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 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.
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.
A Collateralized Debt Position is a loan position created by a borrower by locking collateral to borrow another asset
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.
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 are all cryptocurrencies that can act as a medium of exchange for financial transactions
A hedge fund is a platform that allows investors to take long and short positions on a selected mix of cryptocurrencies.
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
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.
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 is a standard interface for Non-Fungible tokens, ERC721 tokens are simply a subset of Ethereum tokens.
One of the ways to raise capital where a company borrows funds from investors through the sale of company shares
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
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
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.
It is the temporary loss to a liquidity provider due to the price divergence in the pair of the liquidity pool
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 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.
Its the process of adding liquidity to the liquidity pools on protocols and in return being rewarded with native tokens on top of regular yield
Long-tail assets are basically the crypto tokens that do not have a mature market and trading volume is low. In other words, they’re extremely volatile.
LP or Liquidity Providers are the people who initiate a liquidity pool for a set of crypto assets. These liquidity pools have funds locked in the smart contract for the set of tokens that are part of the pool. This enables the algorithmic market creation for the exchange of these tokens directly via the liquidity in the pool instead of having to rely on buyers and sellers
A Non-Fungible Token is one that is distinct from any other token on the blockchain and can be uniquely identified.
A market where the buyers and sellers of options (Call or Put) interact with each other.
Oracles are third-party services that provide real-time data & any external data to smart contracts which are outside of their ecosystem. Currently, DeFi protocols rely on oracles for real-time on-chain data like the price of assets.
Perpetual Financial Products
In the literal sense, the financial instruments that are perpetual (no maturity date) keep on paying interest without maturing.
It denotes the prospective rewards for every dollar that an investor risks. This criteria is used to compare different investment alternatives.
Short selling is simply an exercise to sell assets/financial instruments that the seller doesn’t own and actually borrows from the broker expecting prices to fall, thereby shorting (selling) the asset.
When the expected price of a trade and the price at which a trade is actually executed is different, this can be referred to as slippage. This typically occurs during times of high volatility or when the liquidity pool is too shallow to maintain a constant bid/ask spread.
Staking helps in keeping a blockchain network secure while at the same time enable the staker to earn rewards
UI or User Interface is what the users interact with to perform any action on the platform. This typically includes a web and/or app-based front end that abstracts aways the underlying mechanism of the platform itself.
Wrapped Bitcoin is simply Bitcoin on DeFi ecosystem.
Yield refers to earnings generated over a period of time.
The curve essentially captures the relationship between the bond’s interest rates (yields) and respective time periods. The curve is used by financial analysts as the leading economic indicator.
It's a way to maximize your yields in DeFi by earning cryptocurrencies while lending your crypto assets temporarily into protocols in a permissionless manner
A zero-coupon bond, also known as an accrual bond, is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value.