Follow the DeFi rabbit hole.
Get from “what’s a swap?” to liquidity pools and impermanent loss, one useful word at a time.
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Start this threadSmart contract
A program on a blockchain that executes defined rules when it is invoked.
DeFi
Decentralized finance: financial applications that use blockchain protocols and smart contracts.
Decentralized exchange
An exchange whose trading execution or settlement relies on blockchain protocols.
Automated market maker
A trading mechanism that uses an algorithm and available liquidity to quote or determine exchange prices.
Liquidity pool
Assets held under a protocol’s rules to support activities such as swaps or lending.
Impermanent loss
A liquidity position’s value shortfall compared with holding the deposited assets, caused by changing relative prices.
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