đ Words of the Day â Crypto Glossary #4
- Layer 2
A solution built on top of a main blockchain to improve its speed and reduce transaction fees (e.g., Optimism, Arbitrum).
- Liquidity Pool
A reserve of cryptocurrencies locked in a smart contract to enable exchanges on a DEX without a traditional order book.
- Cross-chain
The ability for different blockchain networks to communicate and exchange assets with each other (e.g., bridges between Ethereum and BNB Chain).
- Algorithmic Stablecoin
A stablecoin whose value is maintained by algorithms and market mechanisms rather than by fiat reserves.
- Impermanent Loss
Potential temporary loss experienced by a liquidity provider on a DEX when the prices of assets change significantly.
- Yield Farming
A strategy consisting of placing funds in DeFi protocols to generate high returns in the form of tokens.
- Rekt
Slang used to refer to a massive loss in crypto investment.
