# Glossary

## Key terms

* **AMM (Automated Market Maker)**\
  A protocol that automatically prices assets based on a mathematical formula, allowing users to trade without a traditional order book.
* **Bound Auth**\
  Bound's passkey-based authentication system that creates self-custodial wallets across BTC, EVM, and Solana — no seed phrases required.
* **bUSD**\
  Bound's native Runes-based stablecoin on Bitcoin, backed 1:1 by other stablecoins. Settlement layer for all Bound structured products.
* **BIP322**\
  A Bitcoin standard for signing arbitrary messages with a Bitcoin wallet. Used by Bound for API authentication.
* **Concentrated Liquidity**\
  An AMM model where LPs provide liquidity within a specific price range, allowing for more capital-efficient liquidity provision.
* **Diamond Hands**\
  Bound Launchpad's game theory mechanic. Long-term holders of a launched token earn a growing share of LP trading fees as other holders sell.
* **FROST Multisig**\
  Flexible Round-Optimized Schnorr Threshold Signatures. Bound uses a 3-of-5 FROST setup for decentralized Bitcoin transaction signing.
* **LP (Liquidity Provider)**\
  A user who deposits assets into an AMM pool to enable trading and earn a share of trading fees.
* **OP\_12**\
  A Bitcoin Script opcode repurposed by Bound to encode structured AMM data in dust-value outputs, enabling on-chain DeFi without smart contracts on Bitcoin.
* **PSBT (Partially Signed Bitcoin Transaction)**\
  A Bitcoin transaction format that allows multiple parties to add their signatures before a transaction is broadcast. Bound uses PSBTs for all trading operations.
* **Runes**\
  A Bitcoin-native fungible token protocol. Bound's AMM is purpose-built for trading runes on Bitcoin mainnet.
* **Sequencer**\
  A node operated by Bound and other stakeholders that validates transaction requests, coordinates signing, and broadcasts finalized transactions to Bitcoin.
* **SODAX**\
  The cross-chain swap infrastructure powering Bound's native asset swaps across BTC, ETH, SOL, and more.
* **Trading Wallet**\
  A 2-of-2 timelocked multisig wallet created on signup. Requires both your signature and Bound's co-signature. Enables near-instant trade execution. Bound's signature expires after 3 months.
* **UTXO (Unspent Transaction Output)**\
  The fundamental unit of value in Bitcoin. All Bound AMM operations are built around Bitcoin's UTXO model.
* **Virtual Mint**\
  Bound Launchpad's off-chain minting mechanism that mirrors on-chain mint UX while committing raised BTC to AMM liquidity instead of miner fees.

## FAQ

{% hint style="info" %}
FAQ content to be compiled from team and support channels. See VERIFY log item #46.
{% endhint %}


---

# 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://bound-1.gitbook.io/bound-docs/developer-guide/glossary.md?ask=<question>
```

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.