Glossary
Wrapped Token
A token representing an asset from another chain or format, so it can be used inside one contract.
A wrapped token locks an asset in a contract and issues a token with the same value for use elsewhere. Wrapped Ether, for instance, exists so Ether can be deposited into lending markets that only accept ERC-20 tokens.
The wrapper is the trust point. Whoever controls the contract that holds the original asset can affect the value of every wrapped unit, which is why bridges and wrappers concentrate assets and attackers together.
Most wrappers keep the same issuer as the original asset, so the added risk is the wrapper contract, not a new claim on reserves. Verify which contract you are approving before signing.
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.