DeFi Glossary
Plain definitions of the terms that come up when you trade synthetics, and what each one means once you're actually holding a position.
Basics
Synthetic Asset
A token that tracks the price of another asset without requiring ownership of the underlying.
Long Token (L Token)
A token that gains value when the underlying asset price increases.
Short Token (S Token)
A token that gains value when the underlying asset price decreases.
Collateral
Assets deposited to back or secure a financial position.
Redemption
The process of burning synthetic tokens to receive back the underlying collateral.
Minting
The process of creating new synthetic tokens by depositing collateral.
Trading
Liquidation
Forced closure of a position when collateral value falls below required levels.
Leverage
Using borrowed capital to amplify the potential returns (and risks) of a position.
Funding Rate
Periodic payments between long and short traders in perpetual futures.
Perpetual Futures (Perps)
Futures contracts with no expiration date that track an underlying asset.
Arbitrage
Profiting from price differences of the same asset across different markets.
Health Factor
A metric indicating how close a leveraged position is to liquidation.
Overcollateralization
Providing more collateral than the value of the loan or position to protect against price volatility.
DeFi
Composability
The ability of DeFi protocols and tokens to work together like building blocks.
Real World Assets (RWA)
Traditional assets like stocks, bonds, or real estate that are tokenized and brought on-chain.
Meteora DLMM
A Dynamic Liquidity Market Maker on Solana using discrete price bins for concentrated liquidity.
Lending Protocol
A DeFi application that allows users to lend assets and earn yield, or borrow against collateral.
Technical
Oracle
A service that brings off-chain data (like prices) onto the blockchain.
SPL Token
The standard token format on the Solana blockchain.
Pyth Network
A high-frequency oracle network providing real-time price data on Solana.
Jito Bundles
Atomic transaction bundles on Solana that protect against MEV frontrunning.
All Terms A-Z
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