Glossary

Blockchain, cryptocurrency, tokens, NFTs… these are some of the most searched key terms in the fintech industry today, mainly because these crypto terms are current and “new,” and to some, they may seem overly complex.

If you’re interested in DeFi or TradFi you’ll stumble across one or more of these terms to know, which is why we thought we’d share a comprehensive glossary to make these concepts simple and digestible.

This glossary will bring you up to speed with all the relevant DeFi and TradFi terms to know – all geared towards bolstering the understanding and widespread application of all of these concepts within the industry and beyond. 

Bookmark this page for future reference, and don’t forget to refer back to it –We will be updating it often.



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Interoperability

The ability of different blockchain networks to exchange and leverage data between one another and to move unique types of digital assets between the networks' respective blockchains.

Isolated Margin

The margin balance that is allocated to a position.

Issuance

The generation and distribution of a new cryptocurrency or token.

Know Your Business (KYB)

Like KYC, but for businesses, KYB compliance requires businesses to collect vital information about the partners associated with their business and check if they are complying with Anti-Money Laundering regulations.

Know Your Customer (KYC)

The process of verifying the identity of customer. The key objective of KYC guidelines is to prevent financial service providers from being used by criminal elements for money laundering activities.

Latency

The time that elapses between when a transaction is submitted to a network and the first confirmation of acceptance by the network.

Law of Demand

The willingness of consumers to buy a certain good or service for a particular price.

Layer 2

A secondary framework or protocol that is built on top of a blockchain network for the purpose of providing increased scalability.

Ledger

A physical book, digital computer file or collection of accounts where transactions are recorded.

Lending

the action of allowing a person or organization the use of a sum of money under an agreement to pay it back later.

Library

A collection of stable resources such as executable files, documentation, message templates, and written code.

Lightning Network

A layer 2 scaling solution designed for Bitcoin that enables increased transaction speeds among participating nodes.

Linux

Popular open source operating system that is used in a wide range of devices around the world.

Liquidation

The term “liquidation” simply means converting assets to cash. Forced liquidation in crypto trading refers to an involuntary conversion of crypto assets into cash or cash equivalents (such as stablecoins). Forced liquidation occurs when a trader fails to meet the margin requirement set for a leveraged position.

Liquidation Threshold

The liquidation threshold is the percentage at which a loan is defined as undercollateralised. For example, a Liquidation threshold of 80% means that if the value rises above 80% of the collateral, the loan is undercollateralised and could be liquidated.

Liquidity

The ability of a coin to be easily converted into cash or other coins. In this sense, good liquidity means that an asset can be quickly and easily bought or sold without having much effect on its price.

Liquidity Mining

Liquidity mining is a mechanism or process in which participants supply cryptocurrencies into liquidity pools, and are rewarded with fees and tokens based on their share.

Liquidity Pool (LP) Staking

Staking a token that you receive for providing liquidity to cryptocurrency market. Providing liquidity requires staking equal values of different tokens, which generates a LP token. This new LP token is then staked in a new pool in order to earn a yield.

Liquidity Pool (LP) Token

A Token that is received for providing equal value of liquidity to both sides of a money market.

Listing

The addition of an asset to an exchange.

Loan

In finance, a loan refers to the lending of money by one or more individuals or organisation to other individuals, organisations, etc. The recipient incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed.

Loan to Value Ratio (LVR)

The value of a loan as a percentage of the value of your asset. In realestate, the LVR formula is calculated by dividing the loan by the property's value.

Lockdrop

A new method for distributing tokens without raising money. It's similar to an airdrop, but incentivizes participation on a network.The purpose of a lockdrop is to distribute a new network’s tokens to a wide variety of holders or participants. To do this, token holders of one network, such as Etherem, will need to lock their ETH into a smart contract for a certain amount of time in order to receive tokens from the new network. Normally, the longer the existing tokens are locked in that smart contract, the more tokens that holder will receive in the new network. After the time period is completed, the original tokens are returned to the owner.

Mainnet

An independent blockchain protocol which is fully developed and running its own network where transactions are being broadcasted, verified and recorded.

Mainnet Swap

When a coin migrates from being hosted on a third party protocol to a native on-chain token on its own mainnet.

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