📂Reminisce The Defi Space

This guide is for you if you possess or have previously traded cryptocurrency but have never accessed a decentralized exchange, staked in a pool, yield farmed, or tried any of the other features DeFi has to offer. To take advantage of the financial possibilities in DeFi, these are some of the most essential principles to learn.

TERMINOLOGY :

DeFi: Short for "decentralized finance," is a catch-all title for services provided on open-source blockchains utilizing smart contracts. These services include token exchanges, adding liquidity, pool stake, yield farming, and more.

DEX: (Decentralized Exchange) A protocol that uses smart contracts to allow users to swap between crypto tokens without a centralized intermediary.

Swap: To trade some amount of one token for an equivalent amount of another token.

Automated Market Maker (AMM): An automated market maker is a type of DEX that uses a mathematical formula to price assets, rather than using an order book model of bids (buyers) and asks (sellers) typical in traditional finance on centralized exchanges.

Liquidity: The degree to which an asset may be purchased or sold. The number of crypto tokens that may be exchanged for one another on a DEX.

Liquidity Provider: Someone who adds liquidity to a protocol by supplying (generally equal) amounts of two crypto tokens to a liquidity pool.

LP Token: Short for "liquidity provider token," a new token that is created and granted to a liquidity provider as a "receipt" of the liquidity that they added to a liquidity pool.

Staking: The act of depositing crypto tokens that you own into a protocol or smart contract to earn Yield (rewards).

Pool: It allows users to stake one type of token to earn either more of the same token, or other tokens.

Yield Farm: A product that allows users to stake LP tokens to earn tokens as a reward. Yield Farms incentivize users to add liquidity to a DEX so that the DEX can continue to facilitate token swaps between the two tokens in the liquidity pool.