I - L
I – L
I
Index Staking The act of locking index fund units in a smart contract to earn incentives, often tied to fund performance or governance participation.
Index Vault Tokens Tokenized representations of shares in an index. They reflect NAV (Net Asset Value) exposure and can be redeemed at the current value.
Index-Based Investing An investment strategy that tracks a structured basket of assets rather than selecting individual tokens.
Institutional Allocators Professional investors such as asset managers, treasuries, and family offices seeking secure and compliant access to digital asset exposure. (See Institutional Use Case for details.)
Institutional Custody The safekeeping of digital assets by regulated custodians, typically including insurance coverage, reporting, and compliance controls.
Internal Eligibility A protocol-defined screening system that determines whether an asset qualifies for index inclusion based on specific rules (liquidity depth, volatility, issuer risk, etc.). (See Eligibility Framework for details.)
K
KYC (Know Your Customer) A compliance process to verify the identity of individual users and prevent illicit financial activity. Standard in regulated financial environments. (See KYCa vs KYCb – when and why for details.)
KYB (Know Your Business) A compliance process to verify the identity and legitimacy of corporate or institutional entities. Often used alongside KYC. (See Institutional Onboarding Playbook for details.)
KYC/KYB The combined application of Know Your Customer (KYC) and Know Your Business (KYB) processes for both individuals and organizations. (See KYCa vs KYCb – when and why for details.)
L
Large Cap (> $1.5B Market Cap in Crypto) Digital assets with a market capitalization greater than $1.5 billion.
In traditional finance, large-cap equities usually refer to companies valued above $10–20 billion, reflecting much larger market scales.
In crypto, thresholds are lower due to the relative size of the asset class. Large-cap tokens are typically prioritized for index construction because of their liquidity, depth, and structural relevance
Layer 1 and Layer 2 Blockchains (L1 / L2) Base blockchains (Layer 1, e.g., Ethereum, Bitcoin) and scaling solutions built on top of them (Layer 2, e.g., Base, Arbitrum). Index funds and assets may operate across both layers.
Liquidity The ease with which an asset can be bought or sold without significantly impacting its price. High liquidity is critical for efficient index construction.
Liquidity Constraints Conditions that restrict the ability to execute trades at desired sizes or prices, often caused by low depth or wide spreads.
Liquidity Farming The practice of providing liquidity to decentralized exchanges or protocols in return for incentives, such as yield or governance tokens.
Liquidity Fragmentation A market condition where liquidity is spread across multiple venues (DEXs, CEXs), complicating execution and pricing.
Liquidity Screens Filters applied to exclude illiquid tokens from index eligibility, based on metrics like volume, spread, and order book depth.
Liquidity Threshold A minimum requirement of daily trading volume or market depth that an asset must meet to qualify for index inclusion.
Liquidity-at-Risk (LaR) A risk metric estimating the potential loss an index could face due to adverse price movements under low-liquidity conditions. (See Analytics Calculation for the formula.)
Log Returns for Volatility A mathematical method to calculate volatility by measuring log-normal price changes instead of linear percentage changes.
Long Position A trading or investment stance where an asset is purchased with the expectation that its value will rise. Long positions can be taken in spot markets (buying the asset directly) or in derivatives (via futures or options contracts). In traditional finance and crypto alike, taking a long position means being bullish on the asset.
Low-Volatility Assets Assets that demonstrate reduced price variance over time. Often prioritized in strategy indices designed for stable returns.
Last updated