> For the complete documentation index, see [llms.txt](https://altodex.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://altodex.gitbook.io/docs/additional-resources/glossary.md). # Glossary #### **Collateral** Assets pledged by a trader to back up leveraged positions. Collateral protects against loss and creates margin health. Alto accepts a variety of collateral, including ETH, BTC, stablecoins (USDC, USDT, and DAI), and eventually tokenized real-world assets (RWAs). *** #### **PnL (Profit and Loss)** A measure of trading performance: * **Unrealized PnL**: Gains or losses on an open position, fluctuating with market prices. * **Realized PnL**: Gains or losses locked in after a position is closed. *** #### **DAO (Decentralized Autonomous Organization)** a governance structure in which token owners, not a centralized authority, make decisions. The AltoDAO oversees protocol upgrades, treasury allocation, voting, and proposals in Alto. *** #### **Dutch Auction** An equitable liquidation process in which a liquidated position is put up for auction at a premium and then the price drops gradually until bidders intervene. This maintains transparency and stops bots from controlling liquidations. *** #### **Leverage** Borrowed exposure that allows traders to control larger positions than their collateral. For instance, using $1,000 in collateral to control $10,000 in exposure is known as 10x leverage. Adaptive leverage, which Alto employs, scales according to trader risk history and volatility. *** #### **Margin Ratio** The percentage that measures a trader’s collateral relative to their position size. * A high margin ratio = safer position. * A low margin ratio = closer to liquidation. *** #### **Liquidation** When a trader's margin drops below the maintenance threshold, the position is forced to close. Dutch auctions are used to handle this process on Alto, and the trader receives their surplus collateral back. *** #### **Vaults** Liquidity pools where LPs deposit assets to support trading. Alto offers three types: * **Delta-Neutral Vaults**: Hedged, low-risk. * **Directional Vaults**: Take long/short market exposure. * **Volatility Vaults**: High-risk, high-reward during volatile markets. Vault shares are tokenized as ERC-20s, enabling composability in DeFi. *** #### **Flat Service Fee** A clear, set fee associated with starting, maintaining, or ending a job. Alto is Shariah-compliant because it avoids interest-like structures by using flat fees instead of percentage-based funding. *** #### **Oracles** The protocol receives asset prices from decentralized data feeds. In order to guard against manipulation, Alto uses Chainlink as its main oracle with TWAP (time-weighted average price) backups. *** #### **Governance Token ($ALTO)** The Alto ecosystem's native token. It offers LP incentives, fee reductions, and governance rights. Deflationary buybacks, capped supply, and gamified incentive schemes are examples of tokenomics. *** #### **Adaptive Leverage** A system where leverage limits adjust dynamically: * Higher leverage in calm markets. * Lower leverage in volatile markets. * Skilled, responsible traders can unlock higher caps over time. *** #### **Ethical Mode** Shariah-compliant trading is made possible by an optional toggle. Features include only asset-backed markets, transparent risk parameters (no gharar), and flat fees (no riba). Shariah advisors provide oversight. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://altodex.gitbook.io/docs/additional-resources/glossary.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.