A collection of funds locked in a smart contract, used to facilitate decentralized trading, lending, and many other functions on a DeFi platform. Liquidity pools are essential for ensuring enough liquidity on a decentralized exchange (DEX) and enable users to earn fees by providing liquidity.

Solutions built on top of a base blockchain (Layer 1) to enhance scalability and transaction speed without sacrificing security. Layer 2 solutions, such as state channels, plasma chains, and rollups, offload transactions from the main chain, thereby reducing congestion and fees.

A regulatory and compliance process where businesses verify the identity of their clients in order to prevent money laundering, terrorist financing, and other illegal financial activities. In the cryptocurrency world, KYC processes are often implemented by exchanges and wallets.

The ability of different blockchain networks to communicate and interact with each other seamlessly. Interoperability is crucial for the widespread adoption of blockchain technology, as it enables the exchange of information and value across diverse blockchain systems.

A term used in DeFi, particularly in the context of providing liquidity to a liquidity pool, referring to the temporary loss of funds experienced by liquidity providers due to volatility in the price of assets in the pool. It occurs when the price of deposited assets changes compared to when they were deposited.

In the context of an Initial Coin Offering (ICO) or token sale, the hard cap is the maximum amount of funds that the project plans to raise. Once the hard cap is reached, the project stops accepting additional funds.

A denomination of ether (ETH), the native cryptocurrency of the Ethereum network. One gwei equals one billionth of an ether. Gwei is commonly used to measure gas fees, which are payments made by users to compensate for the computing energy required to process and validate transactions on the Ethereum blockchain.

A type of loan in DeFi that allows borrowers to access significant amounts of cryptocurrency for a very short period, typically without collateral. The loan must be borrowed and repaid within the same blockchain transaction, enabling sophisticated trading strategies without upfront capital.

In the context of decentralized finance (DeFi), farming refers to the practice of staking or locking up cryptocurrencies in a smart contract to earn rewards or interest. This includes liquidity mining, where users provide liquidity to a DEX and earn fees from trades.

A standard way of proposing improvements to the Ethereum network, detailing potential new features, processes, or environment changes. EIPs play a critical role in the democratic and open governance model of Ethereum, allowing for community input and evolution.