# Glossary **Backwardation** When the price of the futures is lower than the spot price of the underlying asset. #### Collateral ratio When borrowing on a fixed rate protocol, this is the value of the collateral, in debt terms, relative to the size of the debt. #### Composability Ofter referred as 'money lego' thesis: it refers to the idea of building new DeFi protocols on top of others (e.g. Contango is built on top of fixed-rate markets, and at the same time it could be leveraged by new protocols to create structured products on top of it). #### Contango When the price of the futures is higher than the spot price of the underlying asset. #### Expiry date The settlement date at which the price of the futures is identical to the spot. #### Flash swap An atomic transaction where output tokens are sent to the recipient *before* enforcing that enough input tokens have been received. See [Uniswap docs](https://docs.uniswap.org/protocol/V2/guides/smart-contract-integration/using-flash-swaps). #### Fixed-rate market A market that offers the possibility to borrow and lend assets at a fixed rate for a fixed amount of time. E.g [Notional](https://notional.finance/) or [Yield](https://yieldprotocol.com/). #### Forward A forward contract is a derivative to buy or sell a specific asset at a set price by a certain date in the future. A forward contract is privately negotiated by two counterparties and It is only settled at maturity. #### Funding rates Variable interest rate on the underlying debt, charged periodically by derivative exchanges to keep the price of perpetual futures tethered to the index price of the underlying asset. #### Futures A futures contract is a forward contract with standardised terms and is settled on a daily basis. #### Index price manipulation The manipulation that can occur when futures are cash settled. See [this article](https://medium.com/coinflex-official/physical-delivery-vs-cash-settlement-adoption-vs-market-manipulation-86e8cbd48837) for more details. #### Inverse contract E.g. an ETHDAI inverse contract is simply the opposite pair DAIETH, so it’s quoted in ETH and all margin and PnL calculations are also denominated in ETH. #### Leverage Borrowed capital that allows traders to amplify their buying or selling power. #### Linear contract E.g. an ETHDAI linear contract is quoted in DAI and all margin and PnL calculations are denominated in DAI. #### Liquidity pools Crowdsourced pools of tokens that facilitate trading without an order book between buyers and sellers. The deeper the liquidity of the pool, the smaller the price impact of each trade. #### Margin ratio This is the value of the margin, posted by a trader, relative to price to open a position. #### Price impact The change in price that is directly caused by the size of a trade. Larger transactions cause higher price impacts. It differs from slippage, which is caused by external broad market movements, unrelated to the trade. See more at [1inch](https://help.1inch.io/en/articles/4585109-what-is-price-impact-vs-price-slippage-in-defi). #### Spot market A market that offers swapping assets at the spot price. eg. [Uniswap](https://uniswap.org/). #### Tokenized NFT position An ERC-721 Non-Fungible Token that represents ownership of a position. Tokenizing a position allows the independent transfer of its ownership without the need to update Contango's internal accounting. This enhances composability, as positions can be bought and sold on a secondary market or in a private transaction, and potentially used as collateral in third party protocols. --- # Agent Instructions: 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://contango-2.gitbook.io/exchange/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.