Cryptocurrency Terminology

Term	Definition
APY (Annual Percentage Yield)	Annual percentage yield, taking into account compound interest.
APR (Annual Percentage Rate)	This is an annual interest rate that shows the yield or cost of borrowing without taking into account compound interest. In DeFi, it is often used to calculate the profit from staking or lending.
AMM (Automated Market Maker)	A pricing model where prices are determined by an algorithm (e.g. x * y = x*y=k) rather than an order book. Used in DEXs like Uniswap or SushiSwap.
Altcoin	Any cryptocurrency except Bitcoin.
Bitcoin (BTC)	The first and most famous cryptocurrency, created in 2009.
Blockchain	A distributed ledger that records transactions across multiple computers.
Borrowing	In DeFi, borrowing funds from a protocol, usually against collateral, with interest payments.
Bull market	A market with rising prices and high investor confidence.
Consensus mechanism	The process by which a blockchain network agrees on the state of the ledger.
Collateralization Ratio	The ratio of the value of the collateral to the amount of the loan (for example, 150% means that the collateral is 1.5 times greater than the debt).
Cryptocurrency	A digital currency that uses cryptography for security.
Cross-chain	Interaction between different blockchains.
DAO (Decentralized Autonomous Organization)	An organization governed by smart contracts for decentralized decision making.
Decentralized Finance (DeFi)	A decentralized financial system that operates without trusting third parties
DLMM (Dynamic Liquidity Market Maker)	An automated market maker (AMM) model that dynamically adapts liquidity in price ranges (bins) based on market conditions such as volatility and trading volume. Used, for example, by Meteora on Solana to improve capital efficiency, reduce slippage (zero slippage in bins), and increase revenue for liquidity providers through dynamic fees.
Diamond hands	Investors who hold assets despite volatility.
RPC (Remote Procedure Call)	A method of interacting with a blockchain network that allows applications (such as wallets or dApps) to send requests (transactions, reading data) to network nodes via an API.
Private RPC	A personal RPC endpoint provided by a provider (e.g., Infura, Alchemy) or your node, accessible only to you. It provides higher speed, privacy, and request limits, but may be subject to a fee.
Public RPC	A public RPC endpoint provided by a community or project that anyone can use. It is free, but often slower and has a limit on the number of requests.
DYOR (Do Your Own Research)	Reminder to investors to do their research before investing in any financial instrument
Efficient mode	Operating mode that increases LTV on Lending markets for a specific asset category
Ethereum (ETH)	Blockchain platform for creating decentralized applications.
Equity (Own capital)	The net value of your assets in the protocol after deducting all liabilities (debts). This is the difference between the value of your deposits (or collateral) and the amount of borrowed funds.
Liabilities	The amount of your debts in the landing protocol, that is, how much you borrowed and must return, including accrued interest.
ROE (Return on Equity)	A measure of your return on equity as a percentage, taking into account the profit from your deposits minus the cost of borrowing. Formula: ROE = (Return on Deposits - Cost of Borrowing) / Equity * 100%.
Net APY	The total annual return you get from your assets, taking into account all factors: deposit income (Supply APY), borrowing costs (Borrow APY), protocol fees, and possible rewards. This is the difference between income and expenses, expressed as a percentage per annum.
Liquidation Penalty	An additional fee or interest is charged to a borrower when liquidating their position if the value of the collateral falls below the minimum level required to secure the loan.
Reserve Factor in Aave	A percentage of accrued interest on loans that the protocol holds in reserve to provide liquidity and cover potential losses (e.g., defaults).
Net Worth	The total value of your assets in decentralized finance minus all liabilities (debts).
ERC-721	A standard for NFTs on Ethereum that defines unique tokens.
ERC-20	Token Standard in the Ethereum Network
BEP-20	Token Standard on the Binance Smart Chain Network
TRC-20	Token Standard in the Tron Network
Ask Me Anything (AMA)	question-and-answer interview format conducted by project administrators.
Fiat Currency	A traditional currency issued by a government and not backed by a commodity.
Fees in DeFi	Fees for transactions (swaps, borrowing, lending), including gas, interest, or penalties, to support the protocol and liquidity.
Funding Rate	Periodic payments between holders of long and short positions to keep the contract price close to the spot price.
Frontrunning	When someone (often a bot) beats your transaction to the queue by using a higher gas fee, which can impact the price.
Floor price	Minimum selling price for NFTs from the collection.
FOMO (Fear of Missing Out)	Fear of missing out often leads to hasty investments.
FUD (Fear, Uncertainty, Doubt)	Negative information is used to create fear and uncertainty.
Gas	A unit of computational cost in Ethereum for transactions.
Gas fee	The fee for processing a transaction on the blockchain.
Gas limit	The maximum gas a transaction can use.
Governance token	A token that gives voting rights in the governance of a decentralized protocol.
Halving	An event in Bitcoin that halves the reward to miners every 210,000 blocks.
HODL	The intention is to hold cryptocurrency for a long time despite fluctuations.
Hot wallet	A wallet that works in an internet-connected environment
ICO (Initial Coin Offering)	A method of raising funds through the sale of tokens of a new project.
Impermanent Loss	Temporary losses to LPs due to changes in the price of assets in the pool compared to holding them outside the pool.
IDO (Initial DEX Offering)	Selling tokens on a decentralized exchange to raise funds
Incentives	Rewards offered by protocols for actions such as providing liquidity and depositing on Lending Markets
Interest Rate	The yield for lenders or the cost of borrowing for borrowers. Can be fixed or variable (depending on supply and demand).
KYC (Know Your Customer)	Identity verification process to prevent money laundering.
Lending	Depositing funds into DeFi to earn interest
LST (Liquid Staking Token)	A token you receive when you stake your assets through a liquid staking protocol (e.g., Lido). It represents your staked funds and allows you to use them in other DeFi protocols while maintaining liquidity. (wstETH, rETH)
LRT (Liquid Restaking Token)	A token issued when you restake (e.g., via EigenLayer) when you use already staked assets (or their derivatives, like LST) to stake additionally in other protocols to increase your yield. (weETH, ezETH, rsETH)
Leverage	A multiplier that increases the position size (eg, 10x means $100 controls $1000).
Liquidity pool	DEX pool consisting of multiple assets
Liquidation	Closing a position if the price moves against it and the margin becomes insufficient.
Looping	A strategy in DeFi that uses borrowing to increase returns, such as through looping on Aave.
LP tokens (Liquidity Provider tokens)	Tokens issued for providing liquidity to a pool, representing the share of the contributed investment out of the total funds in that pool
NFT (Non-Fungible Token)	Unique digital token
Seed	Slang for a beginner with minimal experience.
Oracle	External data source for smart contracts.
Open Interest	The total volume of open contracts on the platform.
Paper hands	Investors who quickly sell assets at the first sign of a decline.
Protocol	A set of rules and smart contracts that govern a DeFi application
Phishing	A cyberattack where attackers impersonate legitimate platforms.
Position	The amount of a particular asset held by an investor, or exposure in DeFi.
Private key	Secret key for accessing and managing cryptocurrency.
Public key	Public address for receiving cryptocurrency.
Pump and dump	A scheme where the price is artificially inflated and then sold, leaving others in the red.
Range width	The price range in which liquidity is active in a pool, such as Uniswap V3.
Rect	Slang meaning significant loss of funds.
Royalties	The percentage of NFT sales that the creator receives when the token is sold again.
Back pull	A scam where developers abandon the project, taking the funds.
Satoshi	The minimum unit of Bitcoin is 0.00000001 BTC.
Satoshi Nakamoto	Pseudonym of Bitcoin's creator, identity unknown.
Scam	A fraudulent scheme to deceive and extort funds.
Seed phrase	Sequence of words to restore access to the wallet.
Sh*tcoin	A derogatory name for a cryptocurrency with low value.
Smart Contract	A self-executing contract with terms published on the blockchain
Stablecoin	A cryptocurrency that maintains a stable value, such as against USD.
Stake	Holding funds to support the blockchain network while receiving rewards.
Swap	Exchange one asset for another directly through DEX (for example, ETH for USDC).
Slippage	The difference between the expected and actual price of a transaction due to volatility or low liquidity
TVL (Total Value Locked)	A metric that measures the total amount of funds locked in the protocol.
TTL (Time To Liquidation)	A metric that shows how much time remains until a borrower's position in a lending protocol (e.g., Aave, Compound) is liquidated due to insufficient collateral.
Tick	The smallest increment of price change within a price range where liquidity is concentrated. Ticks are discrete price levels between which liquidity providers can place their assets, defining the boundaries of the range.
Token	A digital asset representing a stake in a project.
Yield	The percentage return you receive on your assets over a given period, usually expressed as an annual percentage yield (APY or APR). This may include income from staking, lending, liquidity provision, or farming.
Bin Step	A fixed percentage step between price bins (ranges) into which liquidity is distributed. It determines how tightly or widely liquidity is distributed across price levels, affecting slippage and fees.
TGE (Token Generation Event)	An event in the cryptocurrency industry is when a new token is created and put into circulation for the first time, usually through a sale (such as an ICO or IDO) to raise funds for the development of a project.
Volume	The total trading volume of a cryptocurrency over some time, usually 24 hours.
Vesting	The process of gradually releasing tokens to project participants (e.g., team, investors) on a pre-determined schedule to prevent a one-time sell-off and reduce pressure on the token price.
Whale	A major investor with the ability to influence prices.
Withdraw	Withdrawal of funds from a platform, wallet or protocol.
Wen	Slang meaning "when", often about events or prices.
Yield farming	Providing liquidity in DeFi to earn rewards.
Zero-knowledge proof (ZKP)	A cryptographic method for proving truth without revealing data.
Utilization Rate	Percentage of pool assets lent out. Affects interest rates: the higher the utilization, the higher the rates.