๐Glossary
ATTENTION: This document is a rough draft and hasn't been fully developed yet.
The contents here-in may be incomplete, out-of-date, and modified radically in future revisions.
Total Value Locked
Total Value Locked is represented by a number that indicates the total amount of assets within a DeFi system.
Sidebar
Dracula Protocol Sidebar
Staking
Deposit of Assets
When an on-chain transaction is executed to transfer assets, typically LP tokens or DRC tokens, to Dracula Protocol. Staked assets are utilized by Dracula Protocol to earn rewards for users who contribute assets. Rewards earned from deposited assets are returned to the user using The Drain mechanism.
Unstaking
Withdrawal of Assets
When a user chooses to remove assets currently being staked on the Dracula Protocol.
What is 'Front-Running'?
'Front-running' is a method transacting assets on a blockchain employed by automated trading computer programs known as a bot. When a bot is front-running that bot is searching pending transactions until it discovers a "victim" transaction in the blockchain mempool with a low gas fee offer and larger price slippage tolerance.
The bot engages in front-running by executing its own buy or sell order matching the contents of the existing "victim" order by with a larger, more expensive gas fee. The bot's "front runner" order has a higher gas fee which allows the order to "run to the front of the transaction queue" and is execute before the lower gas fee "victim" transaction is processed. The bot then turns around and resells the assets it just purchased to the "victim" transaction owner at a less desirable price but still within the slippage limits of the victim's initial transaction.
For example, if a user commits a transaction to buy DRC tokens on Uniswap using a medium/normal gas fee and price slippage set to greater than 1%, a front-runner bot will observe this transaction pending execution and issue its own identical transaction with a higher gas fee and buy the DRC token before the user's transaction executes (due to the bot offering to pay a higher gas fee.)
After the bot buys the tokens the bot immediately sells the DRC tokens to the user in their pending transaction at the now higher price, but within the slippage tolerance the user allowed. The greater than 1% slippage and lower gas price offering allowed the bot buy and resell the token and profit on the difference in price.
This type of front-running happens all the time on all popular DeFi indexes like Uniswap and SushiSwap.
Read more here; There are many solutions to help to mitigate front-running, but our general advice is setting a slippage of less than 1%. The lower the slippage the better.
Additional Terms
The Uniswap Glossary includes a larger list of terms used in DeFi and their signifigance.
Last updated
