Terms

A trading tool that searches for optimal swap rates by aggregating liquidity from across multiple DeFi markets.

Instantly swap at optimal rates just by stating your trade amount and the aggregator will automatically search multiple liquidity sources for better rates for your swap.

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A method of kickstarting value exchange for an ecosystem whereby newly minted tokens are sent directly to a user's wallet address.

Get tokens for free if you're an active user of a protocol and meet the qualification criteria setup by the token team. Airdrop hunters can trade their time for potential monetary gains.

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Specified as part of the ERC20 token standard, the allowance defines a token amount from the owner's address that can be spent by another address.

Any movement of tokens from your wallet requires an external address to request for an allowance thereby requiring your approval. Caution should be taken when providing unlimited allowances to contracts.

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AMMs maintain a liquidity pool of assets against which trades can be made automatically along a pricing curve in exchange for a fee.

Your trades are executed immediately without the need for a counterparty to agree to your trade parameters. Instant liquidity is provided by market makers whose funds are automatically utilized for the trade for a small trading fee.

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An ERC20 token function that, once executed by the network, enables another address to spend the specified amount of tokens from a user’s address (i.e. EOA).

Any movement of tokens from your wallet requires your approval so care should be taken when providing unlimited approvals to contracts.

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The yearly percentage returns generated from an invested principle amount (i.e. interest rate), taking into account compounding.

Pay particular attention to how rate of returns are quoted across various DeFi protocols as actual returns can vary widely depending on whether the returns are quoted in APR or APY.

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The yearly percentage returns generated from an invested principal amount, taking compounding interest into account.

Pay particular attention to how rate of returns are quoted across various DeFi protocols as actual returns can vary widely depending on whether the returns are quoted in APR or APY.

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The simultaneous purchase and sale of a similar asset in different markets to profit from the price differences between markets.

As DeFi liquidity can be fragmented, always compare the swap rate (or use an aggregator) when swapping in DeFi to ensure that you don't suffer the negative consequences of arbitrage.

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Used in the context of a leveraged position, asset migration enables users to move their position to a different market without changing the debt token.

By utilizing flash loans, asset migration in DeFi enables users to change their lending market single tx, saving you manual work and unwanted market exposure.

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Used in the context of a leveraged position, asset switching enables users to change the asset that is collateralizing the loan without changing the debt token.

By utilizing flash loans, asset switching in DeFi enables your collateral to be switched in a single tx, saving you manual work and unwanted market exposure.

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Specific to smart contracts, an audit refers to the verification of the functional-correctness and security of a contract by experts in the particular domain being validated.

As smart contract code handles tokens of value, any contract flaws could result in permanent loss of funds. Smart contract audits provide professional assurance but is not a guarantee of vulnerability-free contracts.

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A prolonged period of price decline in the cryptocurrency market.

Investors tend to be less confident in a bear market resulting in depressed prices and more resistance to the upside. Capital will tend to concentrate in lower-risk established tokens but this could also be an opportunity to acquire tokens at lower prices.

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Transactions on a blockchain are batched and processed in blocks which are linked together with a cryptographic hash.

Depending on the block time configured for the chain, you might need to wait longer for a transaction to be processed. Batch processing also results in cryptocurrency-specific concepts such as MEV, flash loans, etc.

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For every block added to the blockchain, the proposer of the block receives a payment for their work in proposing a block that was finalized.

The higher the gas fee paid to validators relative to the market, the higher the chances that your transaction will be included in the next block.

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A distributed database which is composed of blocks (i.e. batches of transactions) which are iteratively chained to it's parent block by means of cryptography.

As network consensus is required with every new block appended, any transactions added to the blockchain is secured by the history of the network making such transactions practically immutable.

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Fixed yield tokens which arise through the lending of assets to a protocol treasury. The asset loaned need not be the protocol token and is determined through treasury governance. Similarly, interest payments are not limited to just the protocol tokens.

Earn a fixed-income on your token upon maturity by lending your tokens to protocols. Particular attention should be paid to how this protocol-owned liquidity is then allocated based on governance rules.

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A bonding curve is a mathematical function that links the price of an asset with the total supply of said asset.

AMMs that use a bonding curve effectively ensures that there is a single exchange for trading the token hence encouraging fairer issuance and burning of tokens.

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The act of obtaining a loan whereby a user is provided capital upfront with the obligation to return the initial capital plus whatever accrued interest to the lender in the future.

Borrowing enables you to access more capital for a fee. DeFi enables you to access collateralized and uncollateralized loans (i.e. flash loans) while providing arguably more security than traditional identity based loans.

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Bribes create a market for protocols to incentivize governance token holders to allocate their voting power towards particular causes. Bribes enable coordinated exploitation of protocol value flows (i.e. rewards) to maximise individual returns especially in a one-token-one-vote model.

As a user, you are able to get voting incentives which effectively function as additional rewards. As a protocol, achieve greater capital efficiency as the value of the protocol rewards can potentially outweigh your initial bribe amount.

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Protocols that enable secure transfer of data between different blockchain networks.

Bridges allows you to execute your strategies and manage your assets across various chains without worrying about different network implementations.

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A prolonged period of price increases in the cryptocurrency market

Investors tend to be optimistic on the future outlook of the cryptocurrency market which results in significant inflows of capital. As sentiment trends towards euphoric, more capital will be deployed into exotic tokens in hopes of generating higher returns for riskier assets.

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CBDCs are digital currencies which are issued by a nation's central bank with the purpose of acting as a fiat equivalent.

CBDCs enable currency programmability while ensuring faster transactions with lower operational overheads. Given the flexibility and control this enables, CBDC governance and transparency will be key to ensure accountability.

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The middle ground between trust based traditional finance and non-custodial decentralized finance. Usually involves DeFi technical rails being integrated within a regulatory framework.

While CeDeFi enables institutions to take advantage of DeFi technology in a compliant manner, it comes at the cost of network neutrality and access.

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Custodial digital asset trading platform whose governance and operations are handled by a single organization (i.e. a third party holds your private key).

CEX transactions do not require gas as it is usually executed within their own private databases. Consequently, this lack of transparency means that you will need to trust that CEXs are able to honour withdrawal requests.

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An umbrella term covering the traditional finance as we know it today which utilizes a know-your-customer custodial account approach (i.e. CEXs hold your private key).

While CeFi has established many financial best practices, the overhead required to maintain financial tech meant for a non-globalized world has resulted in significant inefficiencies allowing conflicts of interests to arise and users to be excluded.

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The net value of tokens that are being transferred in/out of major centralized exchange wallet addresses.

Positive CEX netflow indicates users are likely transferring their tokens to CEXs to be sold for fiat (i.e. negative price action) while negative netflow likely indicates users are planning to safe keep tokens on their own wallets (i.e. positive price action).

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The total amount of coins/tokens that are available to be bought/sold on the open market or are being held by the general public.

Take particular notice of tokens with low circulating supply relative to total supply as small relative trade sizes have a disproportionate impact on the price of the token (i.e. shallower liquidity resulting in greater price impact).

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The native currency of the blockchain network that facilitates a market for decentralized computing and storage resources through the charing of "gas" fees denominated in the network's coin.

You will need the blockchain's coin in order to incentivize the execution of your transaction as this ensures the economic security of the network.

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Cryptocurrency wallets which are kept offline or air-gapped from the internet.

By keeping the private keys to your wallet disconnected from the internet, your cryptocurrency assets are even more secure as your private keys are never exposed to potential leaks of hacks.

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An asset which is pledged/committed as a security to enable the issuance of another asset (e.g. tokens, loans, etc.).

By collateralizing your tokens, you can increase your capital efficiency by taking out a collateralized loan while still maintaining price exposure to the token and even earning yield for lending out your tokens.

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The ratio between the value of the collateralized assets (i.e. supply amount) versus the the debt (i.e. borrow amount) issued.

To ensure the safety of any tokens supplied to DeFi protocols, always ensure you understand what are the market forces that incentivizes the safe claiming of undercollateralized tokens (i.e. collateralisation ratio < 1).

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The ease at which a component can be combined and integrated with other system components.

Much like legos, a highly composable system enables new features to be built on top of existing ones thereby enabling new and varied use cases to be created.

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Concentrated liquidity enables LPs to allocate liquidity towards customized price intervals and earn a portion of the trading fees as long as trades occur within the specified range.

As a liquidity provider, concentrated liquidity enables you to customize your market making risks to reward. The aggregate effect of all LP actions results in capital being deployed where it is needed the most therefore increasing market liquidity.

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The network address of the smart contract which is being interacted with.

Application logic is hosted and executed by the network thereby allowing you to permissionlessly trigger and verify various cryptocurrency application functions.

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A combination of bridging and aggregator technologies that allows value to be exchanged across separate networks and differing tokens.

With a single action, you can now transfer value between any token on any chain without having to worry about chain and token implementation differences.

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Specific to cryptocurrency, custodial services require the private keys which control your assets to be held by the external service provider.

While custodial services provide siginificant conveniences, it requires placing trust in the custodian which has the tendency to become misplaced when there is a conflict of interest.

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An asset which is owed by means of the user taking out a loan (i.e. borrow position).

While taking on debt grants access to more capital, pay particular attention to your debt to collateral ratio as you can incur significant loss if your borrow position is liquidated.

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An app whose core logic are encoded on immutable and permissionless smart contracts and usually consists of a user interface for users to conveniently interact with said permissionless program code.

With dapps, you can easily execute peer-to-peer transactions without the need for an intermediary by replacing trust in third-parties with trust in publicly verifiable and executable code.

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Collectively-owned, blockchain-governed organisations working towards a shared mission.

DAOs replaces trust in stakeholders which are more liable to change with trust in the DAO's immutable code which is guided through community consensus votes which you can easily participate in.

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A decentralized trading platform that enables peer-to-peer trading of tokens without the custodial requirements of a middleman.

Your assets are always your own and you get to decide how it should be spent without external interference!

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Peer-to-peer financial infrastructure that enables anyone to access permissionless financial services while maintaining full control over their own assets.

Financial autonomy does not mean only having the money to spend but also the ability to spend it freely on your own terms and this is the world DeFi is materializing.

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Cryptocurrency slang for “degenerate” used to describe users who engage in highly speculative and risky trades.

Not to be confused with its literal meaning, a degen is someone who is extremely passionate about cryptocurrency and is willing to take on the risks in exchange for profits or increased adoption.

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Used in the context of governance votes, delegation refers to the the granting of voting powers (usually in the form of one token, one vote) to a trusted third party.

With delegation, you are able to nominate a more knowledgeable trusted party who would vote on important network decisions on your behalf while still benefitting from underlying capital movements.

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Decentralized Physical Infrastructure Networks are a class of projects which leverages cryptocurrency incentives to coordinate the provision of peer-to-peer infrastructure in the real world.

Infrastructure is collectively owned by users with costs, benefits, and governance being distributed. This results in more reliable and secure networks.

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Tokens whose value is derived from one or more underlying assets. Through the creation of derivative tokens, new financial markets are established which enable more complex and fine-grained management of risks.

With derivatives, you can gain exposure to price movements of any asset (i.e. a synthetic asset that tracks the price of a stock), short sell tokens, and fine-tune your risks through complex DeFi strategies.

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A sharp artificial drop in the price of an asset due to significant selling pressure that is not based on asset valuation fundamentals.

As markets are social in nature, dumps are usually self-fulfilling due to the risk of contagion following the spread of misleading negative information hence always take into account social narratives when trading.

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A form of auction whereby the auction price progressively descends until the total bids are able to clear the available inventory.

Instead of trading at the minimum quote amount, Dutch Auctions introduce the possibility that your trade might get executed at better rates as market makers actively compete for profit opportunities.

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A complex combination of algorithms and technologies that scans multiple liquidity sources and calculates the optimal route for better swap rates.

Get superior swap rates by just providing the swap tokens and amount with Dynamic Trade Routing automatically handling the rest.

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Short for "Do Your Own Research" which reminds users to conduct proper due diligence before buying a token.

DeFi is permissionless which means everyone gets equal access which comes with it's own risks as you are fully responsible for your own purchasing decisions.

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The process of translating data into more optimized formats that are fit for a particular purpose. In cryptocurrency, this usually means storing data in hashstrings to minimize storage and compute overhead.

Reduce your gas costs by interacting with smart contracts that correctly encodes your data for efficient execution.

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A technical standard for fungible tokens that enable safe handling of interchangeable tokens with predictable behaviours.

Your ERC20 token can be used anywhere across multiple dapps and protocols that support this industry standard.

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A standarized interface for tokenized yield-bearing vaults enabling the safe handling of vault shares across DeFi protocols.

Your ERC4626 token represents sharesof all tokens held in the vault while ensuring interoperability through a standard interface.

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A technical standard for non-fungible tokens that enable safe handling of unique tokens with predictable behaviours.

Your ERC721 NFT, representing ownership of a unique digital asset, can be used anywhere across multiple dapps and protocols that support this industry standard.

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The EVM is the computation engine of Ethereum-based networks that powers the execution of decentralized code in a reliable and deterministic manner.

Enables all manner of application logic to be run on a shared network with the results immediately being shared with the rest of the network participants.

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Applications which enable users to search for transactions, blocks, addresses, smart contracts, and other related blockchain data.

You can easily make sense of public blockchain data by leveraging much more intuitive and convenient user interfaces that blockchain explorers provide.

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A token initial distribution method whereby all participants get the same priority (no premines or founder allocations) to the newly minted tokens based on resource contributions to the protocol.

Fair launches can be an equitable method of token distribution but particular attention needs to be paid to control of the designated resource as it can can be gamed if it takes the form of a token with monetary value.

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The provision of liquidity to a protocol in exchange for additional rewards that are indirectly distributed by the protocol as incentives.

You can offset your market risks while getting improved risk-adjusted returns by strategically locking your liquidity in protocols with significant farming rewards that can even surpass the initial strategy performance.

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Tokens which implement a fee/tax, usually as a percentage of transaction value, on every token transfer.

Beware of FOT tokens as they are designed to be deflationary with more tokens diverted to a designated address with increased token activity. Moreover, FOT tokens might behave unpredictably when interfacing with DeFi protocols which could result in loss of funds.

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The fee tier specifies a percentage fee for every swap that takes place against an AMM liquidity pool. This trading fee compensates liquidity providers for contributing liquidity to the market.

Your LP returns (i.e. AMM yield generation) are closely tied to the selected fee tier and you should therefore be aware of the appropriate liquidity premium to charge for the specific token pair.

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Currency or legal tender that is backed by the authority and trust of a particular governmental system (i.e. money by decree).

To remain politically popular and not default on ever-increasing national debt burdens, governments have a short-term incentive to continue printing fiat money (as it is based on trust) which usually results in inflation and the slow death of the currency.

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A filled order represents an executed trade (limit or market) whereby the buyer and seller agrees on the price of an asset at the point of order execution. Orders can also be partially filled.

By understanding the fill parameters, you can gain more insights into the bis-ask spread and have a better grasp of the current market conditions.

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Uncollateralised lending of cryptocurrency assets that enables profit making strategies via stacking multiple strategies into a single blockchain transaction.

You can gain instantaneous and equitable access to liquidity with no default risks as no collateral is required. Loans are executed and repaid immediately if the end-to-end transaction is successful.

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Swaps whereby the output token is sent to the recipient before verifying that the input tokens have been received.

As EVM transactions are atomic, transaction finality is dependent on all of the initial input parameters being met else it would be like the transaction never took place.

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Short for "Fear Of Missing Out" whereby speculators buy into a token whose price is rapidly increasing so as not to miss out on the profits.

Usually used in the context of buyers rushing to buy a token without any due diligence as they believe everyone else around them is also buying. Be wary and don't FOMO into tokens without first DYOR.

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DeFi enables quick leverage of collateralized debt positions which are secured via forced closure whenever the position becomes undercollateralized.

Leverage amplifies your gains but can easily result in equally large losses if you do not pay attention to forced liquidations based on your position collateralization ratio.

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A legal contract between parties to buy and sell an asset at a predetermined price at a specified time in the future.

Futures allows you to speculate on the future price ( and even profit from price decreases) of the token hence the futures market effectively materializes the future token value which a significant section of the market is already trading on.

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Abbreviation of "Game Finance" which refers to games that natively merges elements of DeFi with the gaming economy to enable true in-game ownership and portability of digital assets.

The transferability of GameFi tokens enables novel cross-game use cases to emerge as well as the tradability of in-game assets outside its original platform.

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A transaction fee that is paid to the network to incentivize decentralized processing of the submitted transaction.

Gas fees change based on network demand and can therefore lead to the same transaction being more expensive depending on when you submit a transaction.

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The maximum amount of gas which will be consumed for processing the transaction on an EVM chain.

Every computational step on the blockchain requires gas to be paid to the network hence more complex transactions will require you to set a higher gas limit.

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The gauge measures how much a particular address is contributing towards a pool's liquidity and is usually weighted based on specific protocol goals.

A gauge system enables a protocol's most valuable users to direct protocol rewards via voting through the DAO.

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A token that represents voting power on the specified protocol. Governance token holders are eligible to vote on proposals that guide the future of the protocol.

Governance tokens makes decentralized governance possible by introducing a transparent and verifiable voting system where every vote (i.e. governance token) is traceable and efficiently aggregated on-chain.

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A combination of the words "giga" and "wei" which refers to a denomination with 1 gwei representing 1 billionth (i.e. 1e-9) ether.

Gas prices are usually quoted in gwei as this enables more intuitive handling of gas costs relative to the price of the gas token (i.e. coin).

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Used in lending, the Health factor is a score which represents the safety of the collateralized assets against liquidations due to changes in asset to debt valuations.

If the health factor of your position falls below 1, your position can be liquidated which usually involves a liquidation fee plus losing exposure to the debt token.

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A typo of the word "HOLD" which first appeared on a drunken rant but has since been charmingly adopted by the cryptocurrency community to mean holding onto a token no matter the market conditions.

Keeping track of cryptocurrency market volatility can be extremely stressful especially when trying to trade against the market hence HODLing might be a good alternative for those that believe in the long term price of a token.

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Wallets which are connected to the internet. Hot wallets store the encrypted private keyson applications which are web-based or installed on desktop/mobile devices.

The added risks of having keys possibly exposed on the internet is counterbalanced by the convenience of managing keys and transaction signing.

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Short for "Initial Coin Offering" whereby a protocol mints a specified quantity of their native tokens to be sold to early investors.

ICOs have fallen by the wayside due to its effect on long-term price action whereby a single unlock period for the majority of tokens results in significant short term sell pressure.

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Short for "Initial DEX Offering" whereby a protocol offers early access to their tokens via a DEX sale.

IDOs relies on smart contracts written by the DEX thereby reducing the risk of scams while also ensuring more immediate liquidity is available post-sale.

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Immutability refers to a data characteristic whereby any information which was previously confirmed by the network cannot be altered without community consensus.

Public blockchain data is secured by the value of the entire network as any instances of data falsification can be easily verified by checking against a publicly distributed ledger.

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Risk management of assets by purchasing insurance coverage in the event of asset loss (hacks, smart contract bug, etc.). Underwriters are able to select protocols/events to underwrite in exchange for a fee. Based on the insurance pools, a user is able to insure themselves by paying a premium to that pool. Payout determination can be either through a voting process or event driven code.

Enable more fine-grained management of risks; Increases trust due to loss minimisation; Creates an insurance market whereby undertakers are able to fund projects based on their relative confidence in the project

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Short for "Know Your Customer" which is a client-based approach used by traditional finance institutions to verify the financial trustworthiness of their customers.

Your ability to transact your own assets is dependent on tradFi institutions harvesting significant personal data to opaquely determine your financial credibility which can be revoked at any time.

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Short for "Know Your Transaction" which is a transaction-based approach used to identify the riskiness of a financial transaction.

KYT focuses on the assets involved in the transaction thereby paving the way for a more privacy-preserving and trustless approach to financial risk management.

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Networks which define their own set of rules for achieving consensus at the blockchain level. As network state is finalised on this layer, decentralisation and security are usually a priority for layer 1 protocols.

Layer 1s provide the highest level of security for your transactions but comes at a greater cost in the form of gas.

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Protocols which aim at solving the scalability of Layer 1 solutions by off-loading network processing to a separate chain but writing the final state back to Layer 1. Through cryptography, Layer 2 solutions are able to optimise data processing requirements while also possibly providing additional privacy guarantees.

While significantly faster and cheaper, the majority of Layer 2 chains prioritize speed over decentralization hence have relatively lower security guarantees.

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In the financial context, leverage refers to the usage of borrowed capital for funding. That is, collateralizing your current capital in order to "lever up" your spending power through borrowed funds.

While leverage significantly increases capital efficiency, losses are also greatly amplified as the original capital collateralizing the loan can be forcefully liquidated based on minute changes in the market.

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An order to buy or sell an asset at a predetermined price.

Limit orders enable you to trade at your specified prices however trades are only executed when the market moves in your favor.

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Added flexibility to cash flows by enabling users to utilise the value locked in staked funds. Users can still earn the rewards from staking while gaining liquidity.

Lowers minimum capital cost of staking; Incentivises larger staking volume which improves protocol security; Adds liquidity to essentially dormant funds; Flexibility in determining value flows

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DeFi instruments that enables stakers to earn yield from locking their assets while still retaining its liquidity.

Continue earning staking yield without worrying about asset lock-ups (note: requires third-party org/smart contract).

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Usually used in the context of leveraged positions, liquidations refer to the forced closure of a borrow position when it becomes undercollateralized.

Trading on leverage can amplify your returns but beware of your liquidation thresholds else you risk forced liquidation of your position at a loss.

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Used in the context of a leveraged position, the liquidation threshold is the ratio between a leveraged position's debt to collateral at which the borrowing position becomes undercollateralized (i.e. at risk of being liquidated).

As the market never sleeps, beware of the liquidation threshold of your leveraged position as you might face significant losses if your position is forcefully liquidated.

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A characteristic of the market which determines how easy it is to trade an asset for another without affecting its market price.

The shallower the liquidity that you’re trading into, the worse the effective rate for your swap.

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Also referred to as yield farming, liquidity mining is the process of providing liquidity to specific protocol pools for the purposes of receiving additional rewards that are external to the market making fees

In addition to market making revenue, earn additional rewards for contributing liquidity to pools with liquidity ming/yield farming incentives.

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A smart contract that maintains a pool of assets against which trades can be made automatically along a pricing curve in exchange for a trading fee.

Get access to instantaneous swaps by trading against a liquidity pool or earn yield by providing liquidity to various liquidity pools.

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Usually used in the context of concentrated liquidity pools, a liquidity position is a NFT which represents a liquidity provider's unique liquidity contributions to a pool.

Ownership of the liquidity position NFT entitles the holder the rights to redeem the underlying capital and accrued rewards.

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Used in the context of concentrated liquidity, each position will specify a price range within which the underlying liquidity is used to facilitate trades and earn fees.

If the market trades outside the position's range, all of the position will be converted to the less valuable token and the position stops earning trading fees.

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A user who provides liquidity, in the form of tokens, to a liquidity pool in exchange for a fee for trades utilizing their liquidity.

Become a liquidity provider and earn yield by accruing trading fees as well as many other liquidity incentives being distributed by various protocol looking to increase market depth.

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The ratio between the value of the loan versus the value of the underlying collateral. Higher LTV implies higher risks due to decreased likelihood of repayments.

The LTV for a position moves with the markets hence it acts as a risk barometer for the leveraged position with higher LTVs implying more default risks.

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Liquidity Pool Tokens represent a share of the pool's underlying liquidity and are provided to Liquidity Providers in exchange for their contributed liquidity.

LP Tokens enable non-custodial and automated market making as protocols can easily keep track of liquidity contributions and reward LPs according to their relative contributions.

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In DeFi, margin refers to the collateral which a user pledges in exchange for borrowing additional liquidity to facilitate trades above the collateral value.

Trading on margin supercharges capital efficiency thereby amplifying not only gains but also losses as small changes to the market price could result in the underlying colaleral being forcefully liquidated.

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A margin call occurs when the value of collateralized assets underlying a loan is insufficient and the borrower is "called" to add more collateral or close the position (maybe forecfully).

Avoid margin calls by ensuring that you always have enough liquidity to increase your collaetral value if the market trades against your position else you will face siginificant losses through forced liquidations.

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The aggregate market value of a token which is calculated by multiplying the token's current market value by the total tokens in circulation.

While useful for gauging the financial value of a specific token network, the market cap has to be viewed in the wider context of token distribution and available liquidity.

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An order to buy or sell an asset immediately at the market’s current best available price.

Market orders enable you to trade immediately however prices are not guaranteed and is instead determined by the market.

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Marketplaces which facilitate the peer-to-peer discovery and trading of assets. The asset traded usually takes the form of NFTs (Non-Fungible Tokens) whereby each asset is unique and therefore requires significant amount of information and price discovery.

Convenient listing and discovery process; Increased transparency across assets in the same collection

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Strategies used to realise a risk-free profit from front-running pending and public network transactions.

Attackers can reorder your transaction resulting in worse rates for your trade.

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Memecoins are tokenized representations of an abstract culturally shared idea (usually comedic) whose value derives from the symbolic meaning each participating member attaches to the idea (i.e. meme).

Memecoin valuations are directly correlated to social virality hence tend to be extremely volatile as there generally hold no other function except for trading the ideas behind the meme (usually for laughs).

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Mining is the process of ordering transactions into new blocks to be processed and appended to the existing blockchain in exchange for mining rewards.

Aside from generating yield, mining incentives secures a network by ensuring that transactions on the network are ultimately ordered and included based on fees paid without any arbitrary censorship by a miner.

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A multisig, or multisignature wallet, is a cryptocurrency wallet that requires more than one (or all related) signatory (i.e. private key) for transactions from that wallet to be deemed as valid.

Multisigs introduces significant safety measures as it ensures that a single signatory going rogue or being hacked does not result in the irreversible loss of funds.

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Non-custodial wallets enable users to have complete ownership over their assets as opposed to custodial wallets (i.e. bank accounts) which require a middleman to execute transactions on your behalf.

Non-custodial wallets provides users wih a genuine option for safekeeping their own hard-earned assets while holding custodial service providers to greater accountability.

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A Non-Fungible Token (i.e. NFT) is a token on a blockchain that verifiably represents a 1-of-1 (i.e. unique) digital asset.

NFTs make it possible to publicly prove digital uniqueness thereby opening up endless opportunities for digital collaboration and value transfer.

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A network of participants external to the blockchain that distributes signed on-chain transactions to be processed off-chain prior to final settlement on-chain.

While off-chain information relay doesn't require gas, resources are still invested into providing this digital infrastructure hence incentives must be carefully designed to ensure the security of the protocol.

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A transaction which takes place external to the blockchain network with the goal of committing the final result to the blockchain.

As blockchain computational resources are expensive, off-chain transactions enable complex intermediate logic to be executed externally while still leveraging the network’s security by executing the resulting state change on-chain.

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A transaction whose execution and resulting state change is confined to a single blockchain network.

On-chain transactions adopt the security guarantees of the underlying network thereby ensuring that once executed and agreed upon by the network, the transaction is immutable.

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Usually used in the options and futures markets, open interest refers to the number of outstanding derivative contracts that has yet to be settled.

Open interest is a strong indicator of market activity whereby more open interest indicates more money and hence liquidity coming into the market.

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Options are a derivative financial instrument that confers the owner the right, but not the obligation, to buy/sell an asset at a fixed price by a set date.

By integrating options into more complex financial strategies, you can hedge your risks and even hold leverage positions.

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Oracles provide blockchains with reliable data about the world external to the blockchain and is usually secured through cryptoeconomic means.

Oracles connect blockchain cryptoeconomic functionality to the rest of the world, whether it is other blockchains, real world assets, or even identity proofs.

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A list of outstanding buy and sell limit orders that indicates the market’s supply and demand at various price levels.

Order books provide an in-depth view of the current supply and demand (i.e. limit orders) for an asset at various price points as well as the ease of buying/selling an asset without changes in price.

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Per its namesake, orderbook DEXs implement an order book trading model in a decentralized manner through the use of smart contracts and off-chain relays.

Orderbook DEXs provide an intuitive swap model based on historical precedent as users are able to set target prices therefore facing less slippage risks.

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Over The Counter (OTC) trading refers to the process of trading assets via a broker-dealer network which is external to the exchanges.

As token accessibility and transparency is less of a blocker in DeFi, OTC markets are usually used to reduce the price imapct of a large transaction hence it's important to keep track of such wallets.

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Applicable to limit orders, a partial fill occurs when a portion of a trade order is executed at the specified price but there is insufficient supply/demand to complete the full quantity requested.

Specific to limit order DEXs, each fill transaction incurs a separate gas cost however makers do not need to worry about this as gas costs are incurred by the takers.

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Permissionless is a quality of web3 infrastructure that allows everyone and anyone to access the services provided by the network without coercion or endorsement from another party.

Permissionless finance means open access, open access means no one gets left behind or forgotten.

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An additional function that extends the ERC20 token standard to enable gasless approval of allowances (i.e. allowing another address to spend the tokens from your wallet).

The permit function not only saves you gas but reduces the number of manual steps required in order to execute a DeFi transaction.

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Perpetuals are futures contracts with no expiration date as the derivative contract is periodically settled with undercollateralized positions being forced closed.

Perpetuals play a significant role in price discovery as it materializes the future value of the token which a significant section of the market is already trading on.

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Also known as a demand curve, a price curve is usually used in the context of AMMs to mathematically determine the price of an asset (i.e. supply vs demand).

Price curves enable market making to be automated as trades against a liquidity pool is determined solely by the pricing curve which adjusts asset prices according to market forces.

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The resulting change in the market price that is brought about due to the execution of a swap transaction.

The more tokens demanded by a trade, the higher the average price per token as tokens will have to be sourced further away from the market price.

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In contrast to the majority of DeFi market making, Private Market Makers (PMMs) provides fill quotes upon receiving a request for quotation from a DEX.

With many PMMs being professionally setup, PMMs are an important liquidity source for DEXs while also ensuring price stability between different trade venues such as other DEXs or even CEXs.

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A sharp artificial rise in the price of an asset due to significant buying pressure that is not based on asset valuation fundamentals.

As markets are social in nature, pumps are usually self-fulfilling due to their risk of contagion following the spread of misleading positive information.

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A type of scam which involves an investor or group of investors heavily promoting an asset based on misleading statements in order to sell cheaply purchased assets at artifically inflated prices.

Such schemes are very common in cryptocurrency so learn to spot them else your capital might become exit liquidity for scammers.

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Tokenised representation of real world assets on the blockchain. This requires a trusted party to custody the real world asset and guarantee the convertibility between the token and asset.

By tokenising real world assets, new channels of trade are opened up between assets in the real world and digital assets on the chain. Some examples of real world assets which have been tokenised and available for public trading: gold, carbon credits, stocks, property, physical art.

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The act of adjusting the multi-asset portfolio's current assets with the target allocations defined by the investment strategy.

Rebalancing automation via the use of DeFi vaults ensures strict adherence to the implemented strategy through higher frequency rebalances which grows the net portfolio value.

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A token supply mechanism whereby the total supply of the token is adjusted periodically based on the deviation from a target price.

When holding rebase tokens, be aware that the number of tokens in your wallet can change with each rebase cycle but the value of the tokens will remain the same.

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Specific to DeFi, RFQs are usually utilized in hybrid on/off-chain aggregator swaps whereby upon receiving a swap order, the aggregator will request and compare fill quotes from integrated market makers.

Off-chain RFQ matching with on-chain settlement provides greater liquidity depth for your swap while still leveraging the security of the network.

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The rehypothecation of liquid staked ETH to economically secure another application use case. By taking on incremental slashing risks, you can earn additional yields paid by the restaking protocol.

Each application specifies their own set of slashing rules hence restaking token holders must be aware of the incremental risks else their stake might be slashed.

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A type of scam where a malicious protocol creates and distributes protocol tokens, which are practically free to create, in exchange for tokens of value with the intention of disappearing with the tokens of value.

Tokens can be created easily and cheaply hence it is important to research the purpose and the team behind each token prior to exchanging your tokens of value for another less established token promising unrealistic returns.

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A type of arbitrage attack whereby a bot monitors the public queue of DEX swap transactions and inserts their own transaction prior to the target swap to profit from forcing the target swap to settle at the maximum price possible.

By utilizing MEV protected network providers, you can sidestep the likelihood of your swap transaction being front-run. You should also always pay attention to your swap's max slippage configuration to ensure no negative outcomes.

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A convenience software interface that allows you to interact with public blockchains without the need to trust an intermediary to hold assets on your behalf.

Self-custody solutions rebalances power dynamics between the user and financial institutions as your assets can't be arbitrarily ceased or censored.

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A decentralized solution which enables users to authenticate themselves on web applications through signing a message with their Ethereum wallets.

SIWE empowers you to take control of your digital identity as your access to various web apps is not dependent on the operations of centralized identity providers.

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By signing a cryptocurrency transaction, the resulting digital signature enables anyone to cryptographically verify that you have consented to the transaction.

Keep your private keys safe as anyone with your private keys can sign transactions resulting in the draining of your funds.

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The difference between the expected and final price of a trade.

Pay attention to your slippage settings to mititgate losses due to sudden changes in market conditions.

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A predefined program that runs on a blockchain. shares the network’s state, and is publicly executable by any user with access to the network.

Interchangeable smart contracts can be combined in numerous ways enabling you to freely access an unlimited array of features in a decentralized manner.

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Pre-programmed software that is automatically triggered to take advantage of specific market conditions/inefficiencies.

Protect your transactions from sniper bots by utilizing safety practices such as slippage settings, price impact acknowledgements, and even using MEV protected providers.

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Also known as the bid-ask spread, it is the difference between the highest price that a buyer is willing to pay and the lowest price a seller is willing to accept.

By tracking the spreads on CEXs or limit order DEXs, you can get a real-time view of a market's available liquidity .

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Also referred to as "stables", stablecoins are tokens whose value is pegged to an asset such as fiat currencies.

Trade with confidence using stablecoins which holds its value and whose valuation is mutually agreed upon.

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In the cryptocurrency context, staking usually refers to the pledging of liquidity in exchange for yield. Staked liquidity can be used to secure the network, facilitate trades, or even direct protocol incentives.

Various staking mechanisms enable you to generate yield by locking up your liquidity but beware the risks involved as well as the opportunity cost of your locked capital.

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Psychological price levels which limits the range of market movement based on the min/max value assigned by the market for an arbitrary time period.

Market expectations tend to be self-fulfilling hence there is a higher likelihood that the market will reverse directions closer to identified support & resistance levels.

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In the context of DeFi, a swap is a peer-to-peer exchange of digital assets that is facilitated by a DEX's permissionless smart contracts..

Your assets remain your own until a swap matching your parameters can be executed without the need for a middleman nor any need to share non-critical swap data such as identity, etc.

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A percentage fee that is charged on the swap amount as a liquidity premium for market making.

Trading fees incentivizes liquidity resulting in greater market depth and less slippage. Trading fees can differ based on the swap pair with more exotic pairs usually having higher premiums.

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A token whose value track the price of another asset without claims to the underlying asset.

Synthetic assets enables price exposure to any asset regardless of the underlying technical limitations. Note that synthetic tokens are not collateralized by the underlying asset.

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A pre-defined program that executes various DeFi trading strategies based on commands provided through the Telegram chat app.

Telegram trading bots provide extreme trading convenience at the expense of sharing your private keys with a centralized operator. Procees with extreme caution.

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A general term which in the DeFi context refers to the representation of digital assets and related data on a blockchain.

There are various DeFi token standards which enable anything and everything ot be represented and interoperable on the public blockchain.

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The address of the smart contract that codifies the characteristics of a token. Any transaction involving the token requires interaction with the token address.

The token address functions as the source-of-truth thereby always ensure that you're interacting with the correct token address.

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The representation of assets on the blockchain. This can be blockchain native assets where the asset is fully described by the blockchain or a tokenised representation of an asset that is external to the blockchain. In the latter case, an oracle is required to bridge the asset onto the blockchain.

Effectively real-time finality with significantly lower settlement overheads. Moreover, by following a token standard, the token becomes interoperable with the rest of cryptocurrency.

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A portmanteau of the word "token" and "economics" which describes the distribution and use of a token and is therefore critical in understanding token valuations.

Every token implements their own tokenomic design which creates market incentivies that will ultimately determine the value and sustainability of the token.

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The total number of tokens in existence which includes tokens which includes both freely circulating tokens as well as any restricted token supply.

Depending on the token's tokenomics, the total supply might fluctuate over time which results in varying price actions as the market responds to token mints or burns.

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Usually shortened to TVL, it is a measure of the total value of all tokens which are locked within a protocol's smart contracts.

TVL is a direct indicator of value flows and protocol engagement within cryptocurrency as user's have to proactively lock their funds in a protocol's smart contracts.

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A percentage fee that is charged on the trade amount as a liquidity premium for market making.

Trading fees incentivizes liquidity resulting in greater market depth and less slippage. Trading fees can differ based on the swap pair with more exotic pairs usually having higher premiums.

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As per it's namesake, utility tokens are tokens which have been designed to achieve a specific use case as envisioned by the token team.

Tokens with a strong utility use case generate value outside of pure speculation as it enables users to access a myriad of different web3 services thereby making their tokenomics generally more sustainable as long as there is product market fit.

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Used to refer to a smart contract which holds assets on behalf of the user in order to automate yield generating strategies. Maximises yield generation by automatically implementing supply side strategies across various DEXes and lending protocols. Users are usually required to lock their liquidity positions with the vault which will then compound the yield based on the strategy defined in the smart contract.

Increased capital efficiency and yields; Reduced exposure to reward tokens; Reduced liquidity management transaction fees

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Software that securely holds the private key that enables users to conveniently interact with the blockchain and control their assets on the network.

There are multiple wallet implementations that cater to various user types, from simple transaction signing to smart wallets that can execute complex code.

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The natural next stage of the internet whereby users have complete ownership over their digital data as opposed to relying on a third party to store and use said data.

You are free to determine the use of your data/assets without coercion or censorship by another party.

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The smallest denomination of ether (the network's currency) with 1 ether representing 10^18 wei.

Wei enables more granular management of token units. By specifying a decimal below the wei unit, token teams are able to significnaly scale token supply which directly affects the per unit token price.

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A wallet that controls a significant amount of tokens with the trade volume required to move the markets.

Any actions by whales could have a significant impact on the wider market due to the sheer volume of their transactions.

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A token whose value is pegged to that of another cryptocurrency token, usually for the purposes of ensuring that the wrapped token interface meets specific industry token standards.

Wrapped tokens ensure dapp and chain interoperability thereby enabling value to be easily exchanged across tokens and across chains.

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The process of providing liquidity to specific protocol pools for the purposes of receiving additional rewards that are external to the market making fees.

In addition to market making revenue, earn additional rewards for contributing liquidity to pools with yield farming incentives.

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A smart contract that accepts deposits for the purposes of automating the compounding of LP rewards to maximize potential yield while minimizing LP management overheads.

Deposit your tokens into the yield vault and let it handle the complex process of optimizing your yields.

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In DeFi, zaps refer to a convenience feature which enables users to interact with a multi-token strategy with just a single token.

By executing all your liquidity management steps in a single transaction, you not only save time but also reduce any market risks due to volatile markets.

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