Glossary

Key terms used throughout the Toros documentation.

A

Aave A decentralized lending and borrowing protocol. Toros uses Aave to build money market-based leveraged tokens through lending loops.

Asset Guard A smart contract that restricts which operations a Toros vault manager can perform on a specific asset or protocol. Guards enforce whitelisted interactions and prevent unauthorized transactions with depositor funds.

B

Bull / Bear Directional labels for Toros tokens. Bull tokens profit when the underlying asset rises (long). Bear tokens profit when the underlying asset falls (short). For example, BTCBULL3X is a 3x long Bitcoin token.

C

Collateral Assets deposited to back a position. In money market-based leveraged tokens, collateral is deposited into Aave to borrow against. In Everlasting Options, WBTC is the collateral backing the Covered Call LP.

Covered Call An options strategy where the holder earns income by selling upside exposure above a strike price. In Toros, the Covered Call LP earns funding and premium payments from Protected Leveraged Token holders.

Covered Call LP The liquidity pool that acts as the counterparty to Protected Leveraged Token holders in the Toros Everlasting Options marketplace. LPs supply WBTC and earn ongoing income from funding and premium fees.

D

Delta-Neutral A strategy with no directional exposure to the underlying asset's price. Returns come from sources other than price movement, such as funding rates or yield farming. Toros USD Market Neutral Yield (USDmny) is an example of a delta-neutral approach.

dHEDGE The underlying protocol that powers Toros vaults. dHEDGE provides the vault infrastructure, permission system, and smart contract framework. Toros is built on top of dHEDGE. See docs.dhedge.org for protocol-level documentation.

E

ERC-20 A standard interface for fungible tokens on Ethereum and EVM-compatible chains. All Toros products are ERC-20 tokens, meaning they can be held in any compatible wallet and transferred freely.

Everlasting Options Onchain options with no expiry date. Instead of a single upfront premium, users pay ongoing funding and premium fees. See Toros Everlasting Options.

F

Funding Rate A periodic payment between long and short positions. In perpetual futures markets, longs typically pay shorts in bullish conditions. Funding rates are a cost for perpetuals-based leveraged tokens and 1x tokens. In the Toros Everlasting Options marketplace, Protected Leveraged Token holders pay ongoing funding to the Covered Call LP as part of maintaining their downside protection.

G

GMX A decentralized perpetual futures exchange. Toros uses GMX to build perpetuals-based leveraged tokens and 1x tokens.

L

Lending Loop The mechanism used by money market-based leveraged tokens. Collateral is deposited into Aave, stablecoins are borrowed against it, the borrowed amount is used to buy more collateral, and the process repeats until the target leverage is reached. See Money Market-Based.

Leverage Amplified exposure to an asset's price movement. A 2x leveraged token targets roughly twice the price movement of the underlying asset.

Liquidation The forced closure of a leveraged position when collateral falls below the required threshold. Toros leveraged tokens use automated rebalancing to reduce effective leverage as prices decline, significantly reducing liquidation risk. Toros reports no forced liquidation events in over 4 years of operation.

Liquidity Pool (LP) A pool of tokens locked in a smart contract that provides liquidity for trading, lending, or other DeFi operations. In Toros, the Covered Call LP is a key component of the Everlasting Options marketplace.

Long / Short A long position profits when the asset price rises. A short position profits when it falls. Toros offers both long (bull) and short (bear) leveraged tokens.

M

Market-Neutral A strategy designed to generate returns regardless of whether the market goes up or down. Returns typically come from funding rates, yield farming, or arbitrage rather than directional price exposure.

Money Market A lending and borrowing protocol like Aave. Toros uses money markets to create leveraged positions by depositing collateral and borrowing against it in a loop. See Money Market-Based.

Minting / Burning The process of creating (minting) or redeeming (burning) Toros tokens. When you buy a Toros token, the protocol mints a new token and opens the corresponding position. When you sell, the token is burned and the position is unwound.

Multisig A wallet that requires multiple signatures (approvals) to execute a transaction. The dHEDGE multisig controls vault configuration and whitelisted contracts for Toros vaults. See Protocol Operations.

O

Oracle A service that provides external data (typically asset prices) to smart contracts onchain. Toros products use oracles from Chainlink, Pyth, GMX, and TWAP mechanisms. See Protocol Operations.

P

Premium A payment made for options exposure. In Toros Everlasting Options, Protected Leveraged Token holders pay an ongoing premium (rather than a single upfront cost) to maintain their downside protection. These premiums flow to the Covered Call LP.

Perpetual Futures (Perps) Futures contracts with no expiry date. Traders can hold long or short positions indefinitely, paying or receiving funding rates. Toros uses perps on GMX to build some leveraged tokens.

Protection Floor The price level below which a Protected Leveraged Token stops losing value. The floor is established through Everlasting Options and depends on the current strike price.

R

Rebalancing The automated process of adjusting a leveraged token's position to maintain its target leverage ratio. Toros rebalances based on how far the effective leverage has drifted from the target, rather than on a fixed schedule.

S

Slippage The difference between the expected price and actual execution price of a trade. Can occur during minting, burning, or rebalancing. See Slippage.

Strike Price The price level that defines the boundary of an options position. In Protected Leveraged Tokens, the strike price determines the protection floor. In the Covered Call LP, upside is capped above the strike price.

T

TVL (Total Value Locked) The total value of assets deposited in a protocol or vault. A common measure of the size and adoption of DeFi products.

TWAP (Time-Weighted Average Price) A pricing method that averages an asset's price over a time window. Used to smooth out short-term price manipulation in oracle feeds.

V

Volatility Decay The gradual erosion of value that affects leveraged tokens in sideways or choppy markets. Caused by repeated rebalancing locking in small losses during range-bound price action. See Volatility Decay.

Vault A smart contract that holds assets and executes a strategy automatically. Each Toros product is a vault that users deposit into by minting the corresponding ERC-20 token.

Vault Token The ERC-20 token you receive when depositing into a Toros vault. It represents your share of the vault's assets. The token value changes as the underlying strategy performs. You redeem (burn) the vault token to withdraw your share.

W

WBTC (Wrapped Bitcoin) An ERC-20 token backed 1:1 by Bitcoin. Used as collateral in the Toros Everlasting Options marketplace and Covered Call LP.

Whitelisting The process of approving specific contracts and assets that a Toros vault manager can interact with. Prevents unauthorized transactions with depositor funds. Managed through dHEDGE DAO governance.