A Collateral is an asset, like cryptocurrency, that you lock up or pledge when you take out a loan from a DeFi protocol.

What is Yield Farming?

Earning rewards by providing liquidity to DeFi protocols

The APR (Annual Percentage Rate) is the simple rate of return you can expect to earn on your crypto assets over a period of one year.

What is Composability?

Composability is the idea that different DeFi protocols or applications can be easily stacked together like digital LEGO bricks to create new and more complex financial products.

Difference between expected and actual transaction price

The APY (Annual Percentage Yield) is the total rate of return you can earn on your crypto over a year because it includes the effect of compounding.

LP Token definition

16 views

Oct 04, 2025

Definition

An LP Token is a special receipt you get when you deposit two different cryptocurrencies into a Liquidity Pool on a decentralized exchange (DEX).

LP stands for Liquidity Provider. The LP token is valuable because you can use it to claim your original deposited crypto plus any trading fees you've earned while your funds were helping others trade.

keywords

DeFi Terms

Related Terms

Collateral

Yield Farming

APR

Composability

Slippage

APY