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DeFi/defi-glossary.md

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-## 👩🏻‍🏫 DeFi Glossary
+## 👩🏻‍🏫 DeFi glossary and important info
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+<br>
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+### DeFi
 
 <br>
 
 * Fully diluted valuations (FDV): refer to the total number of tokens ever multiplied by the current price of a single token.
 
 * Market cap (MC): refers to the number of tokens that are available RIGHT NOW in the market multiplied by the price of a single token. 
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+* Airdrop: “free money”. When we drop tokens from the air to people who meet certain qualifications. In our case, we want that qualified. Have to register, and prove you’ve used DeFi protocols before. Goal is to build community and loyalty.
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+* AML: anti-money laundering. Refers to the laws, regulations and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.
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+* BSC: Binance smart chain
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+* Back-running: happens when a transaction A is broadcasted with a slightly lower gas price than already pending transaction B so that A gets mined right after B in the same block. (e.g. to execute a DyDx liquidation after a price oracle update that triggers a DyDx loan to go under the required collateralization ratio).
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+* CA: Contract account, controlled by code and can be activated only by an EOA
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+* Cold wallet: A cryptocurrency wallet that cannot be compromised because it is not connected to the Internet. Also called a "hardware wallet" and "offline wallet," the cold wallet stores the user's address and private key and works in conjunction with compatible software in the computer.
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+* DEX arbitrage: happens when two DEXe are offering a token at two different prices and one can buy the token on the lower-priced DEX and sell it on the higher-priced DEX.
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+* Doxxing: act of publicly revealing previously private personal information
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+* EOA: externally owned account. An account which is a combination of public address and private key. You can use these accounts to send and receive Ether to/from another account.
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+* ERC-20: One of the most significant Ethereum tokens is known as ERC-20. ERC-20 has emerged as the technical standard; it is used for all smart contracts on the Ethereum blockchain for token implementation and provides a list of rules that all Ethereum-based tokens must follow. ERC-20 is similar, in some respects, to bitcoin, Litecoin, and any other cryptocurrency; ERC-20 tokens are blockchain-based assets that have value and can be sent and received. The primary difference is that instead of running on their own blockchain, ERC-20 tokens are issued on the Ethereum network.
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+* EVM:  Ethereum Virtual Machine. Computation engine which acts like a decentralized computer that has millions of executable projects. It acts as the virtual machine which is the bedrock of Ethereum's entire operating structure.
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+* FATF:  Financial Action Task Force
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+* Forking: Copying someone else’s open source code base. Common in DeFi, where people copy entire protocols.
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+* Flash loans: borrower must pay back the loan before the transaction ends, otherwise the smart contract reverses the transaction – so it’s like the loan never happened in the first place.
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+* Front-running: also known as Priority Gas Auctions (PGAs), happens when a miner steals a profitable opportunity (such as arbitrage) for themselves by sending the same transaction with a higher gas price. For example, a transaction A is broadcasted with a higher gas price than an already pending transaction B so that A gets mined before B (e.g., to snatch a Uniswap price arbitrage trade to rebalance a pool).
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+* FUD: Fear, uncertainty, doubt.
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+* Gas: refers to the computational efforts, fee, or pricing value, required to successfully conduct a transaction or execute a contract on the Ethereum blockchain platform.
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+* HODL: In early bitcoin forums, someone posted a message that spelled the word “hold” wrong, and readers interpreted it as an acronym “hold on for dear life,” Now, it’s become a meme of sorts, so that when the prices are highly volatile, crypto buyers say ‘HODL!’”
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+* KYC: Know your customer
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+* Layer-1 vs Layer-2: Layer-1 is the term that’s used to describe the underlying main blockchain architecture. Layer-2, on the other hand, is an overlaying network that lies on top of the underlying blockchain. Consider Bitcoin and Lightning Network. Bitcoin is the layer-1 network, while the lightning network is layer-2.
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+* Liquidation: happens when the value of a borrowed asset exceeds the collateral and anyone can liquidate the collateral and collect the liquidation fee for themselves.
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+* Long Tail MEV:encompasses all other forms of MEV not described here. Long Tail MEV describes niche, arcane, undiscovered MEV often realized through interacting with lesser known protocols, event based strategies, or unorthodox economic mechanisms.
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+* Mainnet: when a blockchain protocol is fully developed and deployed, meaning that cryptocurrency transactions are being broadcasted, verified, and recorded on a distributed ledger technology (blockchain).
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+* Mempool: (a contraction of memory and pool) is a cryptocurrency node’s mechanism for storing information on unconfirmed transactions. It acts as a sort of waiting room for transactions that have not yet been included in a block.
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+* Merkle tree: a type of binary tree, composed of a set of notes with a large number of leaf nodes at the bottom of the containing the underlying data, a set of intermediate nodes where each node is the hash of its two children, and finally a single root node, also formed from the hash of its two children, representing the top of the tree.
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+* Minting: computer process of validating information, creating a new block and recording that information into the blockchain.
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+* Multi-sig: Short for multisignature wallet, a type of onchain wallet where multiple signers must sign for a transaction to be executed.
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+* NMI: Needs more information.
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+* Nonce: an abbreviation for "number only used once," which, in the context of cryptocurrency mining, is a number added to a hashed—or encrypted—block in a blockchain that, when rehashed, meets the difficulty level restrictions. The nonce is the number that blockchain miners are solving for. When the solution is found, the blockchain miners are offered cryptocurrency in exchange.
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+* OSINT: Open-source intelligence is a term used to refer to any information which may be freely gathered from public sources; generally it refers to information that can be found on the internet.
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+* Pentests: A pentest is short for a penetration test, wherein security experts attempt to break into a protected computer system and disclose results so that they can be mitigated.
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+* PoC: Proof of concept (proof of how much funds can be stolen).
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+* Sandwich attack: when slippage value is not set, occurs by bumping price of an asset to an unfavorable level, executing the trade, and then returning the asset to the original price.
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+* Sats: short for “satoshis,” a term derived from the first name of Satoshi Nakamoto. It refers to the smallest fraction of a bitcoin that can be sent, which is 0.00000001 of a bitcoin.
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+* Shitcoin: to talk about projects that are well...shit. Projects that are more interesting in memes and getting people to pump the token so they can sell a ton and "rug" a project. People will say things like "That shitcoin is a pump and dump, Im not falling for that". Some people say shitcoin as well for just really small projects that arent huge. BSC was known for having a large number of these because their fees were so low so many projects could pop up. Some people say memecoins interchangeably.
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+* Slippage = delta in pricing between time of order and when order is executed.
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+* Stablecoin: digital currency pegged to a 'stable' reserve asset like the USD or gold. Stablecoins are designed to reduce volatility relative to unpegged cryptocurrencies like Bitcoin. Swap pair = “trading pairs” or “cryptocurrency pairs” are assets that can be traded for each other on an exchange.
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+* Tabnabbing (a sophisticated phishing attack).
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+* Testnet: instance of a blockchain powered by the same or a newer version of the underlying software, to be used for testing and experimentation without risk to real funds or the main chain.
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+* TVL: Total value locked. Value of all tokens locked in various DeFi protocols such as lending platforms, DEXes, or derivatives protocols increased from less than $1B in April 2020 to over $32B in Feb 2021.
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+* VAR: Value at risk.
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+* VASPs: virtual assets and virtual asset service providers.
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+* Gwei: a small unit of the Ethereum network's Ether (ETH) cryptocurrency. A gwei or gigawei is defined as 1,000,000,000 wei, the smallest base unit of Ether. Conversely, 1 ETH represents 1 billion gwei! Gwei is a useful denomination to calculate gas fees (paid to miners for transaction processing) in a convenient way.
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+* Whales: individuals or institutions who hold large amounts of coins of a certain cryptocurrency; can become powerful enough to manipulate the valuation.
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+* Zero-day attack: (also referred to as Day Zero) is an attack that exploits a potentially serious software security weakness that the vendor or developer may be unaware of. The software developer must rush to resolve the weakness as soon as it is discovered in order to limit the threat to software users. The solution is called a software patch.
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+* Ethereum address of an EOA account: the last 20 bytes (least significant bytes) of the Keccak-256 hash of the public key of the EOA’s key pair.