definitions and concepts section added

CIP-Liesenfelt-Shelleys_Voltaire_decentralization_update/README.md

@@ -34,6 +34,41 @@ Improving decentralization is absolutely necessary for the long term health and
 The proposed reward equation retains the function of $k$ for diminishing rewards based on stake and enforces diminishing rewards based on pledge leverage, $L$. The proposed equation enforces a set of principles to ensure stakeholders of dramatically different size can all achieve the same maximum yield. The yield ceiling feature prevents the formation of two classes of stakeholders and removes some of the benefits of centralization. The economic motivations of the largest stakeholders will be aligned with decentralization, reward diversification, fault tolerance, and ensuring the sybil protection of the entire community.
 
 
+# Definitions and Concepts
+
+**k, k-parameter**
+
+- The desired number of stake pools for decentralization, which inversely sets a "soft cap" on the stake pools saturation limit (size). The pool size is determined by total circulating supply divided by k number of pools. Pool size is encouraged to converge toward k for optimal staking rewards, in theory.
+
+**k-effective**
+
+- The “average resulting decentralization” or "effective decentralization" taking into account groups or entities of stake pools.  One group could be running multiple stake pools, which lowers the realistic, effective decentralization.
+
+**Nakamoto Coefficient, Minimum Attack Vector (MAV)**
+
+- The minimum number of entities in a given subsystem required to get to 51% of the total capacity, or more simply, how many stake pool groups it would take to gain 51% control of the blockchain. This is a simple yet decisive decentralization measurement. It is not limited to pools, but any attack vector.  However, for the scope of this paper it is assumed to be pools only. The Nakamoto Coefficient is approximately half of k-effective rounded up to the nearest integer.  
+
+**Sybil Attack**
+
+- An attack where the attacker pretends to be an honest pool or pools to gather stake and power in the network.  The attacker can create an infinite number of pools in his effort to maximize his own power in the network.
+
+**Pledge**
+
+- The amount of stake pledged by a stake pool in ADA. This combats a sybil attack with an economic cost of a "down-payment" or stake pool _pledge_ when creating a new stake pool.
+
+**Pledge Leverage, L**
+
+- The ratio between an entity’s pool stake and pledge defined by the parameter L. A leverage-based stake pool saturation is based on pledge rather than a fixed size driven by k-parameter. An entity having high leverage means its total stake is much higher than its pledge.
+
+**VRF Score**
+
+- Verifiable Random Function (VRF) score is essentially the lowest random number generated by the stake pools that determines what pool won the slot leader battle to mint a block.  The lowest random number VFR score generated by a pool wins the block.
+
+**Private vs Public Stake Pools**
+
+- Cardano stake pool operators can be either private, using only their own self-bonded stake, or public, by accepting delegation. A private stake pool retains 100% of the pool’s profits but must also provide 100% of the pool’s staking power. Most stake pool explorers will not give the pool visibility as a staking option because they are already fully saturated.  Private stake pool operators optimize rewards by pledging the whole stake cap for their pool. If you have enough ADA to meet the saturation point alone, your rewards will be 100% of the potential earned when adjusted for the a0 parameter. Public stake pools that do not have full pledge must make up their stake from public delegation.
+
+
 # Motivation
 
 Improving decentralization is absolutely necessary for the long term health and growth of the Cardano ecosystem. The current reward formula has resulted in a stable but stagnant level of decentralization. The motivation is to provide the justification, methods, metrics, and implementation schedule for an improvement program to increase decentralization of the Cardano network.