Glossary

A reference of every term that gets used as if you already know what it means. If you encounter a piece of jargon elsewhere in the docs that isn't here, that's a bug — let us know.

Active loan: A loan in the Active state: the borrower has drawn the funds, the NFT is locked in collateral, and the maturity clock is ticking.
ActiveLock: A protocol-enforced lock that prevents the same NFT from backing two loans at once. Keyed by the NFT mint address.
AllowedCollection: A pool-level allowlist entry indicating that NFTs from a particular Metaplex collection can be used as collateral in this pool.
AllowedOracle: A protocol-level allowlist entry for an oracle public key. Only quotes signed by an active allowed-oracle pubkey are accepted.
Anti-sniping: A mechanism in English auctions that automatically extends the auction's end timestamp when a bid arrives close to expiration, giving competitors time to react. Not used in Dutch auctions.
APR: Annual percentage rate. The fixed interest rate for a Milky loan, applied pro-rata to the term length to compute the actual interest owed.
Asset type ID: A 32-byte deterministic identity for a canonical card at a specific grader and grade. Two different physical certs of the same card at the same grade share the same asset_type_id. Used for exposure tracking.
Auction: The on-chain mechanism that resolves a defaulted loan by selling the collateral card. Production auctions are Dutch; English is also supported by the program.
Bid escrow: A USDC vault attached to a live auction that holds the current high bidder's funds. Funds flow out at settlement (to the pool and the protocol) or back to the bidder if outbid.
Binding leaf: A 32-byte hash combining (NFT mint, cert hash, asset type id) plus a domain separator. The Merkle allowlist's elements.
Cert hash: A 32-byte digest of a grading certificate's identity. Used in the binding leaf and in the CertLock.
CertLock: A protocol-enforced lock that prevents the same grading certificate (identified by cert hash) from backing two loans at once, even if a different NFT is later minted for the same certificate.
Collateral vault: The PDA-controlled token account that holds the card's NFT for the duration of an active loan or auction.
Default: The state a loan transitions into when it's not repaid by `maturity

grace period`. Triggers an auction.
Draw: The instruction that releases USDC to the borrower and locks the card. The maturity clock starts at draw, not at create.
Dutch auction: A descending-price auction where the listed price falls linearly from a starting price to a reserve over a fixed duration. The first bidder to accept the current price wins.
Ed25519: The signature scheme the oracle uses to sign borrow quotes. Solana has native verification support via the Ed25519 program.
English auction: An ascending-bid auction where the highest bid at the end timestamp wins. Supported by the program but not used in production default flow today.
Fixed interest: Interest computed once at draw time as principal × rate_bps × term_secs / (10,000 × seconds_per_year). Doesn't change based on when the loan is repaid.
FMV: Fair market value. The card's price in micro-USDC as determined by the oracle at the moment a quote is signed.
Grace period: The time window after maturity during which the borrower can still repay on the original terms. After grace expires, the loan is eligible for default. Default 7 days, capped at 30 days.
LP position: A per-(owner, pool) account recording how many shares an LP holds in a specific pool.
LTV: Loan-to-value. The ratio of principal to the card's FMV, expressed in basis points. Capped by both pool and protocol settings.
Maturity: The timestamp by which a loan must be repaid to avoid grace and eventual default. maturity = draw_ts + term_secs.
Merkle root: The root hash of the protocol's collateral-eligibility tree. The on-chain Config keeps a ring buffer of K=3 active roots.
Micro-USDC: USDC's smallest unit. 1 USDC = 1,000,000 micro-USDC (USDC has 6 decimals).
NAV: Net asset value. The pool's total value in USDC, computed as vault_balance + outstanding_principal + accrued_interest - accumulated_protocol_fees.
Origination fee: A small fee withheld from the borrower's disbursement at draw time. Computed as a percentage of the interest amount, not of the principal. Default 2%, capped at 5%.
pNFT: Programmable NFT (Metaplex). A Metaplex token standard with delegate-and-lock semantics that the protocol uses for collateral of pNFT cards.
Pool: The unit of capital that funds loans. Has its own quote vault, its own configuration, and its own LPs.
PoolHeldNft: An on-chain record that the pool currently holds an NFT (because its auction expired with no bids). The pool admin retrieves and re-disposes of the card off-chain.
PPS: Price per share. The current USDC value of one LP share, computed from NAV / total_lp_shares (with 1e6 precision factor).
Programmable NFT: See pNFT.
ProofReceipt: A short-lived PDA created by verify_merkle_proof and consumed by loan_create, locking in the (NFT, cert, asset type, root version) binding for the loan being opened.
Protocol fee: The percentage of any auction surplus the protocol takes. Default 50% of surplus (only of surplus, not of debt).
Quote: A signed off-chain message from the oracle authorizing a specific borrow against a specific card with specific terms.
Quote ID: The unique 32-byte identifier of a quote, used for replay protection via the UsedQuote PDA.
Reserve price: The minimum acceptable winning bid in an auction. Always equal to the loan's full payoff (principal + fixed interest).
Root version: The version number associated with one of the K=3 active Merkle roots in the on-chain Config. Quotes carry a root version they were signed against.
Settlement: The act of finalizing an auction: transferring USDC per the waterfall, transferring the NFT to the winner, and closing the loan and auction accounts.
Surplus: The amount by which a winning auction bid exceeds the loan's payoff. Split between the protocol and the pool; never paid to the borrower.
Term option: One of up to three pre-configured (term_secs, rate_bps, grace_period_secs) triples a pool publishes. Borrowers pick one at loan creation.
Tokenization issuer: A third-party platform (today: CollectorCrypt and Phygitals) that takes physical custody of graded cards and mints NFTs/pNFTs representing them. Milky lends against those NFTs but never custodies the underlying physical cards itself.
TypeExposure: A per-(pool, asset_type_id) account tracking how much principal is currently outstanding against that asset type. Used to enforce the pool's max_exposure_per_type.
UsedQuote: A PDA created on first use of a quote. Its existence prevents the same quote from being used a second time.
Utilization: The ratio of outstanding principal to NAV, in basis points. The protocol caps post-draw utilization to preserve a withdrawal buffer.
Waterfall: The fixed split of auction proceeds between the pool (debt + share of surplus), the protocol (other share of surplus), and the borrower (zero on default).

Glossary

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