50K. Processed via normal queue from Reserve Pool (if healthy). | LP Withdrawals |
| Swap-Driven Deficit | Reserve Pool below target because Phase 1 settlement repeatedly pulled stablecoins to cover Active Pool deficits. Fixed by Phase 2 buy-back. | Smart Rebalancing |
| State Cap Modifier | Multiplier applied to MaxSkew_bps based on the current State Engine output (NORMAL=1.0×, PROTECT=1.5×, RESTRICT=2.0×). | Inventory Skew |
| Synthetic Rate | MYR/IDR rate constructed as USD/IDR divided by USD/MYR when no direct oracle feed is available. | FX Engine |
T
| Term | Definition | Referenced In |
|---|---|---|
| Target Residual | The intentional buffer left in the Reserve Pool after Phase 2 execution: Soft Threshold × Residual Factor. Reduces Phase 2 re-trigger frequency. | Smart Rebalancing |
| Time-of-Day Profile | A per-corridor configuration that adjusts cooldown duration based on when bilateral flow is most and least likely. | Smart Rebalancing |
| Tranche | A sub-order created when a large request is split to stay within max size limits. | FX Engine |
| Tranche Execution | Large and Whale withdrawals are split into smaller tranches processed over time to avoid pool destabilisation. | LP Withdrawals |
| Transaction LP Reward | The 30% share of swap profit distributed to LP pools DIRECTLY INVOLVED in a swap's corridor. Triggers updateIndex() on Vault Contract. | Fee & P&L |
| Travel Rule | FATF requirement for originator and beneficiary information to accompany qualifying transfers. | Partner Onboarding |
U
| Term | Definition | Referenced In |
|---|---|---|
| UBO | Ultimate Beneficial Owner. The natural person(s) who ultimately own or control a legal entity (25%+ ownership threshold). | Partner Onboarding |
V
| Term | Definition | Referenced In |
|---|---|---|
| Variable Fee (bips) | The percentage-based component of the platform fee, expressed in basis points of the source amount. Varies by fee tier — larger transactions pay fewer bips. | Fee & P&L |
| VaR (Value-at-Risk) | The maximum expected loss on the Reserve Pool's inventory position over a 24-hour period at a given confidence level. | Reserve Pool VaR |
| Volume-Tiered Fee Schedule | The fee model where platform fees and base spread vary by transaction size per corridor. Replaces the flat fee model. Each corridor has independent tier bands configured in the database. | Fee & P&L |
| VaR Amplifier | Multiplier applied to k based on Reserve Pool VaR utilisation. Increases skew sensitivity as VaR approaches breach threshold. | Inventory Skew |
| VASP | Virtual Asset Service Provider. Regulatory classification for entities providing crypto/stablecoin services. | Partner Onboarding |
W
| Term | Definition | Referenced In |
|---|---|---|
| WAOP | Weighted Average Oracle Price. The break-even cost basis for a rebalancing batch; used to calculate realised PnL after external rebalancing executes. | FX Engine, Inventory Skew, Reserve Pool VaR, Smart Rebalancing, Fee & P&L |
| Whale Withdrawal | Withdrawal over $200K. Requires 72hour advance notice, daily tranches of max $100K, and OTC coordination is offered as alternative. | LP Withdrawals |
| Withdrawal Intent | An on-chain declaration by an LP of their intention to withdraw. Required for Large/Whale tiers to start the notice period. | LP Withdrawals |
| Withdrawal Queue | A FIFO queue that processes withdrawal requests subject to pool health gates. Can be in NORMAL, SLOW, or PAUSED state. | LP Withdrawals |
X
| Term | Definition | Referenced In |
|---|---|---|
| X-Partner-ID | UUID-based partner identifier included in all API requests for fee routing and audit trail. Permanent; revoked on offboarding. | Partner Onboarding |
Y
| Term | Definition | Referenced In |
|---|---|---|
| Yield Pool | Tier 3 pool that deploys idle liquidity into yield strategies (e.g., SuperEarn). Interacts only with the Reserve Pool. | FX Engine |
| Yield Pool Recall | The process of recalling capital from yield-generating strategies to replenish the Reserve Pool or fund LP withdrawals. | Smart Rebalancing, LP Withdrawals, Liquidity Onboarding |