- AMM (Automated Market Maker)
A type of decentralised exchange protocol that uses a mathematical formula — typically x × y = k — to price tokens in a liquidity pool, rather than an order book of buyers and sellers.
- Airdrop
The free distribution of a protocol's governance or utility tokens to wallet addresses that meet specific criteria — typically prior use of the protocol.
- Arbitrage
The practice of exploiting price differences for the same asset across different markets.
- Aave
Non-custodial lending protocol: supply to earn a variable rate, or borrow against collateral.
- Block
A data structure containing a batch of validated transactions on a blockchain.
- Blockchain
A distributed ledger of transactions stored in chronological blocks, each cryptographically linked to the previous one.
- Bridge
A protocol that enables the transfer of assets or data between two separate blockchain networks.
- Bull Market
A sustained period of rising asset prices, characterised by optimism and increasing investment.
- Bear Market
A sustained period of declining asset prices — typically defined as a fall of 20% or more from recent highs.
- Cold Wallet
A cryptocurrency wallet that stores private keys offline, disconnected from the internet.
- Collateral
Assets deposited as security for a loan.
- Compound
A decentralised lending protocol on Ethereum that pioneered the concept of algorithmic interest rates set by supply and demand.
- Curve Finance
A decentralised exchange (DEX) optimised for trading between assets that should have similar prices — typically stablecoins (USDC, USDT, DAI) and liquid staking tokens (stETH, rETH).
- DAI
A decentralised stablecoin issued by MakerDAO (now Sky), soft-pegged to the US dollar and backed by over-collateralised crypto assets deposited into Maker Vaults.
- DAO (Decentralised Autonomous Organisation)
An organisation governed by token holders through on-chain voting, with rules encoded in smart contracts rather than legal documents.
- DeFi (Decentralised Finance)
A category of financial applications built on public blockchains that replicate and extend traditional financial services — lending, borrowing, trading, earning interest — without banks, brokers, or any central authority.
- DEX (Decentralised Exchange)
A cryptocurrency exchange that operates through smart contracts without a central authority holding user funds.
- Ethereum
The second-largest cryptocurrency by market capitalisation and the dominant blockchain for DeFi.
- Flash Loan
An uncollateralised DeFi loan that must be borrowed and repaid within a single blockchain transaction.
- Frontrunning (MEV)
The practice of inserting a transaction ahead of another transaction in the same block to capture profit.
- Funding Rate
A periodic payment between long and short positions in a perpetual swap contract that keeps the perp price aligned with the underlying spot price.
- Gas Fee
The fee paid to validators to process and record a transaction on a blockchain.
- GMX
A decentralised perpetual swap and spot trading protocol operating on Arbitrum and Avalanche.
- Hot Wallet
A cryptocurrency wallet connected to the internet, typically a software application (MetaMask, Coinbase Wallet).
- Layer 1 (L1)
The base blockchain layer — the main chain itself (Ethereum, Bitcoin, Solana).
- Layer 2 (L2)
A secondary network built on top of a Layer 1 blockchain that processes transactions off the main chain and posts compressed proofs back to L1.
- Liquidation
The automatic closure of a borrower's collateralised position when the collateral value falls below the required ratio.
- Lido Finance
The largest DeFi protocol by total value locked as of 2026.
- Liquidity
The ease with which an asset can be bought or sold without significantly affecting its price.
- Liquidity Pool
A smart contract holding reserves of two or more tokens that enables trading on a DEX.
- Liquid Staking
A DeFi service that allows users to stake a Proof of Stake asset (like ETH) and receive a liquid token representing their staked position (like stETH).
- MetaMask
The most widely used self-custodial Ethereum wallet, available as a browser extension and mobile app.
- MakerDAO
One of the oldest DeFi protocols, responsible for the DAI and USDS stablecoins.
- Oracle
A service that provides external data — typically asset prices — to smart contracts on a blockchain.
- Overcollateralisation
The requirement that the value of collateral deposited exceeds the value of the loan taken.
- Perp (Perpetual Swap)
A derivative contract that tracks an asset's price with no expiry date, allowing traders to go long or short with leverage.
- Polymarket
The largest decentralised prediction market by volume, running on Polygon.
- Private Key
A cryptographic string that proves ownership of a blockchain wallet and authorises transactions.
- Proof of Stake (PoS)
A consensus mechanism in which validators are chosen to create blocks in proportion to the cryptocurrency they have 'staked' (locked as collateral).
- Proof of Work (PoW)
The original blockchain consensus mechanism used by Bitcoin.
- Protocol
In DeFi, a protocol is a set of smart contracts deployed on a blockchain that provides a specific financial service — lending, trading, yield generation, etc.
- Prediction Market
A platform where users buy and sell shares representing the probability of future events.
- RWA (Real-World Asset)
Off-chain assets — US Treasury bonds, private credit, real estate, commodities — represented as tokens on a blockchain.
- Rug Pull
A DeFi scam in which the team behind a protocol withdraws all liquidity or mints unlimited tokens and sells them, abandoning the project and leaving investors with worthless tokens.
- Seed Phrase (Recovery Phrase)
A sequence of 12 or 24 words that encodes a wallet's private key and can be used to recover the wallet on any compatible application.
- Smart Contract
Self-executing code stored on a blockchain that automatically carries out the terms of an agreement when predefined conditions are met.
- Stablecoin
A cryptocurrency designed to maintain a stable value, typically pegged 1:1 to the US dollar.
- Staking
The process of locking cryptocurrency to support a blockchain network's operations and earn rewards.
- Token
A digital asset issued on an existing blockchain (as opposed to a coin, which is the native asset of its own blockchain).
- Tokenomics
The economic design of a cryptocurrency or token — including total supply, distribution schedule, vesting periods, inflation/deflation mechanics, fee captures, and burn mechanisms.
- TWAP Oracle
Time-Weighted Average Price — an oracle that calculates the average price of an asset over a defined time window rather than using a single instantaneous price.
- Uniswap
The largest decentralised exchange by volume, operating on Ethereum and multiple Layer 2 networks.
- USDC
A fiat-backed stablecoin issued by Circle, pegged 1:1 to the US dollar and backed by cash and short-term US Treasury bonds held in regulated US financial institutions.
- USDT (Tether)
The largest stablecoin by market capitalisation, issued by Tether Limited.
- Vault
In DeFi, a vault is a smart contract that automatically manages a yield strategy — typically depositing user assets into one or more protocols, compounding rewards, and optimising for returns.
- Yield Farming
The practice of deploying crypto assets across DeFi protocols to maximise returns — often combining trading fees, lending interest, and governance token emissions.
- zkRollup
A Layer 2 scaling solution that batches hundreds of transactions off-chain and submits a cryptographic proof (zero-knowledge proof) to Ethereum, verifying the validity of all transactions without revealing their contents.
- Airdrop Farming
The practice of strategically using DeFi protocols before their token launches to qualify for a retroactive token airdrop.
- Auto-Compound
Automatically reinvesting earned yield rewards back into the same position to earn yield on yield — accelerating growth through compounding.
- Basis Trade
A delta-neutral trading strategy that profits from the difference (basis) between the spot price and futures price of an asset.
- Boosted APY
A higher yield rate earned by users who lock governance tokens (typically in a vote-escrow system) to boost their liquidity mining rewards.
- CDP (Collateralised Debt Position)
A smart contract mechanism where users lock crypto assets as collateral to mint (borrow) a stablecoin.
- Composability
The ability of DeFi protocols to interoperate — to use each other's tokens, liquidity, and mechanisms as building blocks without permission.
- Delta-Neutral
A portfolio or strategy with no net directional exposure to an asset's price movements — gains from price increases in one leg are offset by losses in another.
- Delegation
The act of assigning your governance token voting power to another address (a delegate) without transferring the tokens.
- Epoch
A fixed time period used in DeFi protocol mechanics — typically weekly — during which votes are tallied, rewards are distributed, and parameters are updated.
- EVM (Ethereum Virtual Machine)
The runtime environment that executes smart contracts on Ethereum and all EVM-compatible chains.
- FDV (Fully Diluted Valuation)
The total market capitalisation of a cryptocurrency if its entire maximum supply were in circulation at the current price.
- Front-Running
In DeFi, front-running occurs when a bot detects a profitable pending transaction in the mempool and submits an identical or similar transaction with a higher gas fee to execute first and capture the profit.
- Gauge
A smart contract mechanism on Curve Finance (and protocols using similar ve(3,3) designs) that controls the flow of token emissions to a specific liquidity pool.
- Gas Limit
The maximum amount of gas units you are willing to consume for a transaction.
- Governance Token
A token that grants holders the right to participate in protocol governance — voting on proposals, delegating voting power, and shaping the protocol's future.
- Health Factor
A numeric score in DeFi lending protocols (Aave, Compound, Morpho) that represents the safety of a collateralised borrowing position.
- Impermanent Loss
The temporary reduction in dollar value experienced by liquidity providers in an AMM pool when the price ratio of their deposited tokens diverges from the time of deposit.
- LRT (Liquid Restaking Token)
A token received when restaking liquid staking tokens (like stETH) through a restaking protocol like EigenLayer, EtherFi, or Renzo.
- Liquidation Ratio
The minimum collateral ratio a borrowing position must maintain in a DeFi lending protocol before it becomes eligible for liquidation.
- Liquidity Provider
A user who deposits tokens into a DeFi liquidity pool or lending market to provide capital for trading or borrowing.
- LTV (Loan-to-Value)
The ratio of the amount borrowed to the value of the collateral, expressed as a percentage.
- MEV (Maximal Extractable Value)
The maximum profit that can be extracted by a block validator or builder by reordering, inserting, or censoring transactions in a block, beyond standard block rewards and gas fees.
- Multisig
A smart contract wallet that requires multiple private keys to sign transactions before they execute — for example, 3-of-5 multisig requires 3 out of 5 keyholders to approve.
- Nonce
A sequentially incrementing integer assigned to each transaction sent from an Ethereum address.
- Non-Custodial
A wallet, exchange, or protocol that does not hold your private keys or have the ability to freeze or confiscate your assets.
- Optimistic Rollup
A Layer 2 scaling solution that processes transactions off Ethereum mainnet and posts compressed transaction data as calldata or blobs to Ethereum.
- Over-Collateralised
A borrowing position or stablecoin design where the value of collateral deposited exceeds the value of assets borrowed.
- Permissionless
A system that anyone can interact with without seeking approval, creating an account, or meeting eligibility criteria — just a compatible wallet and the required assets.
- Points System
A pre-token incentive mechanism used by DeFi protocols before their governance token launches.
- Price Impact
The change in token price caused by your own trade on an AMM.
- Protocol-Owned Liquidity
Liquidity that is permanently owned by a protocol's treasury rather than rented from liquidity providers.
- Quorum
The minimum percentage of total voting power (or token supply) that must participate in a governance vote for it to be valid.
- Real Yield
Returns generated from genuine protocol revenue — trading fees, borrowing interest, or consensus rewards — rather than inflationary governance token emissions.
- Restaking
Re-using already-staked assets (typically staked ETH via LSTs like stETH) as cryptoeconomic collateral for additional decentralised services beyond Ethereum consensus.
- Sandwich Attack
An MEV attack where a bot detects a large pending DEX swap, places a buy order immediately before it (frontrun — pushing the price up), lets the victim's trade execute at the worse price, then immediately sells (backrun — pocketing the price impact).
- Slippage
The difference between the expected price when submitting a swap and the actual execution price.
- Soft Liquidation
A gradual liquidation mechanism introduced by Curve's crvUSD lending system (LLAMMA).
- Smart Contract Audit
A security review of a smart contract's code by independent expert reviewers looking for bugs, vulnerabilities, logic errors, and attack vectors.
- Synthetic Asset
A tokenised representation of a real-world or other crypto asset created by DeFi protocols.
- Timelock
A mandatory delay between when a governance proposal passes and when it executes on-chain — typically 24-72 hours.
- Token Unlock
The scheduled release of previously locked or vested tokens into the circulating supply.
- TVL (Total Value Locked)
The total dollar value of all crypto assets deposited in a DeFi protocol's smart contracts at a given time.
- veTokenomics
A governance token design where users lock tokens for a defined period (up to 4 years) to receive vote-escrow tokens (ve tokens) that grant boosted governance power and protocol fee rights.
- Vesting
The scheduled release of tokens to team members, investors, or protocol treasuries over time.
- zkEVM
A zero-knowledge rollup that is Ethereum Virtual Machine compatible — able to execute and prove Ethereum smart contracts using zero-knowledge proofs.
- Account Abstraction
A wallet design model where user accounts behave like smart contracts instead of simple key pairs.
- APY vs APR
Two ways to quote yield.
- AVS (Actively Validated Service)
A service that borrows cryptoeconomic security from restakers — typically via EigenLayer — instead of bootstrapping its own validator set.
- EigenLayer
The leading Ethereum restaking protocol.
- ERC-4337
The Ethereum standard that enables account abstraction without changing the consensus layer.
- Intent-Based Trading
A trading model where users sign a desired outcome (an intent) — e.g.
- Liquid Staking Token (LST)
A transferable token that represents staked assets while they remain locked with validators — for example stETH, rETH, or mSOL.
- Points Farming
Actively using a pre-token protocol to accumulate off-chain or on-chain points that may later convert into an airdrop allocation.
- Shared Security
An architecture where multiple services inherit cryptoeconomic security from a common stake pool rather than recruiting separate validators.
- Smart Account
A wallet implemented as a smart contract rather than an externally owned account (EOA).