Glossary

The terms you will meet across these docs, defined plainly.

DeFi NAV. The net asset value of a fund holding digital assets, built from onchain and off-chain transactions rather than pulled from a broker API.

Net Asset Value (NAV). The per-unit value at which investors subscribe and redeem. Assets minus liabilities, divided by units outstanding.

Shadow NAV. An independently calculated NAV run in parallel to the administrator’s, as a control rather than a replacement.

Independent third-party valuation provider. The party that strikes a fund’s NAV independently of the manager, alongside the administrator and the auditor. The seat PennyWorks sits in.

Tax lot. A single acquisition of an asset at a specific cost basis, tracked so that a later disposal can be matched to it for capital-gains purposes.

Cost basis. The recorded acquisition value of a position, carried forward through wraps, bridges, and rebases so gains and losses are measured against the right number.

Reconciliation. Tying a constructed ledger to an independent onchain snapshot and accounting for the difference, rather than trusting either source alone.

Double-entry accounting. Recording every transaction as balanced debits and credits, so the books stay internally consistent and every figure traces to an entry.

Proof of reserves. An attestation of the assets backing a token or fund. On its own it shows assets but not liabilities, which is why solvency needs both sides.

Rebasing versus appreciating token. Two ways a yield-bearing token reflects income: a rebasing token increases in quantity, an appreciating one increases in value. They imply different accounting and tax treatment for the same economic event.

Accrued income. Income that has been earned but has no transaction attached, such as interest that compounds block by block. A ledger built only from transactions will miss it until it is accrued explicitly.

Liquid staking token. A token representing a staked position that remains transferable, such as a receipt for staked ETH. Its price and its underlying can diverge, so it cannot be booked at face value.