Glossary

Vaults and transactions

Vault: A Bitcoin Taproot output whose normal spending lock combines the customer and protocol signing sides.

Outpoint: A specific Bitcoin output, identified by transaction ID and output index: txid:vout.

Position: The lending account that associates collateral records with debt on Ethereum.

Position binding: The customer Bitcoin key, Ethereum owner, ceremony session and child index used to bind oracle commitments before funding. It is distinct from the Bitcoin outpoint later spent by a cheque.

Pre-vault: The production design’s refundable preparation output used before deposit activation.

Remainder vault: A new V2 output holding collateral left after a withdrawal or partial liquidation, with its own position binding, event commitments and address.

CET: Conditional execution transaction. Its Bitcoin contents are fixed and customer-authorized; the matching oracle reveal completes the protocol pre-signature for its event-keyed leaf.

Chequebook: The package of conditional transactions authorized for a vault.

Grid: The organization of covered outcomes across price, debt and lifecycle states.

Cascade: Parent and child transactions pre-signed against exact future remainder outpoints.

Settlement output: A protected Bitcoin payout with early acknowledgement, delayed recipient sweep and a recipient-authorized return completed by the council. These are three outcomes served by two script paths.

Surplus: Value owed back to the customer after settlement. Signed Bitcoin outputs may allocate BTC; Ethereum accounting can separately return an excess in the borrowing asset. The two must not be conflated.

Signing and authorization

MuSig2: The multisignature scheme combining customer and protocol participation in the vault’s key-path signature.

FROST: Threshold signing used for the protocol side of the vault. Participants use shares without reconstructing the group secret.

DKG: Distributed key generation: establishing the group key and participant shares without a trusted dealer.

Adaptor signature: A conditional signature that becomes complete when its matching secret is revealed.

Event-keyed cheque leaf: A vault spending path combining the customer key with the protocol key adjusted by a cheque’s oracle commitment. The customer signature commits to this leaf and the fixed transaction.

Protocol pre-signature: The incomplete protocol signature contribution for an event-keyed cheque. It becomes a valid signature under the event-adjusted key when completed with the matching oracle reveal.

Cooperative settlement leaf: The plain customer-plus-protocol vault path used for cooperative withdrawals. It is distinct from both cheque leaves and the downstream Settlement UTXO.

Secret nonce: Single-use signing material. Reuse across signing attempts can compromise a key.

0-of-N custody: No operator coalition can invent a vault spend without customer authorization.

Events and coverage

Attester: A participant that commits to and authorizes defined oracle events.

Oracle reveal: Completion material bound to the intended event, outcome and position.

Band / bucket: A covered price range and one of its defined subdivisions.

Epoch: A period used to organize oracle events and grid coverage.

Announcement horizon: The bounded future range for which oracle commitments are made available.

Rotation: An authorized re-vault and coverage-renewal transition. New outpoints have new relative clocks.

Release stamp: An eligible mixed-roster member’s statement of finalized debt-zero state. The attester also checks its own finalized observation before authorizing the release event.

Debt-bucket stamp: Authorization of the debt state used by the applicable lifecycle transaction.

Lapse closure: A pre-authorized closure for an inactive indebted position, with defined timing and settlement terms.

Roles and recovery

Signer set: Independent participants holding protocol key shares and performing protocol signing and validation duties.

Guardian Council: The watchdog role, also completing customer-authorized, budgeted vault vetoes.

Mixed stamp roster: The open signer, council and liquidity-provider roster for release and debt-bucket stamps; never signer-exclusive.

Liquidator / executor: A participant that completes and broadcasts an authorized liquidation and participates in settlement.

LLP: Liquidation Liquidity Pool: the production design’s facility for financing liquidation settlement.

Escape: The customer-only vault script path available after its relative block delay.

Veto: A customer-authorized, council-completed re-vault with a delay and bounded template inventory.

Lending and accounting

LTV: Loan-to-value ratio: debt value divided by collateral value.

Liquidation threshold: The collateral ratio used to determine liquidation eligibility, distinct from the maximum borrowing LTV.

Health factor: Collateral value multiplied by the liquidation threshold, divided by debt value.

Gateway: Ethereum entry point for authorized collateral actions and settlement.

Reserve: Ethereum collateral accounting, construction records and position gates.

Facade: Restricted collateral-accounting representation, with one unit per satoshi.

SPV: Verification of Bitcoin inclusion and chain facts from headers and transaction proofs; it does not by itself establish every vault-authorization fact.

Freshness gate: A restriction on new borrowing against stale coverage.

Settlement-pending interlock: A restriction on conflicting actions while collateral settlement is incomplete.

Two-sided finality: Finalized Ethereum reads and at least six confirmations for Bitcoin-derived actions.

CPFP: Child-pays-for-parent: fee acceleration through a child transaction, without rewriting the parent’s signed outputs.