Glossary

51% Attack

When a single entity controls more than 50% of the mining power, they can manipulate the ledger to benefit their interests. This is known as a majority attack.

Address

String of text that identifies a unique crypto account or wallet on the blockchain. Normally displayed as a hashed version of the public key.

Airdrop

Depositing digital assets into public crypto accounts, usually tied to a promotional or marketing event, or as an incentive for holding certain tokens or participating in DeFi apps.

Algorithm

A sequence of instructions, or a process to be followed to solve a problem or make a calculation, especially done by a computer.

All-Time High (ATH)

The highest historical price per token of a cryptocurrency.

AMM (Automated Market Maker)

AMM (Automated Market Maker) is a protocol in DeFi that allows for decentralized trading by using liquidity pools and mathematical formulas to set asset prices. Instead of relying on an order book, it uses these pools to facilitate trades and provide liquidity.

Bear Market

A market where the majority of asset prices are down from previous time periods, also used to express distrust or lack of optimism in future market trends.

Bitcoin

The first worldwide popular cryptocurrency created by developer(s) using the pseudonym Satoshi Nakamoto.

Block Explorer

A tool for browsing the details of transactions stored in a blockchain. Often created and deployed as a website that integrates with a specific blockchain, such as Etherscan or BSCscan.

Blockchain

A decentralized and distributed digital ledger technology that securely records transactions in a chronological and immutable manner. Each set of verified transactions, or "block," is linked to the previous one using cryptographic hashes, forming a chain. Blockchain enables trustless, transparent, and secure data storage and transfer, serving as the foundation for cryptocurrencies and various other applications in DeFi and beyond.

CeFi

CeFi, or Centralized Finance, refers to centralized financial platforms that are owned and operated by a centralized entity.

Collateral

Loan collateral must be provided by borrowers in cryptocurrencies to receive a loan, and the amount of loan collateral required compared to the loan amount is specified by the Loan-to-Value ratio.

Compound Interest

Compound interest is when the interest earned on an investment is added to the initial sum, so that the interest itself also earns interest over time.

Crypto-Backed Loans

Crypto-backed loans are loans paid in either fiat or cryptocurrencies and collateralized by cryptocurrencies.

Cryptocurrency

A cryptocurrency is a blockchain-based token that can be used as a means of payment.

Crypto Lending

Crypto Lending refers to the lending of cryptocurrencies, and crypto lending platforms are classified as either CeFi or DeFi platforms. Lending transactions are usually collateralized with other cryptocurrencies, similar to traditional securities lending. Savers who provide cryptocurrencies for lending receive interest in return.

DAO

A DAO, or Distributed Autonomous Organization, is an organization on a blockchain, represented by a set of rules encoded as a computer program that is transparent, controlled by the organization members, and not influenced by a central government.

dApp

A dApp, or decentralized Web3 software application, normally runs on a blockchain.

DeFi

DeFi stands for “Decentralized Finance,” which refers to decentralized crypto lending platforms that are governed by a blockchain-based protocol that automates all operations using smart contracts.

Fiat Currency

Fiat currency is traditional currency issued by a central bank, such as USD, or EUR, and its intrinsic value is based on its function as a widely recognized government-backed means of payment and store of value.

Impermanent Loss

Impermanent Loss occurs in AMMs when lending providers contribute assets to provide liquidity for market participants, and the value of their assets decreases due to the price movement of the assets.

Liquidations

Liquidations occur when a borrower fails to post additional collateral after a margin call or when the Loan-to-Value (LTV) ratio exceeds a certain threshold, which allows the lender to sell the borrower’s collateral to repay the loan balance. The LTV ratio represents the ratio between the loan amount and the value of the deposited cryptocurrencies used as collateral.

Liquidity pools

Liquidity pools are pools of deposited funds designed to provide liquidity to a currency, network, or smart contract, often with rewards or incentives given to those who provide liquidity.

Margin Calls

Margin calls are triggered when the LTV ratio approaches a critical threshold, and the borrower is required to restore the agreed-upon LTV ratio by repaying the loan or posting additional collateral.

Oracles

Oracles provide trusted feeds of data, such as market prices, to ensure timely and accurate data.

Real World Assets (RWA)

Real World Assets (RWA) are physical assets that have an intrinsic worth due to their substance and properties. Real assets include precious metals, commodities, real estate, land, equipment, and natural resources. Because of their relatively low correlation with financial assets, such as stocks and bonds, they can be used as a collateral on lending platforms.

Shrimps and Whales

Shrimps and whales refer to investors with low and high deposit amounts, respectively, with lending rates often differing depending on the amount deposited.

Smart Contracts

Smart contracts are self-executing contracts with the terms of the agreement written directly into code, enabling automated enforcement and decentralized execution.

Stablecoin

A stablecoin is a cryptocurrency whose value is pegged to an asset with stable value, such as a fiat currency, a precious metal like gold, or a real estate basket. By reducing the volatility of the cryptocurrency it may be used as a reliable means of payment or store of value.

Staking

Staking is the process of holding and locking up cryptocurrency as collateral to support the operations of a blockchain or project, in exchange for rewards that can depend on project performance.

Tokens

Tokens are digital assets securitized on a blockchain, with security tokens securitizing securities, utility tokens securitizing the right to use a blockchain platform, and payment tokens acting as means of payment.

Tokenomics

Tokenomics refers to the business model of a blockchain-based token.

Total Value Locked (TVL)

The Total Value Locked (TVL), also known as Total Locked Value (TLV), is a metric used to measure the total dollar value of all investor deposits that are locked into a variety of financial programs and platforms, such as lending programs, yield farming programs, insurance liquidity pools, protocols, and others.