📔Glossary

Ownership Token (OTs)

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)

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

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

Annual Percentage Yield (APY)

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)

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)

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 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

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

Impermanent loss (IL)

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.