APY APY Annual Percentage Yield
DeFi DeFi is short for “Decentralized Finance.” It refers to a variety of financial services based on blockchain networks, making them accessible to anyone worldwide. No identification documents or KYC requirements are needed to participate in DeFi. While centralized finance mediates financial services through a bank, with DeFI, financial services are transferred on a P2P (person to person) basis. Decentralized Finance (DeFi) or Open Finance, is a suite of financial services using blockchains and smart contracts to create services similar to traditional financial products. but different in the sense that they function in a trustless and transparent fashion with no intermediaries.
LP // Liquidity Provider A liquidity provider is a type of market maker. When traders want to buy or sell an asset, there’s not always enough cash (liquidity) on the market to keep the orders flowing. Market makers ensure that there’s enough liquidity on the market for trades to be executed, and they make a small profit on the difference between bids (buying prices) and asks (selling prices). In conventional financial markets, large institutions fill this function, but with cryptocurrency smaller investors (liquidity providers) can join together to form liquidity pools that act as market makers.
Smart Contract Smart contracts are programs, stored on a blockchain, that allow the automated transfer of funds or ownership data between parties based on certain conditions. While conventional contracts would depend on court systems, government guarantees and identity documents, smart contracts can instead rely on cryptographic guarantees. This allows people who don’t know each other, or live in different jurisdictions, to enter into contracts with each other. This reduces the need for paperwork and middle men, significantly reducing the expense of many contractual agreements.
Staking Staking is an alternative system to ensure that all transactions on a blockchain are correct. Users “stake” a certain amount of cryptocurrency and in exchange they earn the right to have a chance to add a “block” to the blockchain and earn a reward. The reward can be a combination of new coins that are minted or reduced transaction fees. If the stakers misbehave they lose their stake, thus providing a powerful incentive to stay honest and transparent.
Treasury A treasury system is a community-managed, decentralized and collaborative mechanism for making decisions about how development and maintenance funds will be allocated. During a given time period players can submit, discuss and vote for different proposals. At the completion of the treasury period, top ranked projects are funded from the treasury.
Yield Farms Yield farming, or liquidity mining, is a way to earn using cryptocurrency holdings. Cryptocurrency is locked in a contract where it can provide liquidity for traders. In exchange for this access to liquidity, traders or markets pay a fee to users who make their funds available. It’s somewhat similar to staking, the difference being that staking is a method of ensuring the authenticity of transactions on a blockchain network.
Centralized // Decentralized "Centralization" means that a central point of authority is governing an entity. E.g., when you send an email to another person, the email service provider instantly knows the content of your email, from where it was sent and when. While this information is stored securely with the service provider, they do have full access to the data.
"De-centralization" as the name suggests, is the direct opposite of centralization. In essence, it means that an action (in this case a network transaction) doesn’t need to pass through a central point of authority. The network can be accessed and utilized by anyone, making it a more equitable option as opposed to centralized networks.
Layer 2 Scaling Second-Layer Solutions is a set of solutions built on top of Ethereum public blockchain. The reason for doing so is to make the relevant blockchain more scalable and efficient, in particular for microtransactions. Polygon is one of many examples of Second-Layer Solutions.
ERC-721 Introduced as a standard for NFT, this type of Token is unique and can have a different value than another Token from the same Smart Contract. That can be due to age, rarity or visuals/esthetics.
ERC-1155 / Multi-Token Standard The ERC-1155 token can do the same functions as an ERC-20 and ERC-721 token, and even both at the same time. Best of all, it can improve the functionality of both standards, making it more efficient and correcting obvious implementation errors on the ERC-20 and ERC-721 standards.
ERC-20 The standard for Fungible Tokens. They possess a property that makes each Token equal (in type and value) to another Token. For example, an ERC-20 Token acts just like the ETH, meaning that 1 Token is and will always be equal to all the other tokens.
PoS POS stands for Proof-of-Stake and is the proposed future consensus algorithm to be used by Ethereum. Instead of mining in its current form, people that own ETH will be able to “lock up” their Ether for a short amount of time in order to “vote” and generate network consensus. The plan is that these stakeholders will be rewarded with ETH by doing so.
PoW PoW stands for Proof-of-Work and is the current consensus algorithm used by the Bitcoin network, commonly referred to as "Mining". Because of it's rather large energy requirement to power the GPUs (Graphical Processor Units) it has sparked a global debate about its environmental impact.
Gas Fees Gas Fee means the amount of Ether (ETH) or MATIC spent for each gas unit on a transaction. The initiator of a transaction chooses and pays the gas price of the transaction. Transactions with higher gas prices are prioritized by the network.
Airdrop This is a token distribution method that usually occurs as a loyalty gesture, free of charge, from token foundations to its early users. Airdrops can come as a surprise or be announced beforehand.
Play-to-earn Play-to-earn games allow users to farm or collect tokens and NFTs that can be sold on the market. By playing the game regularly, each player can earn more items or tokens to sell and also generate an income. Some players have even begun to supplement or replace their salaries playing these blockchain games. Play-to-earn games represent not just a new economic model for video games, but economic opportunity for the individuals who play them.
Metaverse Metaverse is a dynamic term. It generally refers to open virtual worlds where people can only access through the internet platforms. The term can also refer to digital spaces which are made more lifelike by the use of virtual reality (VR) or augmented reality (AR)
Credit Delegation It allows a depositor to deposit funds in the protocol to earn interest and delegate borrowing power (i.e. their credit) to other users. The enforcement of the loan and its terms are agreed upon between the depositor and borrowers, which can be either off-chain via legal agreements or on-chain via smart contracts.
Impact to Earn It enables the functionality for measuring Real-Life positive impact, thus players can participate in activities from NGOs who contribute to the sustainable development of our Earth.
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