DeFi Glossary
Every key term from the CryptaCore guides, defined in plain language on one page. Each definition points you to the guide that covers the topic in depth.
Foundations
DeFi
Decentralised finance: financial services — trading, lending, saving — built as open smart contracts on public blockchains, running without banks or brokers. Anyone with a wallet can use them directly. Covered in depth in the What is DeFi? guide.
Smart contract
A program stored on a blockchain that executes automatically once its conditions are met — no intermediary required. Every DeFi protocol is a set of smart contracts. Covered in depth in the What is DeFi? guide.
Gas
The fee paid to the network for processing a transaction, priced by computational load. On Layer 2 networks in 2026, a typical transaction costs cents. Covered in depth in the Gas Fees guide.
Seed phrase (recovery phrase)
The 12 or 24 words that back up your wallet; anyone who holds them controls your funds. Never type it into a website and never share it — no legitimate service asks for it. Covered in depth in the Wallet Setup guide.
Stablecoin
A token designed to hold a fixed value — usually 1 US dollar — backed by reserves such as cash and treasury bills. The workhorse of trading and saving in DeFi. Covered in depth in the Stablecoins guide.
Layer 2
A network built on top of Ethereum that processes transactions cheaply and fast, then anchors them to the main chain for security. Examples: Arbitrum, Base, Optimism. Covered in depth in the Gas Fees guide.
Trading
DEX
Decentralised exchange: smart contracts that let you swap tokens directly from your wallet, with no account and no custodian. Covered in depth in the DEXs & Token Swaps guide.
AMM (automated market maker)
The pricing mechanism most DEXs use instead of an order book: a formula derives the price from the ratio of tokens in a liquidity pool. Trades shift the ratio — and with it the price. Covered in depth in the DEXs & Token Swaps guide.
Liquidity pool
A pot of two (or more) tokens deposited by users that traders swap against; depositors earn the trading fees. Covered in depth in the Liquidity Provision & Impermanent Loss guide.
Slippage
The price movement between submitting a swap and its confirmation; your slippage tolerance is the maximum you accept before the trade reverts. Covered in depth in the DEXs & Token Swaps guide.
Price impact
How much your own trade moves the pool price. High impact means the pool is too shallow for your trade size. Covered in depth in the DEXs & Token Swaps guide.
MEV
Maximal extractable value: profit that block builders and bots extract by reordering, inserting, or sandwiching transactions. Private order flow and intents defend against it. Covered in depth in the MEV guide.
Intent
Instead of a raw transaction, you sign the outcome you want ("sell X, receive at least Y") and competing solvers execute it — with built-in MEV protection. Covered in depth in the DEXs & Token Swaps guide.
Funding rate (perps)
The periodic payment between longs and shorts on perpetual futures that keeps the contract price pinned to the spot price. Positive funding: longs pay shorts. Covered in depth in the Perpetual Futures guide.
Aggregator
A service (such as 1inch) that compares prices across many DEXs and splits your trade across routes for a better net price. Covered in depth in the DEXs & Token Swaps guide.
Yield
APY vs APR
APR is the simple annual rate; APY includes compounding, so the same yield shows a higher number as APY. Protocols often display whichever looks better — always check which one you are seeing. Covered in depth in the Liquidity Provision & Impermanent Loss guide.
Impermanent loss
The value shortfall of a liquidity position versus simply holding the tokens, caused by prices drifting apart. A 2x price move costs roughly 5.7 %. Covered in depth in the Liquidity Provision & Impermanent Loss guide.
Staking
Locking ETH (or another proof-of-stake token) to help secure the network in exchange for protocol rewards. Covered in depth in the Staking, Liquid Staking & Restaking guide.
Liquid staking token (LST)
A token (such as stETH) you receive for staked ETH that keeps earning rewards while staying tradable and usable across DeFi. Covered in depth in the Staking, Liquid Staking & Restaking guide.
Restaking
Reusing already-staked ETH to secure additional services for extra yield — with stacked, additional risks. Covered in depth in the Staking, Liquid Staking & Restaking guide.
TVL
Total value locked: the dollar value of assets deposited in a protocol. It misleads because it swings with token prices and can be inflated by double-counting or incentives — it measures size, not safety. Covered in depth in the Reading On-Chain Data guide.
Safety & Regulation
Token approval / permit
Permission you grant a contract to move your tokens; a permit is the signature-based (gasless) variant. Grant limited amounts and revoke old approvals regularly. Covered in depth in the DeFi Security Essentials guide.
Signature phishing / drainer
Scams that trick you into signing a message or approval that empties your wallet. Around 75 % of the value stolen in 2025 traced back to signing mistakes and key compromise, not smart contract bugs. Covered in depth in the DeFi Security Essentials guide.
CASP (MiCA)
Crypto-Asset Service Provider: the EU licence category under MiCA. Since the transitional period ended on 1 July 2026, providers serving EU customers need full authorisation. Covered in depth in the MiCA Enforcement Watch guide.
DAC8 / CARF
The EU and OECD frameworks for automatic tax reporting of crypto transactions. Providers have been collecting data since January 2026; the first exchanges between tax authorities follow in 2027. Covered in depth in the DeFi Taxes & Reporting guide.