📚Glossary

Here you will find the words of the DeFi world

• Annual Percentage Rate (APR): In DeFi, the yearly rate of return for activities like staking or providing liquidity, not considering compounding. Useful for estimating potential earnings or costs on crypto platforms.

• Annual Percentage Yield (APY): In DeFi, the yearly rate of return for activities like staking or providing liquidity, taking into account the effect of compounding. Helpful for understanding the potential growth of your investment on crypto platforms.

• Automated Market Maker (AMM): An Automated Market Maker (AMM) is a type of decentralized exchange (DEX) protocol that relies on a mathematical formula to price assets. Instead of using an order book like a traditional exchange, assets are priced according to a pricing algorithm. This enables decentralized and automated trading without the need for intermediaries.

• Borrowing: The act of obtaining assets from a decentralized lending platform by providing collateral in the form of other assets.

• Blockchain: A decentralized and transparent digital ledger technology that securely records and verifies transactions across a network of computers, enabling trust and eliminating the need for intermediaries. It is widely used across industries for enhancing transparency, efficiency, and security in data management and transactions.

• Collateral: Assets that are pledged to secure a loan. In DeFi, collateral is typically locked in a smart contract to ensure loan repayment.

• Cross-Chain Bridges: Mechanisms that facilitate the transfer of assets and data between different blockchain networks, enabling interoperability and expanding DeFi capabilities.

• DEX (Decentralized Exchange): A type of cryptocurrency exchange that operates on a decentralized network, allowing users to trade digital assets directly with each other without the need for intermediaries. DEXs provide increased privacy, control over funds, and greater resistance to censorship compared to centralized exchanges.

• DEX Tokens: Tokens specific to decentralized exchanges, often used for governance, fee sharing, or as a reward mechanism for liquidity providers.

• Decentralized Autonomous Organization (DAO): Organizations governed by smart contracts, where participants collectively make decisions and manage funds through voting and proposals.

• ERC20 Tokens: A type of cryptocurrency that exists on the Ethereum platform. ERC20 tokens are stored and sent using Ethereum addresses and transactions.

• Ethereum Virtual Machine (EVM): A runtime environment for Ethereum smart contracts. It is completely isolated from the main Ethereum network, which makes it a perfect sandbox for testing smart contracts.

• Farming: In DeFi, the process of earning rewards by staking or lending digital assets in a cryptocurrency protocol.

• Fictive Reserve (FR): A unique feature of SmarDex that helps manage the issue of Impermanent Loss.

• Governance Token: Tokens that grant holders the right to participate in the governance and decision-making processes of a decentralized protocol or platform.

• Impermanent Gain (IG): A potential gain, as theorized by SmarDex, that can be achieved by managing liquidity differently.

• Impermanent Loss (IL): A DeFi phenomenon referring to a change in the price of tokens compared to when a market participant deposited those tokens in the pool.

• Lending: The practice of providing loans to borrowers through decentralized lending platforms, where lenders earn interest on their deposited assets.

• Liquidity: The availability of assets to a market or company. In DeFi, liquidity is often provided by users who receive rewards for their efforts.

• SDEX Token: The primary token of SmarDex. It can be staked by users to earn passive income as a result of farming rewards and protocol fees.

• Smart Contract: A self-executing digital agreement where the terms and conditions are written in code. They operate on blockchain technology, automatically carrying out transactions and agreements without needing a third-party intermediary.

• Stablecoin: A type of cryptocurrency designed to maintain a stable value, often pegged to a fiat currency like USD. Stablecoins provide stability within the volatile crypto market.

• Staking: Participating in a proof-of-stake (PoS) system. In the context of DeFi, it often involves staking a token to earn rewards.

• Swap: The exchange of one asset or token for another, often done through decentralized platforms without a middleman.

• Synthetic Assets: Tokens that represent the value of an underlying asset but do not have a direct connection to it. Synthetic assets enable exposure to various assets without owning them physically.

• Tokenomics: The economic system governing the behavior, distribution, and use of tokens within a blockchain ecosystem or cryptocurrency project. It encompasses factors like token supply, distribution, utility, governance, and incentives for participants.

• Volatility Vault (Liquidity Pools): Liquidity Pools, essential for DEXs, are pools of tokens that facilitate transactions by providing the necessary liquidity (they are often design as pair of 2 tokens). Volatility Vaults, a SmarDex innovation, redefine these pools by employing an algorithm with a fictive reserve strategy for dynamic liquidity management. Aimed at minimizing Impermanent Loss and potentially generating Impermanent Gains, these innovative Liquidity Pools offer enhanced protection and benefits to Liquidity Providers, optimizing returns in the DeFi ecosystem. This algorithm is optimised for high volatility pools.

• Volatility Vault Liquidity Providing Tokens (LP tokens): Tokens received by liquidity providers as proof of their contribution to the Volatility Vaults at SmarDex, an evolution of traditional Liquidity Pools in decentralized exchanges. The LP Tokens symbolize the held participation and can be used for various DeFi activities, such as yield farming, illustrating SmarDex's commitment to optimizing returns and enriching the DeFi ecosystem. The LP tokens are also standard ERC20 tokens that can be transfered from a user to another or traded.

• Wrapped Tokens (WETH, WBTC): Tokens that represent other cryptocurrencies but are wrapped in a standardized format compatible with the Ethereum blockchain.

• Yield Farming: The process of earning passive income by providing liquidity or staking assets in various DeFi protocols to maximize returns.

• Yield Farming Campaigns: These are specialized programs set up by DeFi platforms like SmarDex that provide additional earning opportunities. In a yield farming campaign, users stake their liquidity in specific pools for a set period to earn extra rewards, often in the platform's native token. These campaigns focus on promoting specific trading pairs or bolstering the platform's liquidity.