A glossary of DeFi terms
A measurement of an investment strategy's ability to exceed the average growth of the wider market.
A measurement of the systematic risk associated with an investment strategy compared with the risk in the wider market.
A form of distributed ledger technology
A loan made to a borrower (typically corporate or governmental) over a fixed period in exchange for interest accrued at either a fixed or variable rate.
A derivative investment contract giving the buyer the opportunity to buy an underlying asset during a specific period of time.
Financial assets. Businesses generally recognize three types: working capital, equity capital, and debt capital.
A system governed by smart contracts deployed by MakerDAO enabling users to mint DAI stablecoins in exchange for cryptocurrency held in escrow.
The proportion of an organization's total debt versus its total assets.
The process by which power is distributed away from an intermediary authority.
An field of application for distributed ledger technologies involving the development of financial products and services that mitigate reliance on central authorities.
A financial security whose value is pegged to that of an underlying asset or basket of assets.
A piece of software used for storing electronic data.
A system for recording, replicating, and displaying synchronized digital data across a network.
A reward distributed to a defined class of shareholders from a portion of a the earnings from a company, mutual fund, or exchange-traded fund.
A social science exploring the production, distribution, and consumption of goods and services from both micro and macroeconomic perspectives.
The value returned to stakeholders in the hypothetical liquidation of a business.
A security involving a collection of securities that track an index.
Government-issued currency backed by faith in the credibility of the issuing government.
The theory and practice of raising and managing capital for personal, corporate, and public use.
A derivative financial contract obligating the parties involved to buy or sell an asset at a predetermined price on an assigned date.
A theoretical framework for evaluating the outcomes of social situations.
An investment made to reduce the downside risk associated with a related investment.
An alternative investment using pooled funds to employ defined strategies, typically only accessible to accredited investors.
A measure of something, typically the change in a securities market.
A type of mutual fund with a portfolio structured to match or track a financial market index.
The rate at which the average price of a good or service, or a set of goods and/or services, increases over time.
The rate a lender charges a borrower for use of their assets expressed as a percentage of the amount borrowed.
A contract in which a policyholder receives financial protection or reimbursement against losses in exchange for regular payments.
A business deal where two or more parties agree to share resources to accomplish a defined goal.
An economic theory advocating for the active use of government policy to stimulate demand and prevent or fix economic recessions.
Capital borrowed to expand an investment position.
A debt owed to another person or organization.
A type of order to buy or sell something at the best available rate above or below a specified price.
The process of closing a business and distributing its assets.
A description of the availability for something to be bought or sold.
Money borrowed to expand an investment position.
A hypothetical investment portfolio representing a given segment of the financial market.
A type of order to buy or sell something at the best rate currently available.
An account enabling the depositor to accrue interest on funds that are lent out to borrowers.
An organization that pools money to make investments.
An economic, political, and social theory favoring economic control by the private rather than public sector.
A derivative investment contract giving the buyer the opportunity to buy or sell an underlying asset.
A derivative investment contract giving the buyer the opportunity to sell an underlying asset during a specific period of time.
A monetary policy in which a central bank purchases government securities (or other securities) to increase the money supply and stimulate lending and investment.
Speculative strategies that involves relying on mathematical computation to identify favorable opportunities.
A measurement of the performance of an calculated by subtracting the current value of an investment from the amount invested and then dividing the total by the amount invested. (Current Value - Amount Invested)/Amount Invested
A financial instrument with a monetary value.
An investment strategy that involves speculating on the decline of something.
A smart contract is a form of software that creates rules for governing digital transactions. It includes an account, a mechanism for interacting with tokens, bytecode, and data.
Smart contracts play a critical role in the development of DeFi because they help define the ways in which blockchains communicate and interact with the world.
A type of trade executed at the best possible price after the price has crossed a predefined threshold.
A type of cryptocurrency whose value is pegged to that of an underlying asset.
A relationship in which one party gives another the right to hold assets for the benefit of a third party, commonly known as a "beneficiary."
Whatever the price of a financial derivative is based on.
The process of determining how much something is or will be worth.
The extent to which a set of data points in a data set differ from the average value of the set.
A measurement of how far each number lies from every other number in a given set of numbers.
A measurement of the variation in the price of something over a given period of time.
A derivative giving an investor the opportunity to buy or sell something at a given price before the contract expires.
Money circulating outside of the jurisdiction it was issued in.
An expression of the returns realized on an investment over a set period of time.
A line comparing the interest rate of bonds of equal creditworthiness at different dates of maturity.
A cryptographic method enabling one party to prove its knowledge of something without revealing the secret.