Bitcoin Yield Glossary
Comprehensive definitions of Bitcoin yield and DeFi terms
A
Annual Percentage Yield (APY)
The real rate of return earned on an investment, taking into account the effect of compounding interest over a year.
Automated Market Maker (AMM)
A type of decentralized exchange protocol that uses mathematical formulas to price assets.
B
Babylon Protocol
A Bitcoin staking protocol that enables Bitcoin holders to earn yield by securing Proof-of-Stake networks.
Bridge Risk
The risk associated with transferring assets between different blockchain networks using cross-chain bridges.
Byzantine Fault Tolerance
A property of distributed systems that allows them to function correctly even when some nodes fail or act maliciously.
C
Consensus Mechanism
The method by which a blockchain network agrees on the validity of transactions and maintains the ledger.
Counterparty Risk
The risk that the other party in a financial transaction will default on their contractual obligation.
Custodial Risk
The risk of loss when a third party holds and manages your cryptocurrency or digital assets.
D
Delegated Proof of Stake (DPoS)
A variation of PoS where token holders vote for delegates who validate transactions on their behalf.
E
Epoch
A fixed period of time in blockchain networks, often used to measure staking periods and reward distribution.
F
Finality
The assurance or guarantee that cryptocurrency transactions cannot be altered, reversed, or canceled.
Flash Loan
A type of uncollateralized loan that must be borrowed and repaid within the same blockchain transaction.
G
Governance Token
A cryptocurrency that gives holders voting rights in the governance of a decentralized protocol.
I
Impermanent Loss
The temporary loss of funds experienced by liquidity providers due to volatility in a trading pair.
L
Liquid Staking Token (LST)
A token that represents staked cryptocurrency, allowing holders to maintain liquidity while earning staking rewards.
Liquidity Provider (LP)
A user who deposits tokens into a liquidity pool to facilitate trading and earn fees.
M
MEV (Maximal Extractable Value)
The maximum value that can be extracted from block production in excess of standard block rewards.
O
Oracle
A service that provides external data to blockchain networks and smart contracts.
P
Proof of Stake (PoS)
A consensus mechanism where validators are chosen to create new blocks based on their stake in the network.
R
Restaking
The practice of using already-staked tokens to secure additional networks and earn extra rewards.
S
Slashing
A penalty mechanism in PoS networks where validators lose a portion of their staked tokens for malicious behavior.
Smart Contract Risk
The risk of financial loss due to bugs, vulnerabilities, or exploits in smart contract code.
T
Total Value Locked (TVL)
The total amount of cryptocurrency assets locked in a DeFi protocol or platform.
V
Validator
A network participant responsible for verifying transactions and maintaining consensus in a blockchain network.
Y
Yield Farming
The practice of earning rewards by providing liquidity or staking tokens in DeFi protocols.