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In their purest form, algo-stables are completely uncollateralized as their value is not backed by any external asset. They are inherently decentralized and tailored to improve market price stability without the involvement of a central authority. Instead, their functioning is based on algorithms - specific instructions or rules to be followed (hard-coded into smart contracts) in order to generate an outcome. These algorithms are optimized to incentivize the behavior of market participants and / or manipulate the circulating supply so that the price of any given asset stabilizes around a peg.
As the title suggests, this term refers to a currency that is essentially backed by a reserve. In the old days, until 1971, the US dollar was backed by gold. After that year, everything changed; the gold standard was abolished, which means dollars are now unbacked money still printed by the United States.
In today’s traditional financial system, reserve currency refers to currency held in large quantities by governments and institutions. Reserve currency is used as a means of international payments and to support the value of national currencies.
A Decentralized Exchange (DEX) is a Peer-To-Peer (P2P) market in which transactions take place directly between cryptocurrency traders. These transactions are facilitated by self-executing agreements written in code called smart contracts. DEXs fulfill one of the fundamental characteristics of cryptocurrencies in that they support financial transactions that are not managed by banks, brokers, or any other intermediary.
Blockchain bridges, as the name suggests, serve as mutual bridges between blockchains. These bridges address one of the main problems of blockchain technology, which is the lack of interoperability between blockchains. In short, a blockchain bridge is a tool that enables the transfer of assets from one blockchain to another.
Collateralized Debt Position (CDP) is a technology developed by MakerDAO, a company specialized in providing products and services for decentralized finance (DeFi). CDP allows users to provide their cryptocurrencies as collateral, for which they can generate a stablecoin DAI in return.
Oracles provide external data to a decentralized Web 3.0 system. Since blockchains and smart contracts are closed systems, oracles inherently form the primary communication vessel / vehicle between the outside world and the blockchain.
You can think of a synthetic asset, or synth for short, as a type of derivative product. It allows you to gain exposure to an asset without having to own that asset.
Lending / Borrowing
Do you still have cryptocurrencies lying around in your Web 3.0 wallet that you don't plan to sell and are wondering how to use them to your advantage during this period? You definitely have heard of a technology called crypto lending. Crypto lending is a type of decentralized financing that allows investors to make loans via cryptocurrencies to various borrowers, in exchange for which they receive interest payments, also known as "crypto dividends". It also works the other way around, when you are interested in a loan, you just need to deposit your digital assets on the platform as collateral to get it.
Liquid staking protocols have brought many benefits to the world of Decentralized Finance (DeFi), resulting in an enormous increase in investors. One of the main benefits of liquid staking is the ability to instantly interact with your funds without having to agree to lock them for a certain period of time in order to withdraw them. In addition to providing tremendous benefits to their investors, liquid staking protocols also provide liquidity to lending protocols and yield farming activities. Thanks to liquid staking, users can interact with many DeFi platforms while earning multiple rewards.
If you’ve thought about getting into the world of Decentralized Finance (DeFi), yield farming is a concept that you won’t want to miss. Yield farming, in short, is providing liquidity to various protocols, for which you receive additional income from the capital provided.
The DeFi yield aggregator or yield optimizer is a platform that helps crypto investors maximize passive income from yield farming. Yield aggregators collect staking contracts across different protocols, making it easier for investors to find good opportunities to earn interest on their digital assets. These platforms act as Auto-compounders (AC), meaning they automatically re-stake the rewards earned, maximizing investors' returns from yield farming.
A derivative is a contract between two or more parties whose value is based on an agreed underlying financial asset (security) or set of assets (index). Common underlying instruments include bonds, commodities, currencies, interest rates, market indices and stocks.
Crypto launchpads are essentially platforms that help new blockchain projects raise seed capital. The goal of these projects is to increase demand and attract investment attention. They provide an opportunity for investors to gain a prominent position in certain projects and buy tokens while they are still on presale at a reduced price before the public launch.
Non-Fungible Tokens (NFTs) have become very popular digital assets that can be created, bought or sold by almost anyone who is familiar with the basic rules of the NFT market. In recent years, NFTs have gone from relative obscurity to widespread public adoption, largely due to their ease of creation, their appeal as collectibles, and their representing an easy way to become part of large communities with shared interests. This has all been fueled by sales running into the billions of dollars, with some NFTs being worth several million on their own.
All of these factors have caused a massive influx of NFTs in the market, with many new investors and organizations jumping on the NFT bandwagon.
Non-Fungible Tokens (NFTs) have earned their place of honor in the cryptocurrency world in recent years, where billions of dollars’ worth of transactions take place every month. With the NFT sector’s gradual development, non-fungible tokens are now being increasingly used for multiple purposes, no longer being restricted merely to buying, selling, or holding. Like other assets, they can be part of more complex and lucrative financial deals.
Validator / Nominator
One of the key mechanisms enabling blockchain functionality is the block verification process. Validators are in charge of this task on Proof of Stake (PoS) blockchains. While validators are active participants in the network, involved in block production and finalization mechanisms, nominators have a slightly more passive role.
Cross-chain is a technology that improves the interconnection between blockchains by enabling the exchange of information and value, resulting in an interconnected distributed ecosystem. Cross-chain smart contracts are decentralized applications (dApps) that consist of multiple different smart contracts deployed across several different blockchains, which interact with each other to form one unified application. This new design paradigm is a key step in the development of the multi-chain ecosystem and has the potential to create entirely new categories of smart contracts use cases that utilize the unique advantages of various blockchains, sidechains, and second layers - Layer 2.
NFT Gaming, or GameFi, combines blockchain technology, NFTs (Non-Fungible Tokens) and gaming mechanisms to create a virtual environment in which players can participate and receive rewards in the form of tokens. NFT gaming is very similar to traditional games, but solves one of their greatest problems: being hosted on centralized servers, which means developers and publishers retain the rights to everything within these games. This meant that players had no real ownership or control over any of the digital items collected during their hours – or sometimes years – of play.