Course Glossary
A searchable glossary of key terms used throughout the course.
AMM (Automated Market Maker)
A type of DEX that uses mathematical formulas to price assets instead of order books, enabling permissionless trading.
APY (Annual Percentage Yield)
The real rate of return earned on an investment, taking into account the effect of compounding interest.
Airdrop
Distribution of free tokens to wallet addresses, often used to reward early adopters or bootstrap communities.
Bridge
Infrastructure that enables the transfer of assets and data between different blockchain networks.
Collateralization Ratio
The ratio of collateral value to borrowed value, determining the health of a lending position.
Composability
The ability of DeFi protocols to interact and build upon each other, often called 'money legos.'
Cross-Chain
Technology enabling interaction and asset transfer between different blockchain networks.
DAO (Decentralized Autonomous Organization)
An organization represented by rules encoded as a smart contract, controlled by organization members without centralized leadership.
DeFi (Decentralized Finance)
A financial ecosystem built on blockchain technology that enables peer-to-peer financial services without traditional intermediaries like banks.
Depeg
When a stablecoin loses its target peg and trades significantly above or below its intended value.
ERC-20
A technical standard for fungible tokens on the Ethereum blockchain, defining a common interface for token contracts.
ERC-721
The standard for non-fungible tokens (NFTs) on Ethereum, where each token is unique and not interchangeable.
EVM (Ethereum Virtual Machine)
The runtime environment for smart contracts in Ethereum, providing a sandboxed execution environment for bytecode.
Flash Loan
An uncollateralized loan that must be borrowed and repaid within a single blockchain transaction.
Frontrunning
Placing a transaction ahead of a known pending transaction to profit from the anticipated price movement.
Funding Rate
Periodic payments exchanged between long and short traders in perpetual futures to keep prices aligned with spot.
Gas
The unit of measurement for computational effort required to execute operations on the Ethereum network. Users pay gas fees to validators.
Governance Token
A token that grants holders voting rights on protocol decisions and parameter changes.
Impermanent Loss
The temporary loss of value experienced by liquidity providers when the price ratio of pooled assets changes.
Layer 2
A secondary framework built on top of an existing blockchain to improve scalability and reduce transaction costs.
Leverage
Using borrowed capital to increase the potential return of an investment, amplifying both gains and losses.
Liquidation
The forced sale of collateral when a borrower's position falls below the required collateralization threshold.
Liquidity Mining
A mechanism where protocols distribute tokens to users who provide liquidity, incentivizing participation.
Liquidity Pool
A collection of funds locked in a smart contract that provides liquidity for trading on a DEX.
MEV (Maximal Extractable Value)
The maximum value that can be extracted from block production by reordering, inserting, or censoring transactions.
Optimistic Rollup
A Layer 2 scaling solution that assumes transactions are valid by default and uses fraud proofs for disputes.
Oracle
A service that provides external data (like prices) to smart contracts that cannot access off-chain information directly.
Perpetual Futures
A type of derivative contract that has no expiration date, allowing traders to hold positions indefinitely.
Protocol
A set of rules and smart contracts that define how a DeFi application operates on the blockchain.
Reentrancy Attack
A vulnerability where a malicious contract repeatedly calls back into the victim contract before the first execution is complete.
Self-Custody
Maintaining personal control of private keys and crypto assets without relying on a third-party custodian.
Slippage
The difference between the expected price of a trade and the actual executed price, typically higher for larger trades.
Smart Contract
Self-executing code deployed on a blockchain that automatically enforces the terms of an agreement when predetermined conditions are met.
Stablecoin
A cryptocurrency designed to maintain a stable value relative to a reference asset, typically the US dollar.
Synthetic Asset
A tokenized derivative that mimics the value of another asset without requiring ownership of the underlying.
TVL (Total Value Locked)
The total value of crypto assets deposited in a DeFi protocol, used as a key metric to measure protocol adoption and trust.
TWAP (Time-Weighted Average Price)
A pricing mechanism that calculates the average price over a specific time period to resist manipulation.
Tokenomics
The economic design and incentive structure of a cryptocurrency or token, including supply, distribution, and utility.
Wrapped Token
A token on one blockchain that represents an asset from another blockchain, enabling cross-chain usage.
Yield Aggregator
A protocol that automatically moves user funds between different DeFi protocols to optimize returns.