Wrapped assets glossary: every term you need on Monad

Core wrapping terms

Wrapped asset: a token representing an asset from another chain or system. Backing: the underlying asset held to give the wrapper value. Mint and burn: creating wrapped tokens when backing is deposited, destroying them on redemption. Peg: the intended one-to-one price relationship between wrapper and underlying. Depeg: when the market price drifts from the peg.

Custodial wrapper: backed by assets held by a company. Trustless wrapper: backed by assets locked in a smart contract, like WMON.

Bridging terms

Bridge: a protocol that moves value between chains, usually by locking on one side and minting on the other. Lock and mint: the standard bridge mechanism. Relayer or validator set: the parties that confirm cross-chain messages. Finality: the point after which a transaction can't be reversed; Monad's is roughly 600 ms.

DeFi terms

LST (liquid staking token): a wrapped staked position, like shMON or aprMON. TVL (total value locked): the value deposited in a protocol. Liquidity pool: a smart contract holding two tokens that traders swap against. Impermanent loss: the underperformance of providing liquidity versus holding, when prices move.

Collateral: assets you post to borrow against. Health factor: how close a loan is to liquidation. Slippage: the price movement caused by your own trade.

Safety terms

Approval: permission you give a contract to move your tokens; revoke ones you no longer need. Honeypot: a token you can buy but not sell. Phishing: fake sites that imitate real ones to steal signatures or seed phrases. Seed phrase: the master key to your wallet; never share it with anyone, ever.