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Glossary

Commodity finance, on-chain credit and ADGM regulation each bring their own vocabulary, and this documentation uses all three. Terms are grouped by where they come from. Where a term has a precise meaning in the formal development, the declaration is named.

The metal

Doré — a semi-pure gold–silver alloy cast at the mine, typically 60–90% gold. Not tradable bullion: its fineness is uncertain until assayed and it must be refined before it becomes a Good Delivery bar. Value that is unambiguously real but not yet in a form anyone will accept — which is the whole analogy the protocol is named for.

Assay — the measurement that converts "some gold" into a specified quantity and fineness a claim can reference. In the model, gross and fine quantity are separate dimensions with LotWellFormed requiring fine ≤ gross.

Fineness — purity, in parts per thousand. 999.9 is refined bullion.

Gross vs fine quantity — total mass versus contained precious metal. A refining step reduces both, and the model requires the loss to be accounted rather than assumed: transformation_no_fine_creation, chain_conservation.

Tolling — refining someone else's metal for a fee. The lender's question is whether its security survives the transformation; it does, and that is proved: transform_carries_security.

The trade

Self-liquidating — repayment comes from the sale that the financing itself made possible, rather than from the borrower's balance sheet generally.

Offtake — a contract to buy future production. It is a financing instrument as much as a sales contract, because repayment can be made in physical delivery rather than cash.

Prepayment / pre-export finance — paying a producer now against future deliveries. The exposure is to production itself.

Stream — an upfront deposit buying a percentage of future metal at a fixed delivery payment. Royalty (NSR) — a percentage of revenue net of smelting and refining charges. The longest-dated instruments in the industry.

Factoring / receivables discounting — advancing cash against invoices already owed by buyers. Credit shifts from the borrower toward the buyer.

Forfaiting — purchase of a term receivable without recourse to the seller, who is genuinely out of the risk.

Cycle — one turn of purchase → refine → sell → repay. Cycle length is one of the two numbers the whole pipeline verdict depends on; see the pipeline.

Collateral and control

Advance rate — the fraction of eligible collateral value that may be drawn. Haircut — the remainder, absorbing price moves, liquidation costs, assay differences and uncertainty. A haircut is neither a fee nor a reserve: it is the lender's estimate of the gap between NAV and liquidation value.

Borrowing base — the permitted exposure, recomputed as inventory and receivables move rather than fixed at drawdown. draw_within_borrowing_base.

Warehouse receipt · bill of lading — the documents that make custody and title transferable. Whether they are negotiable determines what transfers with them.

Possession · custody · legal title · beneficial ownership · security interest · priority · control · perfection — eight distinct concepts that failures routinely conflate. See risk and collateral.

Control is not location. Knowing where goods are is worth little if someone else can instruct their release. The control package is a pledge plus a custodian release undertaking.

Double pledge — the same commodity, receipt or receivable pledged to several financiers. The industry's most expensive recurring fraud, and unreachable in the model: whr_double_pledge_rejected.

Specie / cargo cover — insurance protecting the goods against transit and storage loss. It does not cover borrower default; the distinction is routinely blurred.

Cut-through — a clause letting the insured claim directly against the reinsurer if the fronting carrier fails to settle. Whether it exists for a given holder depends on the actual policy and any endorsement; see risks.

The regulation

FRT — Fiat-Referenced Token — the ADGM category the payment leg falls in, governed by COBS chapter 19A. Defined at FSMR s.258.

CIF — Collective Investment Fund — defined at FSMR s.106 by cumulative limbs including that contributions are pooled and property is managed as a whole. Units in a CIF are Securities, and managing one is a Regulated Activity. This definition is why the structure uses one SPV per facility.

SPV — special purpose vehicle — a single-purpose company holding one facility and issuing its own debenture against it. Passive by design: no regulated function is performed inside it.

Debenture — a debt security. The investor-facing instrument in the single-vehicle route.

Exempt offer — the offer route at MKT 4.3.1(1), to professional clients above a minimum subscription.

Attestation — an independent monthly confirmation of reserves, including a random-day test, required at COBS 19A.9.1(b)(iv) and published under 19A.9.2. Distinct from an audit, which is annual and tests composition and controls (19A.10).

FSRA — the ADGM Financial Services Regulatory Authority: authorises the issuer, receives breach notifications and redemption-period extensions.

The protocol

drUSD — the payment leg. Treasury-backed, no yield, par redemption on demand with no queue.

sdrUSD — the yield leg. A pro-rata share of the financing book, not a coupon and not a deposit. It absorbs loss ahead of the protocol.

NAV — net asset value: what the book says. Not liquidation value, which is what a buyer pays under pressure after recovery time.

Ceiling — the maximum the protocol can earn in a calm year over the declared design space, proved rather than estimated: deck_ceiling_band.

Outside option — what a player earns by walking away. A design that pays any player less than its outside option is infeasible, however profitable it looks.

Elegant — used precisely: no player can be paid more without pushing another below its outside option (the_optimum_is_elegant).

Participation-feasible optimum — the best design that keeps everyone at the table. Distinct from, and lower than, the unconstrained ceiling.

On-chain

TVL — total value locked versus RDC — real deployed capital. TVL counts every claim in the system; RDC counts only capital actually financing commodity transactions. A leverage loop inflates the first and cannot change the second: rdc_never_exceeds_capacity. See the simulation.

Looping — borrowing against a yield token to buy more of it. A distribution feature; it finances nothing new.

Lineage — the requirement that every derived position trace back to the underlying claim, so that multiple representations of one claim are never treated as independent collateral. The on-chain form of the double pledge.

Attested vs documented vs proved — the three kinds of truth. Real-world facts are attested and expire; legal conclusions are documented and opined on; only deterministic rules are proved. Conflating them is the category error that makes verified systems dangerous.