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DeFi Glossary

Comprehensive dictionary of decentralized finance (DeFi) terms, concepts, and strategies. From APY to yield farming - understand DeFi terminology with clear definitions, examples, and risk assessments.

DeFi Glossary

Your comprehensive guide to decentralized finance terminology. This glossary covers essential DeFi concepts, from basic terms like APY to advanced strategies like yield farming. Whether you’re a DeFi beginner or experienced user, this resource helps you understand the rapidly evolving world of decentralized finance.

Each item is provided with definition, example, related questions and relevant content.

Why This Glossary?

  • Expert Insights: Definitions based on real DeFi experience
  • Risk Assessment: Each term includes potential risks and considerations
  • Practical Examples: Real-world usage examples for better understanding
  • Regular Updates: Continuously updated with new DeFi innovations
  • Multilingual: Available in English and French
  • Forkability: Open source + easy to fork to translate into other languages

This glossary is maintained and regularly updated to reflect the latest DeFi developments. Have a term to suggest? Get in touch.

135 terms

L

Liquidity Mining

Earning token rewards by providing liquidity to DeFi protocols

Strategies
Liquidity Pool

Smart contract containing funds that enable decentralized trading and lending

AMM
Layer 2 Layer 2 Scaling Solution

Scaling solutions built on top of blockchains to reduce fees and increase speed

Protocols & Platforms
Lending DeFi Lending

Earning interest by lending crypto assets through smart contracts

Yields & Returns
LTV Loan-to-Value Ratio

Percentage of collateral value that can be borrowed

Yields & Returns
Liquidation Collateral Liquidation

Automatic sale of collateral when loan becomes undercollateralized

Risks & Security
LP Token Liquidity Provider Token

Tokens representing a user's share in a liquidity pool

Tokens & Assets
Limit Order

Order to trade at a specific price or better

Technical Concepts
Limit Order

Order to trade at a specific price or better

Trading & AMMs
Liquidity Provider Liquidity Provider (LP)

Entity that supplies assets to facilitate trading and earn fees

Trading & AMMs
Liquidity Aggregation

Combining liquidity from multiple sources for better trading execution

Trading & AMMs
Leverage Financial Leverage

Using borrowed funds to amplify trading position size and potential returns

Strategies
πŸ“Š
Liquidity Shaping

Custom liquidity distribution patterns that automatically adjust with price movements

Trading & AMMs
⚠️
Liquidation Cascade

Chain reaction of liquidations where each one triggers further price drops and more liquidations

Risks & Security
🧩
Liquid Staking

Staking tokens while receiving a liquid derivative usable in DeFi

Strategies
Licensed under CC BY-NC-SA 4.0
Last updated on Feb 13, 2026 11:27 +0100