DeFi Terms
Automated Market Maker (AMM)
An Automated Market Maker (AMM) is a smart contract protocol that enables decentralized crypto trading using liquidity pools and mathematical pricing formulas.
Automated Market Maker
A protocol using algorithmic formulas instead of order books to price token swaps.
Bonding
Mechanism to acquire protocol-owned assets by selling tokens to the treasury at a discount.
Collateral Ratio
Ratio of collateral value to borrowed value in a lending position.
DeFi
Decentralized finance (DeFi) is an ecosystem of blockchain-based applications that enable peer-to-peer financial services without traditional intermediaries.
DEX
A peer-to-peer decentralized exchange that allows users to trade cryptocurrencies directly without a central intermediary.
Flash Loan
A flash loan is an uncollateralized DeFi transaction where funds are borrowed and fully repaid within the exact same blockchain transaction.
Gauge Weight
Governance-determined allocation controlling token emissions to each liquidity pool.
Health Factor
Numeric indicator of a borrowing position safety - below 1 triggers liquidation.
Impermanent Loss
Impermanent loss is the temporary loss of funds experienced by liquidity providers when asset prices diverge compared to simply holding them.
Liquidity Mining
Earning token rewards by providing liquidity to a DeFi protocol.
Liquidity Pool
A liquidity pool is a smart contract holding locked tokens that enables automated decentralized trading without needing to match individual buyers and sellers.
LP Token
A receipt token representing a liquidity provider share of a pool.
MEV
Maximal Extractable Value - profit extracted by reordering or inserting transactions.
Overcollateralization
Requiring collateral worth more than the borrowed amount to secure a loan.
Price Impact
Price change caused by a specific trade relative to pool depth.
Protocol-Owned Liquidity
A model where a protocol owns its own liquidity rather than renting it.
Protocol Revenue
Fees generated by a DeFi protocol from actual usage, distinct from token emissions.
Real Yield
Returns paid to participants from actual fee revenue rather than token inflation.
Rebase Token
A token whose supply adjusts each epoch to target a price, changing holder balances.
Sandwich Attack
MEV strategy placing orders before and after a victim transaction to profit from price movement.
Total Value Locked
Total Value Locked (TVL) is the aggregate market value of assets locked in a DeFi protocol or blockchain network.
Utilization Rate
Percentage of a lending pool total deposits currently borrowed.
Vetoken
Vote-escrowed governance token where locking longer grants more voting power.
Yield Farming
Yield farming lets users earn interest by supplying crypto assets to DeFi protocols for lending, liquidity provision, or other yield‑generating activities.