Glossary

Absorption — a buyer taking on covenant debt at a discount. Buys are matched FIFO against the covenant queue before pool settlement.

Base discount — the 5% floor of the absorption discount (BASE_DISCOUNT_BPS = 500).

Covenant — a temporary, on-chain obligation created when someone sells: 20% of the net sell, retained as exit debt, with a frozen discount and a 7-day expiry.

Covenant queue — the FIFO list of open covenants, owned by CovenantQueue. The single on-chain address you index to read protocol state.

Covenant stress — how much open exit debt is outstanding; drives the discount between the 5% floor and the 20% cap.

Creator — the immutable address that receives the 3% ETH tax and seeds the pool.

Creator tax — a flat 3% tax, in ETH, on every buy and sell (TAX_BPS = 300).

CVN — the Covenant token (ERC-20, 18 decimals). The pool is CVN/ETH on Uniswap v4.

Exit debt — another name for the retained portion of a sell; the outstanding balance a covenant represents.

Expiry — the fixed 7-day window after which an unabsorbed covenant is settled into locked LP. No extensions.

FIFO — first-in, first-out. Buys absorb the oldest covenant first; settlement matures the head first.

Hook — CovenantHook, the Uniswap v4 hook that enforces the whole mechanism via beforeSwap, afterSwap, and permissionless expiry.

Locked LP — the permanent, protocol-owned CVN/ETH liquidity position created when covenants expire unabsorbed. Never withdrawn.

Max discount — the 20% cap of the absorption discount (MAX_DISCOUNT_BPS = 2000).

PoolManager — the singleton Uniswap v4 contract that holds all pool state and calls hooks.

Protocol reserve — ETH paid by buyers into absorptions (and CVN held for settlement), managed by the CovenantVault as ERC-6909 claims.

Reference price — the realized price of a sell, frozen as the basis a covenant is absorbed against.

Retention — the 20% of a net sell kept back as a covenant (RETENTION_BPS = 2000).

Settlement / expireMany — the permissionless action that converts matured covenant debt into locked LP.

Status codes — 0 Active/open · 1 Absorbed · 2 Locked (expired → settled).

Vault — CovenantVault, which holds protocol custody as ERC-6909 claims inside the PoolManager.