Frequently Asked Questions
Glossary
Bitcoin Layer 1
The base layer of the Bitcoin blockchain where transactions and blocks are processed and validated.
DeFi
Decentralized Finance - a system of financial applications built on blockchain networks that operate without centralized intermediaries.
Lending Pool
A smart contract-based system where users can deposit assets to be lent out to borrowers, earning interest in return.
Liquidation
The process of selling a borrower's collateral when their position becomes under-collateralized to repay the outstanding loan.
Taproot
A Bitcoin upgrade that enhances privacy, scalability, and smart contract capabilities on the Bitcoin network.
Ordinals
A protocol for assigning unique identifiers to individual satoshis, enabling the creation of Bitcoin-native digital assets.
BRC-20
A token standard for creating fungible tokens on the Bitcoin network using Ordinals.
Credit Score
A metric in DeFi lending that represents the safety of a borrower's position based on their collateral-to-loan ratio.
APY
Annual Percentage Yield - the effective annual rate of return taking into account the effect of compounding interest.
APR
Annual Percentage Rate - the annual rate of interest without taking into account the compounding of interest within that year.
Collateralization Ratio
The ratio of the value of assets deposited as collateral to the value of the loan taken out.
Governance
The system by which decisions are made and implemented within a decentralized protocol, often involving token holder voting.
Oracle
A service that provides external data to a blockchain or smart contract, often used for price feeds in DeFi applications.
Stablecoin
A type of cryptocurrency designed to maintain a stable value, often pegged to a fiat currency like the US dollar.
Yield Farming
The practice of strategically providing liquidity or staking tokens to maximize returns from various DeFi protocols.
Gas Fees
Transaction fees paid to miners or validators to process transactions on a blockchain network.
Smart Contract
Self-executing contracts with the terms of the agreement directly written into code, automatically enforcing and executing the terms.
Liquidity Pool
A collection of funds locked in a smart contract, used to facilitate decentralized trading, lending, or other DeFi activities.
Impermanent Loss
A temporary loss of funds experienced by liquidity providers due to the volatility of paired assets in a liquidity pool.
Flash Loan
A type of uncollateralized loan in DeFi where funds are borrowed and repaid within a single transaction block.
Slippage
The difference between the expected price of a trade and the price at which the trade is actually executed.
TVL (Total Value Locked)
The total value of crypto assets deposited in a DeFi protocol, often used as a growth metric.
Atomic Swap
A peer-to-peer exchange of cryptocurrencies from different blockchain networks without the need for intermediaries.
MEV (Miner Extractable Value)
The profit a miner can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce.