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Glossary
Throughout our documentation, you must have encountered some terminologies with which you are not familiar. We have tried to elaborate all the uncommon terms for your quick reference
For any support on clarifying doubts on the documentation, reach out to us on our discord: https://discord.gg/CGwfqkh6FV
Term
Explanation
AMM
Automated Market Maker, the algorithmic price discovery mechanism that allows users to interact with smart contracts and enable liquidity pools.
Users while interacting with Timeswap AMM can automatically derive interest rates & collateral values to be locked without depending on any external price feed
Arbitrage
Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset's listed price.
Arbitrageur
An arbitrageur is a type of investor who attempts to profit from market inefficiencies. Arbitrageurs exploit price inefficiencies by making simultaneous trades that offset each other to capture risk-free profits.
CDP Ratio
A Collateralized Debt Position is a loan position created by a borrower by locking collateral to borrow another asset
Collateral
Collateral is essentially the security backing a transaction. Like in traditional loans such as a mortgage, which has the property assigned as collateral that can be sold off to cover a default, DeFi also backs any lending/borrowing by the use of various crypto assets.
Collateralization Value
It denotes the value of assets pledged to secure a loan. This parameter is used by the lenders to measure the risk of lending
Crypto Assets
Crypto assets are all cryptocurrencies that can act as a medium of exchange for financial transactions
Crypto hedge Funds
A hedge fund is a platform that allows investors to take long and short positions on a selected mix of cryptocurrencies.
Debt Financing
One of the ways to raise capital where a company borrows funds from investors to be paid back with interest at a future date. This is a useful way of raising capital for companies that do not want to dilute equity
DeFi
Decentralized Finance or DeFi is the blockchain-based financial system that has emerged in the wake of smart contract-enabled blockchain. DeFi revolves around DApps or Decentralised applications that perform financial functions. There are no central financial intermediaries between market participants or superior authority governing the markets but instead mediated by smart contract programs.
ERC20
The token standard on Ethereum allows new tokens to be minted to be used in various apps. Introduced by the 20th Ethereum Request for Comment (ERC).
ERC721
ERC721 is a standard interface for Non-Fungible tokens, ERC721 tokens are simply a subset of Ethereum tokens.
Equity Financing
One of the ways to raise capital where a company borrows funds from investors through the sale of company shares
EV
EV or Equity Value is the value that remains after all debts have been settled. It is the equivalent of enterprise value added to all investments, minus all debt
Governance Tokens
The governance tokens are native crypto tokens of the projects that grant its holders the voting power in the development of the project thus making the projects more decentralized
Hedging
When you safeguard yourself from any risk or downside mainly due to the fall in any asset’s price, you’re said to hedge against any crash/price correction.
Impermanent Loss
It is the temporary loss to a liquidity provider due to the price divergence in the pair of the liquidity pool
Liquidation
Liquidation in DeFi is selling collateral of borrowers at a discount when the collateral value goes below a minimum value. Liquidators can pay the debt and claim the collateral.
Liquidity
Liquidity is a collection of assets locked into a fund, called a pool, through the use of a smart contract. Liquidity pools enable DeFi projects to offer a decentralized exchange, lending, borrowing, and other functions.
Last modified 7mo ago
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