Glossary
Liquidity Pool
A pool of funds locked in a smart contract that anyone can trade against.
A liquidity pool is a pot of two tokens locked in a contract that anyone can trade against. Instead of matching buyers with sellers, traders swap against the pool itself.
Providers earn a cut of every swap. In return they accept impermanent loss and the risk that the contract has a flaw. Pool size determines slippage: thin pools punish large trades.
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.