Skip to main content

Glossary

AMM​

Automated market maker. PRISM uses constant-product AMMs to trade tranche tokens against USDC.

Constant-Product​

The AMM pricing rule x * y = k, where x and y are reserves of the two tokens in a pool and k is a constant. Each trade keeps the product unchanged and shifts price along the curve.

Credit Event​

An event that reduces vault assets and triggers the loss cascade. Examples include borrower default, partial loss, and recovery.

Default Cascade​

The reverse-priority loss application that absorbs realized losses Alpha → Core → Prime. Prime protection emerges from this ordering, not from any external guarantee.

Alpha Tranche​

The highest-risk tranche. Alpha receives residual upside but absorbs losses first.

Fixed-Point (Q64.64)​

Rational-number representation used for NAV math. Q64.64 stores values as 128-bit integers where the high 64 bits are the integer part and the low 64 bits are the fractional part. Avoids floating-point drift and gives deterministic on-chain accounting.

Liquidity Provider (LP)​

An account that deposits both sides of an AMM pool (a tranche token and USDC) and receives LP tokens representing a proportional share of pool reserves and accumulated fees.

Loss Bucket​

A program-controlled token account that holds USDC moved out of the vault reserve when a credit event is realized. Maintains the reserve invariant by absorbing the cash that corresponds to the realized loss.

Core Tranche​

The intermediate tranche. Core is paid after Prime and absorbs losses after Alpha.

Net asset value per share.

NAV = total_assets / total_supply

PDA​

Program-derived address. A deterministic account address generated from program-defined seeds and signed only by the owning program. PRISM uses PDAs to hold authority over vault reserves, tranche mints, AMM pools, and LP mints.

pALPHA​

SPL token representing a claim on the Alpha tranche.

pCORE​

SPL token representing a claim on the Core tranche.

pPRIME​

SPL token representing a claim on the Prime tranche.

PRISM​

Programmable Risk and Income Structured Markets. The protocol decomposes a credit pool into tranches the same way a prism separates light into bands.

Reserve (Vault Reserve)​

The USDC token account held by a vault. Stores all deposited USDC and source funds for withdrawals.

Reserve Invariant​

The accounting rule that the vault USDC reserve must equal the sum of tranche assets at all times.

reserve = prime_assets + core_assets + alpha_assets

Maintained by transferring loss USDC to the loss bucket whenever a credit event reduces tranche assets.

Prime Tranche​

The most protected tranche. Prime is paid first and absorbs losses last.

Strategy Preset​

An interface-level allocation template (Conservative, Balanced, Aggressive) that splits a single deposit across the three tranches according to a fixed risk profile. Presets are user-experience tools, not protocol primitives.

Subordination​

The hierarchy that determines which tranche absorbs losses first. Alpha is most subordinated, Prime is least.

Tranche​

A risk-segmented slice of a credit vault. Each tranche has its own NAV, target yield, loss position, and SPL token.

Vault​

A single PRISM credit pool. Contains a USDC reserve, three tranches, optional loan references, and a credit-event log. Vault state machine: Active, Defaulted, Resolved.

Waterfall​

The deterministic payment order used to distribute incoming yield. Prime receives target yield first, then Core, then Alpha receives the residual.