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DeFi Glossary

A DeFi glossary with clear definitions, examples, related articles, and risk notes for protocols, strategies, and market terms.

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.

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Foundations every reader should know

152 terms

L

Liquidity Mining

Earning token rewards by providing liquidity to DeFi protocols

Liquidity Pool

Smart contract containing funds that enable decentralized trading and lending

Layer 2 Layer 2 Scaling Solution

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

Lending DeFi Lending

Earning interest by lending crypto assets through smart contracts

LTV Loan-to-Value Ratio

Percentage of collateral value that can be borrowed

Liquidation Collateral Liquidation

Automatic sale of collateral when loan becomes undercollateralized

LP Token Liquidity Provider Token

Tokens representing a user's share in a liquidity pool

Limit Order

Order to trade at a specific price or better

Liquidity Provider Liquidity Provider (LP)

Entity that supplies assets to facilitate trading and earn fees

Liquidity Aggregation

Combining liquidity from multiple sources for better trading execution

Leverage Financial Leverage

Using borrowed funds to amplify trading position size and potential returns

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Liquidity Shaping

Custom liquidity distribution patterns that automatically adjust with price movements

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Liquidation Cascade

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

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Liquid Staking

Staking tokens while receiving a liquid derivative usable in DeFi

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Liquidity

How easily an asset can be traded or redeemed without large price impact

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Liquidity Providing

Supplying assets to a protocol or venue to earn fees, interest, or incentives

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LP Boost Liquidity Provider Boost

Reward multiplier for liquidity providers who meet protocol conditions

Licensed under CC BY-NC-SA 4.0
Last updated on May 19, 2026 14:30 +0200