📚Glossary

APR: Annual percentage rate.

APY: Annual percentage yield is the real rate of return on an investment, taking into account the effect of compound interest.

Depeg: Refers to a situation when a digital currency that is supposed to be pegged to the value of another asset loses its peg and no longer maintains parity (1:1 exchange rate). Depeg can be temporary or permanent.

Early termination: Refers to a position that is terminated or closed before its originally intended or contractual maturity date.

Epoch: In the context of cryptocurrencies and blockchain-based networks, an "epoch" refers to a specific period or time interval within the protocol's operation.

Leverage: Leverage in finance refers to the use of borrowed capital, such as loans, debt, or digital asset, to increase the potential return on investment (ROI by controlling a larger position or asset).

Liquidity provider: A liquidity provider is an individual or entity that contributes funds to a liquidity pool on a decentralized exchange (DEX) or a lending protocol, enabling other users to trade or borrow assets. Liquidity providers play a crucial role in the DeFi ecosystem by supplying assets to these pools, thereby increasing the liquidity and efficiency of decentralized markets. While providing liquidity can be profitable, it carries risks such as impermanent loss, exposure to potential smart contracts, and market volatility.

Lower band: In the context of liquidity pools in DeFi, the lower band refers to the minimum threshold set from which liquidity is provided to generate trading fees. If the underlying asset trades below this threshold, no trading fees are generated.

LP token share price: The LP token share price, also known as the LP token value or LP token price, represents the current market value of a liquidity provider's share in a decentralized finance (DeFi) liquidity pool. LP tokens, short for Liquidity Provider tokens, are tokens issued to liquidity providers in exchange for depositing assets into a liquidity pool on a decentralized exchange (DEX) or lending protocol in the DeFi ecosystem. The LP token share price is determined by the total value of assets in the liquidity pool and the total supply of LP tokens issued. It represents the value of each LP token in terms of the underlying assets (e.g., ETH and DAI). The LP token share price can fluctuate as users trade or interact with the liquidity pool.

Off-chain: Off-chain refers to operations and activities outside or off the main blockchain network. It involves handling certain aspects of transactions and data processing through alternative mechanisms, such as private databases or layer-2 scaling solutions. Off-chain solutions are often used to address scalability, privacy, and speed limitations associated with on-chain transactions.

On-chain: On-chain refers to operations and activities that occur directly on or within the blockchain network. It involves recording and executing transactions, running smart contracts, and storing data on the blockchain's distributed ledger. On-chain transactions are publicly verifiable and processed and validated by network nodes through consensus mechanisms (e.g., Proof of Work or Stake).

Principal: In the context of investments, "principal" refers to the initial amount of money that is invested or borrowed, excluding any interest or returns earned or paid on that amount. The principal is the original sum of money that serves as the basis for calculating investment returns, interest, and any potential gains or losses.

Redemption: In the context of digital asset, it refers to the process of selling or cashing out an investment position from a pool or a protocol, for instance.

Rewards: In the context of investments, "rewards" typically refer to the potential benefits or returns that an investor can earn from their investment activities. These rewards can come in various forms, depending on the type of investment and the associated risks. In the context of DeFi, it can refer to receiving a fixed yield revenue (coupon) or receiving protocol tokens.

Slippage: Slippage is a common term used in financial markets, including cryptocurrency and traditional financial markets. It refers to the difference between a trade's expected price and its actual executed price. Slippage can occur in various situations, and it can be both positive and negative, depending on whether the executed price is better or worse than the expected price.

Stablecoin: Stablecoin is a category of cryptocurrencies designed to maintain a stable value by pegging their worth to a reserve of assets or through algorithmic mechanisms. Unlike traditional cryptocurrencies like Bitcoin or Ethereum, which can experience significant price volatility, stablecoins aim to provide a stable store of value and are often used as a medium of exchange or a unit of account within the cryptocurrency ecosystem.

Token: In the context of blockchain technology, a token is a digital representation of an asset, utility, or value that exists on a blockchain. Tokens can serve various purposes within blockchain ecosystems, and their functionality depends on the specific blockchain platform and the smart contracts governing them. Tokens are a fundamental component of decentralized applications (Dapps) and enable a wide range of use cases, from representing cryptocurrencies to facilitating access to digital services.

Uniswap: Uniswap is a decentralized cryptocurrency exchange (DEX) that operates on the Ethereum blockchain. It is known for its automated market maker (AMM) model, which allows users to trade various Ethereum-based tokens directly from their wallets without the need for traditional intermediaries like centralized exchanges.

USDC: USDC, or USD Coin, is a type of stablecoin in the cryptocurrency space. It is a digital currency whose value is designed to be pegged to and maintain a one-to-one (1:1) exchange rate with the United States dollar (USD). In other words, one USDC is intended to always be worth one US dollar. USDC is often used as a stable and secure means of transferring and storing value within the cryptocurrency ecosystem.

Vault: In decentralized finance (DeFi), a "vault" refers to a specific type of smart contract or protocol designed to optimize the management of users' assets by maximizing yield, minimizing risk, and automating various financial strategies. Vaults are a fundamental component of DeFi platforms and are primarily used for automated yield farming.