DeFi Glossary
Clear, practical definitions of crypto and DeFi terminology. Learn how each concept applies to synthetic asset trading.
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.
Lending Protocol
A DeFi application that allows users to lend assets and earn yield, or borrow against collateral.
Technical
All Terms A-Z
Get early access to Continuum and trade synthetic assets 24/7 on Solana.
Get Early Access