# Glossary

#### **Ownership Token (OTs)** <a href="#principal-token-pts" id="principal-token-pts"></a>

The Ownership Tokens represent the deposited token by a user in the protocol. This becomes equal to the principal amount added by the user at the end of the term.

#### **Interest Bearing Token (IBT)** <a href="#interest-bearing-token-ibt" id="interest-bearing-token-ibt"></a>

Interest-bearing tokens are tokens whose balance changes over time due to interest accrual and/or rate change for example aDAI, cUSDC.

#### **Underlying asset or Underlying token** <a href="#underlying-asset" id="underlying-asset"></a>

The asset deposited by the user to enter into an interest-bearing position for example DAI, USDC.

### **Annual Percentage Yield (APY)** <a href="#annual-percentage-yield-apy" id="annual-percentage-yield-apy"></a>

APY stands for Annual Percentage Yield. It is the actual annual rate of return, taking into account the effect of compound interest.

### **Annual Percentage Rate (APR)** <a href="#annual-percentage-rate-apr" id="annual-percentage-rate-apr"></a>

APR stands for Annual Percentage Rate. It is the actual annual rate of return, NOT taking into account the effect of compound interest.

### **Automated Market Maker (AMM)** <a href="#automated-market-maker-amm" id="automated-market-maker-amm"></a>

Automated market makers (AMMs) are part of the decentralized finance (DeFi) ecosystem. They allow digital assets to be traded in a permissionless and automatic way by using liquidity pools rather than a traditional market of buyers and sellers. AMM users supply liquidity pools with crypto tokens, whose prices are determined by a constant mathematical formula. Liquidity pools can be optimized for different purposes, and are proving to be an important instrument in the DeFi ecosystem.

### **Liquidity Provider (LP)** <a href="#liquidity-provider-lp" id="liquidity-provider-lp"></a>

A liquidity provider is a user who funds a liquidity pool with crypto assets she owns to facilitate trading on the platform and earn passive income on her deposit.

### **LP Tokens** <a href="#lp-tokens" id="lp-tokens"></a>

Tokens that represent the shares of liquidity of a Liquidity provider in an AMM

### **Impermanent loss (IL)** <a href="#impermanent-loss-il" id="impermanent-loss-il"></a>

Impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.

### **Protocol**

The name of the Interest bearing token (IBT) provider or the platform you want to invest in. e.g AAVE, YEARN, COMP.