Glossary
Leverage
Borrowed exposure that lets you trade a larger position than your own capital covers.
Leverage means controlling a position larger than the margin you posted. Ten times leverage on a small deposit gives you the upside and the downside of a position ten times as large.
Returns and losses scale together. Leverage does not improve a strategy, it increases the size of the outcome, including the outcome where the position goes against you and the margin is consumed.
Fees, funding payments, and liquidation thresholds all apply on the full borrowed size, so a leveraged position that would be unremarkable as a spot holding can lose principal in days without ever moving much.
Related terms
Airdrop
Free tokens distributed to wallet addresses, usually to reward early users of a protocol.
AMM
Automated Market Maker — a protocol that prices assets with a formula instead of an order book.
APR vs APY
APR is the yearly rate without compounding; APY includes compounding and is always higher.
ATH
All-Time High — the highest price an asset has ever traded at.
Bear Market
A prolonged decline, conventionally 20% or more from recent highs.
Bull Market
A prolonged rise driven by new demand, easy credit and rising confidence.