New to DeFi

A wallet is an account on the blockchain, identified by an address, from which transactions are signed by whoever holds its private key. It holds tokens. Anyone with a wallet can use the protocol, with no account to create and no KYC at the protocol layer. To the protocol, an address is the full extent of identity: it records what an address holds and owes, and asks nothing about who is behind it.

A token is a unit of something recorded on the blockchain — an amount of a currency, or a share of an asset — whose holders and balances are kept by the token's own contract, so it can be held and passed between wallets. Some tokens are interchangeable unit for unit, as dollars are; others are one of a kind. A token's rules are its issuer's, not the protocol's: whether a token that stands for an asset held elsewhere is backed by that asset is a matter for its issuer and custodian.

An auction is how Gavel sets prices. For a loan, lenders bid against each other on what the borrower will repay, and the best bid wins. For a trade, the orders placed in a short window clear together at one price.

Collateral is what a borrower pledges to make a promise credible. On Gavel it is locked in a shared vault under a lien: paid back, it is released; not paid, the lien is enforced by rules everyone agreed to in advance.

A price feed. Many lending markets read a price from an outside source and liquidate a borrower when it crosses a line. Gavel's own contracts read no price feed: prices come from its own auctions.