Minitswap Terminology - Initia Docs

INIT Token Variants

Term	Definition
$INIT$	The vanilla Initia INIT tokens on the Initia L1
$m$	The destination rollup that the user wants to bridge to
$OpINIT$	The variation of the INIT tokens bridged directly from the Initia L1 to the destination rollup m
$IbcOpINIT$	The variation of the INIT token that was bridged from Initia L1 to the rollup m through OP Bridge, then subsequently back to the L1 through IBC

Bridges

Term	Description
IBC Bridge	The Inter-Blockchain Communication Protocol used as a bridging solution between rollups. Bridging in both directions is instantaneous.
OPINIT Bridge	Initia's implementation of an optimistic bridge to be used as the primary bridge between the Initia L1 and all rollups. Deposits into rollups are instantaneous, but withdrawals have a waiting period.

Actors

Term	Description
Virtual Pool	The liquidity pool used to facilitate the swaps. Initially, the pool starts at a size V, with a virtual IbcOpINIT balance of V and a virtual INIT balance of V. The exchange rate for swaps through the pool is determined by the StableSwap formula. The Virtual Pool does not allow the amount of IbcOpINIT tokens to be less than V because, in such cases, it is more economical for the user to use the OP Bridge directly.
Liquidity Provider	A user that provides INIT token liquidity to the Minitswap DEX. Unlike conventional DEXes, Minitswap only allows for single-sided INIT token deposits.
Peg Keeper	A virtual market participant implemented into the DEX that automatically swaps INIT tokens for IbcOpINIT tokens directly before or after all user swaps. The aim of the peg keeper is to maintain a swap price close to 1 before fees.
User	The end user using the Minitswap DEX who seeks to swap IbcOpINIT tokens into INIT.

Parameters

Symbol	Term	Description
$V$	Virtual Pool size	Virtual Pool size: An on-chain governance-set parameter that defines the size of the virtual liquidity pool. A larger value increases the total available swap liquidity for Minitswap and helps facilitate a larger swap volume, all else being equal.
$B$	Peg Keeper’s $IbcOpINIT$ token balance	Peg Keeper's IbcOpINIT token balance: This balance increases when a user swaps IbcOpINIT tokens for INIT and sometimes decreases when a transfer and swap in the opposite direction occurs.
$I$	Virtual Pool imbalance	This is defined to be the ratio of the Virtual Pool size V and the Peg Keeper balance B. The ratio measures how far the virtual pool currently deviates from the initial state. When there is a large volume of swaps in only one direction, the ratio increases.
$R_{fr}$	Fully Recovered Ratio	Defines the ideal proportion of IbcOpInit vs. INIT in the virtual pool. For example, a ratio of 0.6 implies that the ratio of IbcOpInit to INIT is 6:4. When a user performs a swap, the pool ratio is compared to the Fully Recovered Ratio. If the current pool is greater, the Peg Keeper will swap the IbcOpInit tokens for INIT tokens.
$R_{max}$	Max Ratio	A governance-controlled value that dictates the largest Fully Recovered Ratio value allowed.
$f$	Flexibility	A governance-controlled variable that modifies the Peg Keeper's tolerance towards imbalance. A higher flexibility means that a low target ratio can be maintained even with a high imbalance. When the flexibility is low, the Peg Keeper will interfere less frequently compared to high flexibility, ceteris paribus.