A compilation of notable important terms in the DeFi market.

*A summary of important terms to note in the DeFi market.*

1. DeFi

DeFi (Decentralized Finance) refers to a financial ecosystem where financial services are provided through decentralized platforms, based on blockchain technology and smart contract. DeFi allows users to access traditional financial services without the need for intermediaries such as banks, governments, or other financial institutions, as transactions are executed entirely through smart contracts.

2. Blockchain

Blockchain is a system consisting of interconnected blocks stored publicly on a network in chronological order, often referred to as a "ledger." This system is shared among all Bitcoin users. The chain of blocks is used to verify transactions and prevent double-spending.

Examples include Bitcoin, Ethereum, Near, and Solana.

3. Ecosystem

The term "ecosystem" refers to a network or system comprised of various projects, applications, protocols, users, and digital assets that are interconnected.

The crypto ecosystem includes various components such as cryptocurrency projects, exchanges, digital wallets, DeFi protocols, decentralized applications (dApps), developers, users, and communities. These components interact with one another, creating a complex and diverse environment.

4. Wallet

A cryptocurrency wallet is used to store digital currencies. There are two main types of wallets: hardware wallets and software wallets.

Hardware wallets are physical devices designed specifically to secure and protect your private keys and transaction information. They operate offline, meaning they are not connected to the internet, which helps prevent online threats such as malware or hacking attacks.

Hardware wallets typically feature a screen that allows you to confirm transactions directly on the device. When conducting a transaction, you will need to connect the hardware wallet to a computer or mobile device and use a PIN or digital signature to authenticate the transaction. Hardware wallets are considered one of the safest storage methods for cryptocurrencies.

Examples of hardware wallets include Ledger Nano S and Trezor Model T.

Software wallets are applications installed on computers, browsers, or mobile devices to store and manage various types of cryptocurrencies. Software wallets can be connected to the internet, allowing you to conduct transactions directly from your computer or mobile device.

Examples of software wallets include MetaMask, Coin98 Wallet, Trust Wallet, and Phantom Wallet.

Both hardware and software wallets have their own advantages and limitations, and the choice of wallet type depends on your needs and the level of security you desire.

5. Bridge

A "bridge" refers to technologies or protocols that connect two different blockchains, enabling them to interact and exchange data or assets.

Examples of Bridges include:

Rainbow Bridge which allows users to transfer assets between Near, Aurora, and Ethereum.
The Aptos Bridge which enables users to transfer assets between Aptos, Ethereum, BNB Chain, Optimism, and Arbitrum.
Mayan Finance , which facilitates asset transfers between Solana, Ethereum, BNB Chain, and Arbitrum.
Stargate , a cross-chain bridge that allows users to transfer assets across most chains.

6. Coin

A coin is a cryptocurrency issued on a separate blockchain and operates independently. Coins possess the fundamental features of fiat currency, created to address payment, financial, security, and application development issues specific to that blockchain.

In simple terms, what is a coin? A coin is a cryptocurrency issued on a blockchain.

Each blockchain has only one unique coin.

Examples include:

Bitcoin has the coin BTC.
Ethereum has the coin Ether (ETH).
BNB Chain has the coin BNB.

7. Token

Token is a cryptocurrency that is issued and operates on the blockchain of existing projects or third parties. Tokens do not have their own blockchain.

While coins are modeled after traditional currencies, tokens are akin to assets or can be understood as ownership documents. Tokens can be bought, sold, and traded like coins; however, they are not used as a medium of exchange or payment.

Examples include:

Uniswap lists the UNI token on the Ethereum network.
Chainlink lists the LINK token on the Ethereum network.
Uniswap and Chainlink do not have their own blockchain.

8. Address

A wallet address in the cryptocurrency realm is a string of characters that represents a location on the blockchain network. It is a unique address used to receive and send various cryptocurrencies, such as Bitcoin, Ethereum, or other tokens.

Each wallet address is unique and is generated through a process of encryption and hashing of the user's public key. Wallet addresses are typically represented as a combination of numbers and letters, for example: "1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa" for a Bitcoin wallet address.

Wallet addresses are commonly used to receive and send payments. When someone wants to send cryptocurrency to you, they only need to know your wallet address and send the corresponding amount to that address. Wallet addresses can also be used to view transaction information related to that wallet on the blockchain.

9. Domain name

n the crypto space, a domain name represents a wallet address. Domain names make wallet addresses easier to remember, facilitating transactions. Domain names can be traded on NFT marketplaces.

Some projects providing domain name services include ENS and SpaceID.

10. Stablecoin

A stablecoin is a type of cryptocurrency designed to maintain a stable value and exhibit low volatility compared to traditional currencies such as the USD, EUR, or JPY. The goal of stablecoins is to provide a stable medium of payment and store value within the cryptocurrency ecosystem.

Common types of stablecoins include:

Tethered/Backed Stablecoin: This type of stablecoin is backed by traditional assets such as cash or gold. Each unit of stablecoin has an asset backing it to ensure stable value. The most common example of this type is Tether (USDT), where each USDT is backed by a US dollar.
Algorithmic Stablecoin: This type of stablecoin does not rely on traditional assets but uses algorithms and mechanisms to ensure stable value. This may include increasing or decreasing the supply of the cryptocurrency based on demand and other indicators.
Hybrid Stablecoin: This type of stablecoin combines both asset backing and algorithmic elements. An example of this type is USD Coin (USDC), which is pegged to the USD and verified by bank accounts and independent audits.

11. Burn

Burning refers to the action of sending a certain amount of tokens to an inaccessible or unspendable address, rendering those tokens unusable or untradeable. This address is known as a burn address.

A burn address is typically created without a corresponding private key, meaning no one can access the tokens sent to that address.

12. Testnet

A testnet is a trial version of a main network, allowing users to experiment with transactions and features.

Testnets play a crucial role in developing and testing applications and features before deploying them on the main network.

Tokens on a testnet are not real and often have unique names, such as "tETH" (Ethereum Testnet Ether). These tokens cannot be exchanged for real money and cannot be used outside the test environment.

Testnets can undergo frequent updates and changes to test the network's stability and the functionality of new versions of blockchain software, allowing developers and the community to experiment with new features without worrying about affecting the mainnet.

Examples of testnets include:

Avalanche Fuji Testnet
Polygon Mumbai Testnet
Aurora Testnet
Goerli Testnet

13. Mainnet

Mainnet refers to the primary network of a blockchain project. This is where real transactions and applications operate, and all transactions executed on the mainnet impact actual assets and currency.

Examples of mainnet chains include:

Ethereum Mainnet
BNB Chain
Avalanche Network C-chain
Sui
Aptos

14. Faucet

A faucet is an action that requests permission to receive a certain amount of test coins/tokens from the project's team during the testnet or devnet phase. This helps users experience and familiarize themselves with new technological products in a risk-free manner.

Some websites offering Crypto Faucets include:

FTM Faucet: https://faucet.fantom.network/ providing free FTM to users on the Fantom testnet.
Avalanche Testnet Faucet: https://core.app/tools/testnet-faucet/?subnet=c&token=c providing AVAX on the Fuji network (C-chain).
MUMBAI FAUCET: https://mumbaifaucet.com/ providing free MATIC for the Polygon testnet.
Triangle Faucet: https://faucet.triangleplatform.com/arbitrum/goerli providing ETH or WETH on the Arbitrum Goerli network.

15. DEX

A DEX, or Decentralized Exchange, is a cryptocurrency trading platform that operates without the need for a third-party intermediary. In a DEX, transactions occur directly between buyers and sellers through smart contracts and blockchain protocols.

DEXs eliminate the need for intermediaries, allowing users to trade anonymously without KYC requirements, utilizing blockchain technology that offers high security and resistance to hacks.

Notable DEXs include: Uniswap, PancakeSwap, QuickSwap, DODO.

16. Yield Farming

Yield Farming is a method for users to earn passive income by providing liquidity. This is done by depositing cryptocurrencies into DeFi liquidity pools or staking pools.

17. Lending và Borrowing

Lending involves providing your money or digital assets through a DeFi protocol or other decentralized financial systems for others to borrow. This allows you to earn interest from your capital.

Borrowing is the process of obtaining money or digital assets from a DeFi protocol or another decentralized financial system without going through traditional intermediaries like banks.

In DeFi, both lending and borrowing are executed via smart contracts.

Notable lending projects include AAVE, Venus, and Radiant.

18. Derivatives

In the cryptocurrency realm, derivatives are financial contracts whose value depends on the value of a specific cryptocurrency asset or cryptocurrency indices. Derivatives in crypto allow investors and users to engage in complex trading activities and manage risk in the cryptocurrency market.

Common types of derivatives in crypto include:

Cryptocurrency Futures: These are contracts to buy or sell a cryptocurrency asset at a predetermined price and time. Cryptocurrency futures enable investors to buy or sell cryptocurrencies at a fixed price in the future, helping them hedge and invest without directly owning the asset.
Cryptocurrency Options: Cryptocurrency options grant the buyer the right, but not the obligation, to buy or sell a cryptocurrency asset at a specified price and time. Cryptocurrency options are used for speculation and to hedge against price volatility.

Notable derivatives projects include DYDX, GMX, and Synfutures.

19. Launchpad

Launchpad is a fundraising platform built on CEXs and DEXs, or developed by the project itself, to help crypto projects promote and raise funds.

The attractiveness of participating in a Launchpad lies in the potential for high returns. Many tokens have listed at prices many times higher than their Launchpad price, with all-time highs (ATH) reaching x100 or even x1000, as seen with tokens like GRT and Flow.

20. Pool Liquidity

In DeFi, liquidity pool refers to the process of combining different digital assets into a "pool" to create liquidity and facilitate trading within a DeFi protocol.

DeFi protocols use the Automated Market Maker (AMM) model to create decentralized markets. These markets are formed by pairing digital assets in liquidity pools, such as ETH/DAI or USDT/USDC.

21. Staking

Staking in DeFi is the process of locking a certain amount of digital assets in a DeFi protocol or decentralized financial system to contribute to network operations and earn rewards or returns.

Participating in staking also carries risks, including asset value fluctuations, loss of assets, technical risks, and network risks. Participants need to carefully consider and understand the risks and conditions of staking in DeFi protocols before getting involved.

22. TVL

TVL stands for "Total Value Locked." It is a metric commonly used in decentralized finance (DeFi) to measure the total value of digital assets locked in a specific DeFi protocol or decentralized financial system.

TVL is typically calculated based on the total value of digital assets (usually tokens) locked in smart contracts or DeFi protocols. These assets are often used to provide liquidity, lend, or perform other activities in DeFi. TVL reflects the scale and scope of decentralized financial activity within the DeFi ecosystem.

Some sites that help track TVL include DefiLlama and DappRadar.

23. Airdrop

Airdrop is an activity in which a project distributes coins/tokens to the community, typically for newly launched tokens. This is a way for them to attract community attention and introduce their project to a wider audience.

24. Retroactive

Retroactive refers to users engaging in experiences with a crypto project's features in search of opportunities to receive airdrops from the project.

25. IDO

IDO stands for "Initial DEX Offering." It is a method of token issuance that new cryptocurrency projects use to raise funds directly from users through decentralized exchanges (DEXs).

The IDO method helps new cryptocurrency projects raise capital and increase liquidity from the outset. It also provides potential community members with an early opportunity to participate in the project and purchase tokens at the initial price.

However, participating in an IDO also carries risks, including market risks, asset risks, and technical risks. Participants should thoroughly research the project, tokens, and consider the risks before participating in an IDO.

26. Smart contract

Smart Contract is a special programming protocol that runs on a blockchain platform, designed to execute and automate transactions and actions based on specific rules. Smart contracts operate based on the rules and terms predefined by the programmer, and when conditions are met, they automatically execute the specified actions.

27. Gas fee

Gas fee is the cost incurred for executing transactions or performing operations on a blockchain network.

Most public blockchains, such as Ethereum, use a gas-based pricing model to manage network resources and ensure transaction accuracy and security. Gas fees represent the amount of network resources (such as computation and storage) that a transaction or activity requires.

Gas fees are typically paid in the native token of the blockchain network. For example, on Ethereum, gas fees are paid in Ether (ETH). Users must have enough of this token in their wallets to cover gas fees when executing transactions.

Gas fee levels fluctuate over time and depending on network conditions. When the network is congested or many transactions are competing, gas fees can rise, while they may decrease when the network is relatively empty.

28. DApps

DApps, or Decentralized Applications, are decentralized applications that operate on blockchain networks or other cryptocurrency platforms. The characteristic of DApps is that they are built and deployed on decentralized networks, not relying on a single intermediary organization.

29. DAO

A DAO, or Decentralized Autonomous Organization, is a form of decentralized organization that operates based on principles and rules encoded within a blockchain or another cryptocurrency platform. A DAO is designed to function without traditional intermediaries and relies on smart contracts and voting mechanisms to make decisions and carry out activities.

30. ATH

ATH stands for "All-Time High," which refers to the highest price that an asset or market has ever reached in the past.

For example, if BTC reaches $100,000, it means the price of BTC has surpassed all previous highs and reached its all-time peak.

31. ATL

ATL stands for "All-Time Low," which refers to the lowest price that a coin or market has ever reached in the past.

32. Scam

Scam refers to fraudulent actions. A scam coin, also known as a fraudulent coin, is a type of cryptocurrency that has no real value and is created with the intent to deceive users and steal their assets.

33. Shitcoin

Shitcoin is a term used within the cryptocurrency community to refer to coins that have little or no real value and lack potential for development. This term is often used to describe coins that are unreliable, unstable, or lack support from the community and exchanges.

34. Seed phrase

A seed phrase (also known as a recovery phrase, mnemonic phrase, or backup phrase) is a random sequence of words generated to represent the secret key of a cryptocurrency wallet. The seed phrase is used to restore your cryptocurrency wallet in case of lost phones, damaged computers, or other issues.

Seed phrases typically consist of 12, 18, or 24 words selected from a word list (usually the BIP39 list). The words in a seed phrase are arranged in a specific order and must be recorded and secured carefully. With a seed phrase, you can restore all of your wallet addresses, private keys, and transaction information.

Most importantly, the seed phrase is the secret key to your cryptocurrency assets. Therefore, it needs to be kept confidential and secure. You should write the seed phrase down on a durable medium, such as paper, and store it in a safe place away from risks like theft or damage. Additionally, avoid sharing your seed phrase with anyone, as others could use it to access and steal your cryptocurrency assets.

35. Whitelist

A whitelist is a list of wallet addresses or users permitted to participate in a specific event, such as an IDO, NFT minting, or a particular trading system.

36. Whitepaper

A whitepaper is a detailed document that describes a cryptocurrency project or a blockchain protocol. It is typically written by the development team or project founders to introduce the idea, objectives, technical structure, and operational methods of the project.

Whitepapers provide technical, business, and legal information related to the project and may include sections such as:

Abstract: A brief summary of the project and its key aspects.
Problem: A description of the issue or challenge the project aims to address.
Solution: An explanation of how the project proposes to solve the identified problem using blockchain technology or other methods.
Technical Architecture: A description of the project's technical structure, including algorithms, protocols, and operational mechanisms.
Business Model: An overview of the project's business model, including how it will create value and generate income.
Benefits and Applications: An explanation of the project's benefits and applications in specific fields.
History and Development Team: An introduction to the project's history and the members of the development team.

Whitepapers are often crucial documents for investors and the community to evaluate and understand the project. They provide a basis for assessing the feasibility, potential, and technology of a cryptocurrency project.

37. Shill

Shill refers to the act of promoting or pushing a cryptocurrency or project in a dishonest or non-transparent manner. A person who engages in shilling is referred to as a "shill."

Typically, shills create positive posts or messages about a specific cryptocurrency, which may appear on forums, social media, Telegram groups, or YouTube channels. The goal of shilling is to create a positive sentiment around that cryptocurrency and persuade other investors to buy or participate in the project.

38. DYOR

DYOR khuyến khích người dùng tự tìm hiểu và nghiên cứu thật kỹ về một đồng tiền điện tử, dự án hoặc cơ hội đầu tư trước khi đưa ra quyết định đầu tư. Thay vì chỉ dựa vào thông tin từ nguồn không tin cậy hoặc lời khuyên từ người khác, DYOR gợi ý rằng bạn nên tự mình làm rõ thông tin và đánh giá rủi ro.

Khi thực hiện DYOR, bạn có thể:

Đọc whitepaper: Nghiên cứu tài liệu chính thức của một dự án tiền điện tử để hiểu về mục tiêu, công nghệ và kế hoạch của dự án.
Tìm hiểu về đội ngũ phát triển: Xem xét kinh nghiệm và thành tựu của đội ngũ, đảm bảo rằng họ có đủ năng lực để thực hiện dự án.
Kiểm tra sự phù hợp với thị trường: Xem xét cách mà dự án hoặc đồng tiền điện tử phù hợp với nhu cầu và xu hướng của thị trường.
Đánh giá cạnh tranh: Tìm hiểu về các dự án hoặc đồng tiền điện tử cạnh tranh và so sánh để có cái nhìn tổng quan về thị trường.
Theo dõi tin tức và diễn đàn: Đọc các tin tức, bài viết, diễn đàn và sự kiện liên quan để cập nhật thông tin mới nhất về dự án hoặc đồng tiền điện tử.

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