Glossary

Parallel Finance is a user-focused DeFi protocol that has evolved to become a hub for DeFi use cases and solutions. As such, the project is moving at a fast pace and as we roll out new products and add new assets, we deem it fit to develop a glossary of terms to help our users get started and learn all the important information about the project, its architecture, assets, bridge, wallet, and other key technical features.
AMM: Automated Market Maker - ​​a substrate-based pallet that enables decentralized (non-custodial) and autonomous trading or exchange of assets. This autonomous trading mechanism removes the need for centralized third parties like exchanges, trading platforms, and financial entities and allows users to trade assets against liquidity pools without relying on any of these intermediaries.
Auction: The method used by projects to win a parachain slot from the relaychain
Bridge: A substrate-based pallet that acts as an intermediary that connects the Polkadot and Kusama Relaychain and parachains. It allow seamless interoperability and fluidity between them by enabling token transfer, data exchange, and feedback flow between the independent platforms.
Council: an elected body of on-chain accounts that represents the passive stakeholders of Parallel and/or Heiko. The council has two major tasks in governance: proposing referenda and vetoing dangerous or malicious referenda.
Crowdloan: A method used by projects to temporarily source tokens to win an auction for a parachain slot from a relaychain. The tokens that are gathered in this way and rewards are programmatically returned to the lender after the lease period is over or the crowdloan period ends.
Lease Period: The amount of time that a parachain can connect to the relaychain.
Liquid Staking: A method of staking where users receive a derivative form of their staked asset to help them remain liquid. The derivative asset can be used the same way the underlying asset is used and it help users have better capital efficiency and compound their reward.
Liquidity: An essential part of the DeFi ecosystem that is made up of a collection of assets locked in substrate-based pallet that facilitates decentralized trading, lending and farming.
Money Market: A DeFi protocol that allow users to put their idle assets to work — enabling them to borrow money by supplying collateral to the market and allowing others to deposit (lend) their assets to earn yield and compound their rewards.
Nominated Proof-of-Stake (nPOS): The type of Proof-of-Stake system used by Parallel Finance where nominators back validators with their own stake as a show of faith in the good behavior of the validator. nPOS differs from the more generic concept - Delegated Proof-of-Stake in that nominators are subject to loss of stake if they nominate a bad validator; delegators are not subject to loss of stake based on the behavior of the validator.
Nominators: Accounts that select a set of validators to nominate by staking their tokens. By appointing their stake, they are able to elect active set of validators and share in the rewards that are paid out. They are the second set of participants in the relaychain staking subsystem.
Off-chain: Refers to activities e.g transaction that takes place outside of the blockchain or not publicly accessible.
On-chain: Refers to activities e.g transactions that occurs on the blockchain, and the blockchain status is modified to reflect the occurrence and validity of the transaction.
Oracle: Any tool that provides aggregated price information about a given asset.
Pallet: A Turing-complete Substrate runtime module that functions in a similar way as a smart contract.
Polkadot JS: a collection of tools that interfaces with the Polkadot blockchain in a granular way. It includes a browser extension, UI, API, and other apps.
Parachain: A custom, project-specific blockchain that meets several characteristics that allow it to work within the confines of the Host (Relaychain). It is also known as “parallelized chain.”
Relaychain: The source blockchain that coordinates consensus and communication between parachains (and external chains, via bridges) and lends security to them. These relaychains are Polkadot and Kusama networks.
Slashing: The removal of a percentage of a staked asset (DOT or KSM) as a punishment when a validator misbehaves e.g attacks the network, runs modified software, or remains offline for an extended period. The slashed asset is added to the treasury. In a situation where slashing occurred due to a faulty runtime causing forcing validators offline through no fault of their own, the slashed asset may be reversed.
Staking: The method by which blockchain protocols that use the Proof-of-Stake consensus mechanism validate transactions, create new blocks, and secure the blockchain network. Users supply their assets for a certain period of time and are rewarded for helping to secure the network.
Treasury: a pot of funds collected through a portion of block production rewards, transaction fees, slashing, staking inefficiencies, etc.
Tokens: ​​A digital currency that represents a tradable asset on a blockchain. Parallel network accommodates several tokens with different utilities within its ecosystem. They include:
PARA - Parallel token, the native token of the Polkadot network-based Parallel Finance parachain. It is used for governance, network security, and execution of functionalities on the protocol's DeFi Dapp suite.
HKO - Heiko token, the native token of Heiko protocol, the Kusama-based sister parachain of Parallel Finance. It is used across the different products in the Heiko super dapp suite - Staking, AMM, Cross-Chain Bridge, Money Market, etc.
DOT - The DOT token is Polkadot’s native token. It can be used for governance over the network, staking, and bonding, as well as for paying fees.
KSM - The KSM token is Kusama’s native token. It can be used for governance over the network, staking, and bonding, as well as for paying fees.
sKSM - Staked Kusama, this is the minted derivative version of the KSM that is supplied to the Heiko staking pallet. It can be redeemed to KSM at a 1:1 ratio and it can be used as collateral, farm yield, and supplied to the platform’s money market to compound rewards.
cKSM - Crowdloan Kusama, this is the minted derivative version of the KSM that is supplied to the Heiko Crowdloan pallet. It can be redeemed to KSM at a 1:1 ratio and it can be used as collateral, farm yield, and supplied to the platform’s money market to compound rewards. The numbers next to cKSM, e.g cKSM-20/27 represent the batch of the cKSM
cDOT- Crowdloan DOT, this is the minted derivative version of the DOT that is supplied to the Parallel Crowdloan pallet. It can be redeemed to DOT at a 1:1 ratio and it can be used as collateral, farm yield, and supplied to the platform’s money market to compound rewards. The numbers next to cDOT, e.g cDOT-2/17 represent the batch of the cDOT
sDOT - Staked DOT, this is the minted derivative version of the DOT that is supplied to the Parallel staking pallet. It can be redeemed to DOT at a 1:1 ratio and it can be used as collateral, farm yield, and supplied to the platform’s money market to compound rewards.
Unbond: The process of unstaking your asset. Once the unbond waiting period elapses, the relaychain will transfer the unstaked asset to Parallel, and it will be available for withdrawal.
Validators: A node that secures the relaychain via staking DOT or KSM, validate proofs from collators on parachains and vote on consensus along with other validators. They are active participants in the relaychain staking subsystem.
Wallet: A wallet allows you to send, receive, hold and monitor your cryptocurrency asset. However, it is based on cryptographic principles and uses blockchain to send, receive and store transaction information.
Yield Farm: An investment strategy in DeFi that involves locking or staking your tokens to get rewards in the form of transaction fees or interest. It is similar to earning interest on the money you keep in your bank account.