Glossary

A

AMM (Automated Market Maker): A decentralized exchange mechanism that uses mathematical formulas to price assets, enabling trading without traditional order books.

ATM (At-the-Money): A warrant where the strike price equals the current underlying valuation.

B

Bermuda-Style: Exercise style allowing exercise only during specific windows (quarterly + events), between American (anytime) and European (expiry only).

C

Call Warrant: A derivative giving the holder the right to profit from an increase in the underlying’s valuation above the strike price.

Cash Settlement: Settlement method where the exerciser receives USDC equivalent to the intrinsic value, rather than actual shares.

CPMM (Constant Product Market Maker): AMM formula where x × y = k, used by Uniswap and PIPO.

Covered Warrant: A warrant issued by a financial institution (not the underlying company) and backed by collateral.

D

Dual-Market: PIPO’s architecture with both Call (bullish) and Put (bearish) warrant markets.

E

Exercise Window: Specific time period during which warrants can be exercised for settlement.

Expiry: The date after which a warrant can no longer be exercised and becomes worthless if OTM.

I

Intrinsic Value: The profit that would result from immediate exercise: max(0, Valuation - Strike) for calls.

ITM (In-the-Money): A warrant with positive intrinsic value.

K

KYB (Know Your Business): Entity verification process for corporate/institutional users.

KYC (Know Your Customer): Identity verification process for individual users.

L

LP (Liquidity Provider): User who deposits assets into AMM pools to facilitate trading.

LP Token: Token representing a proportional share of an AMM pool.

N

Notional: The face value of a warrant position, typically $1 per token.

O

Oracle: System providing off-chain data (company valuations) to smart contracts.

OTM (Out-of-the-Money): A warrant with zero intrinsic value (current valuation below strike for calls).

P

Physical Delivery: Settlement method where the exerciser receives actual shares from the SPV (VIP only).

Put Warrant: A derivative giving the holder the right to profit from a decrease in the underlying’s valuation below the strike price.

R

Reserve: Collateral backing warrants (SPV shares for calls, USDC for puts).

ROFR (Right of First Refusal): Company’s right to match any offer for shares before allowing transfer.

Rollover: Extending warrant exposure by swapping near-dated for far-dated warrants.

S

Settlement: The process of converting exercised warrants into USDC (or shares).

Slippage: The difference between expected and actual trade execution price.

SPV (Special Purpose Vehicle): Legal entity holding private company shares to back call warrants.

Strike Price: The target valuation at which warrant payoff is calculated.

T

Time Value: Portion of warrant price above intrinsic value, reflecting possibility of favorable movement.

TVL (Total Value Locked): Total assets deposited in AMM pools.

U

Underlying: The private company whose valuation determines warrant payoff (e.g., SpaceX, OpenAI).

V

VIP: High-value users with KYB verification eligible for enhanced services.

VWAP (Volume Weighted Average Price): Average price weighted by trading volume over a period.

W

Warrant: A derivative security giving the right (not obligation) to profit from underlying price movements.