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# Glossary

Active Set: Only validators in the active set produce blocks and contribute to Kujira consensus. Inactive or deactivating validators do not earn staking rewards on staked KUJI.
Base Asset: Crypto trading pairs consist of two assets that can be traded with each other on an exchange and are also used to quote one cryptocurrency against another. In cryptocurrency pairs written first token / second token. The first token is always called the base asset. The second token is always called the quote asset. The trading pair shows the price of the base asset in terms of the quote asset. For example, KUJI/USK would track (or quote) the price of KUJI (the base asset) in terms of Kujira's native stablecoin USK (the quote asset).
Bond: Bonding is another word for staking. In the context of the Kujira network, KUJI can be staked or bonded to allow holders to start earning a proportional portion of generated revenue on the Kujira network based on the total of KUJI currently staked. Read more about KUJI staking here and read more about how to stake KUJI using BLUE here. Staking on Kujira is different than staking on other blockchains because rewards do not get converted to KUJI; rather, the staking rewards reflect real demand and supply forces on the Kujira blockchain.
CLOB: CLOB stands for Central Limit Orderbook. Essentially, it refers to an exchange that uses an orderbook to process transactions (buys and sells) rather than relying on an automated market maker (AMM). Kujira's FIN is a CLOB DEX which is not only significantly more capital efficient than AMMs like Uniswap, but also has the benefit of the centralized exchange model while also remaining decentralized and non-custodial.
Community Pool: The community pool is a pool of funds owned by the Kujira community that can be used to fund various initiatives. The Senate is a body of 9 passionate elected members of the Kujira community (who can be ejected at any time by popular demand) who oversee community pool grant funding requests for projects, partnerships, and other initiatives that benefit the community. As the Kuijra network's fees are paid using the assets being traded or bid on, the community pool is able to accumulate a diverse range of tokens. This gives it the flexibility to adapt to changes in market demand and remain resilient in the long term.
KUJI: KUJI is the central token powering the Kujira network. KUJI stakers receive a portion of all revenue generated by the Kujira network. Unlike other networks, all tokens on Kujira are native and gas can be paid using any token, not just KUJI. KUJI's value derives from the success of the Kujira decentralized application ecosystem.
Incentivize: Anyone can 'incentivize' (i.e. provide crypto tokens to) BOW pools to advertise their own products or indirectly increase the corresponding FIN token pair's liquidity by increasing that liquidity pool's token rewards to liquidity pool providers.
Inflation: Tokens and currencies are inflationary if their maximum supply increases over time. Kujira has 0% inflation. KUJI is not inflationary and the supply neither expands nor contracts over time.
Liquidity: Liquidity is the measure of how easily an asset can be converted into cash or into another asset (how long does take it take to make a trade, how possible is it to make a trade without changing the price of what is being traded, etc.).
Liquidity Pool: Liquidity Pools are collections of tokens or digital assets locked in a smart contract that provide essential liquidity to decentralized exchanges. On Kujira, BOW is FIN's largest market maker, and it is where Kujira ecosystem inhabitants can deposit tokens into liquidity pools.
LTV (Loan-To-Value): To borrow cryptocurrency, it is necessary to deposit crypto assets as collateral. The loan-to-value ratio is a ratio measuring the value of the loan to the value of provided collateral. When the LTV ratio exceeds a certain threshold, provided collateral starts to be liquidated. The loan-to-value ratio depends on the current price (of both the borrowed and the provided assets) and changes with those prices. The LTV ratio also changes when additional funds are provided, existing funds are withdrawn, extra funds are borrowed, or borrowed funds are returned. The Risk Ratio is a more general renormalized version of the Loan-to-value ratio that equals the current LTV ratio divided by the maximum allowed LTV ratio. Risk Ratio is convenient because all borrow positions are liquidated at 100% Risk Ratio. Put more simply, using shorthand: LTV =
$\frac{\text{amount of USK borrowed i.e. minted}}{\text{amount of backing collateral provided}}$
& Risk Ratio =
$\frac{\text{amount of USK borrowed i.e. minted}}{\text{amount of backing collateral provided}}\times\frac{1}{\text{Max allowed LTV}}$
Premium: A premium or discount is the terminology used for the discount on collateral purchased by the ORCA liquidation queue. For example, USK submitted to the 3% premium column in the ATOM USK market, purchases liquidated ATOM at a 3% discount once all bids at smaller premiums have been cleared out.
Quote Asset: Crypto trading pairs consist of two assets that can be traded with each other on an exchange and are also used to quote one cryptocurrency against another. In cryptocurrency pairs written first token / second token. The first token is always called the base asset. The second token is always called the quote asset. The trading pair shows the price of the base asset in terms of the quote asset. For example, KUJI/USK would track (or quote) the price of KUJI (the base asset) in terms of Kujira's native stablecoin USK (the quote asset).
Redelegate: Redelegation is the process of moving bonded/staked KUJI from one validator to another. This may happen for many reasons such as a validator increasing the commission rate, a user developing a fondness for a different validator, a validator temporarily falling outside of the active validator set, etc. Either way, redelegation allows users to avoid instantly redelegate their KUJI without having to go through the 14 day KUJI unstaking period to switch validators.
Risk Ratio: To borrow cryptocurrency, it is necessary to deposit crypto assets as collateral. The loan-to-value ratio is a ratio measuring the value of the loan to the value of provided collateral. When the LTV ratio exceeds a certain threshold, provided collateral starts to be liquidated. The loan-to-value ratio depends on the current price (of both the borrowed and the provided assets) and changes with those prices. The LTV ratio also changes when additional funds are provided, existing funds are withdrawn, extra funds are borrowed, or borrowed funds are returned. The Risk Ratio is a more general renormalized version of the Loan-to-value ratio that equals the current LTV ratio divided by the maximum allowed LTV ratio. Risk Ratio is convenient because all borrow positions are liquidated at 100% Risk Ratio. Put more simply, using shorthand: LTV =
$\frac{\text{amount of USK borrowed i.e. minted}}{\text{amount of backing collateral provided}}$
& Risk Ratio =
$\frac{\text{amount of USK borrowed i.e. minted}}{\text{amount of backing collateral provided}}\times\frac{1}{\text{Max allowed LTV}}$
Stablecoin: Stablecoins are cryptocurrencies whose value is pegged, or tied, to that of another currency, commodity, or financial instrument. Stablecoins aim to provide an alternative to the high volatility of the most popular cryptocurrencies, including Bitcoin (BTC), which has made crypto investments less suitable for common transactions. USK is Kujira's 1st party native stablecoin.
Stake: In the context of the Kujira network, KUJI can be staked or bonded to allow holders to start earning a proportional portion of generated revenue on the Kujira network based on the total of KUJI currently staked. Read more about KUJI staking here and read more about how to stake KUJI using BLUE here. Staking on Kujira is different than staking on other blockchains because rewards do not get converted to KUJI; rather, the staking rewards reflect real demand and supply forces on the Kujira blockchain.
Total Value Locked (TVL): Total value locked (TVL) is the overall value of crypto assets deposited in a decentralized finance (DeFi) protocol. It is a key metric that can be used to understand underlying demand for that protocol. TVL is often not 'locked'. It can change rapidly with changing underlying circumstances. More TVL is generally associated with better liquidity.
Treasury: The Treasury is a collection of tokens that the Kujira Senate uses to fund projects, partnerships, and other initiatives that benefit the community. It is replenished through the community fund, which accumulates 2% of network fees from gas and transactions on the Kuijra network's first-party dApps, as well as from revenue share on third-party Kujira dApps. These funds are transferred to the treasury through governance, ensuring that it has a sustainable source of funding over time.
Unstake: Unstaking or unbonding is a 14 day process KUJI from one validator to another. This may happen for many reasons such as a validator increasing the commission rate, a user developing a fondness for a different validator, etc. Either way, redelegation allows users to avoid instantly redelegate their KUJI without having to go through the 14 day KUJI unstaking period to switch validators.
Validator: Kujira uses Tendermint consensus which relies on a set of validators that are responsible for committing new blocks in the blockchain. These validators participate in the consensus protocol by broadcasting votes that contain cryptographic signatures signed by each validator's private key. Validator candidates can bond their own KUJI and have KUJI "delegated", or staked, to them by token holders. Kujira has 75 active validators, but over time the number of validators can be increased with governance proposals. The validators are determined by the total number of KUJI tokens delegated to them — the top 75 validator candidates with the most voting power are the current Kujira validators. Validators and their delegators earn Kujira protocol revenue from transaction and gas fees through execution of the Tendermint consensus protocol. Note that validators can set a commission percentage on the fees their delegators receive as an additional incentive. You can find an overview of all current validators and their voting power on BLUE. If validators double sign or are offline for an extended period, their staked KUJI (including KUJI of users that delegated to them) can be slashed. The penalty depends on the severity of the violation. Read more here.