Words starting with L
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Layer 1
A blockchain's base network, responsible for its own consensus and canonical state.
Layer 2
A system that processes activity outside a base blockchain while relying on it for key security or settlement functions.
Leverage
Exposure to a position larger than the capital directly supporting it.
Light client
A client that checks selected blockchain information using compact proofs and protocol-specific assumptions.
Lightning Network
A Bitcoin payment network that uses channels so every payment does not need its own onchain record.
Limit order
An order that buys only at or below a chosen price, or sells only at or above it.
Liquid staking
Staking through a system that issues a transferable token representing a staking position or claim.
Liquid staking token
A transferable token representing a claim connected to assets in a liquid staking protocol.
Liquidation
The forced repayment or closing of a position that no longer meets its collateral or margin rules.
Liquidation threshold
The collateral parameter used to determine when a borrowing position becomes eligible for liquidation.
Liquidity
The ability to trade an amount of an asset without a large delay or adverse price effect.
Liquidity mining
Distributing token incentives to participants who provide liquidity or perform qualifying protocol activities.
Liquidity pool
Assets held under a protocol’s rules to support activities such as swaps or lending.
Liquidity provider
A participant who supplies assets for a protocol’s trading, lending or other liquidity needs.
Loan-to-value
A loan’s value relative to its collateral value, often expressed as a percentage.
LP token
A token representing a liquidity provider’s claim on a pool or liquidity position.
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