25 more Defi-nitios for Smart Contract Auditors.

Want to be a smart contract auditor? Contact me for learning paths, advice and real-world challenges by email at aitor.zaldua@draftdigital.xyz or in X as @azdraft_.

When I wrote the article 25 Defi-nitios for Smart Contract Auditors, I felt I had done a great job. Gathering 25 definitions of one of the most important aspects for a smart contract security researcher was a titanic task and I thought I deserved the title of the world’s best writer.

But I was wrong.

Because @XAudit174176 took up the challenge and doubled down. He managed to collect no less than 48 definitions of DeFi terms with a good, detailed explanation.

And, because this is web3 and not a boring old web2 job, he offers the document to anyone who is interested. How cool is that.

You can read it here:

DeFi Concepts

In this article I have selected most of the definitions that were not in the previous one and copied and pasted a small part of the @XAudit174176 texts. As you will see, there are more marginal or less important concepts, but we can also find some interesting ones, such as Health Factor, Pool or different token definitions. But go and check the original document, it is worth it.

1. Arbitrage: Arbitrage is a trading strategy in decentralised finance (DeFi) where users can take advantage of price discrepancies between different markets or exchanges to make a profit. Arbitrage can be facilitated by various mechanisms, such as flash loans or other liquidity pools.
2. Auction: In web3, an auction refers to a decentralised financial mechanism for buying or selling assets through a bidding process. Auctions can be used to determine the price of assets based on demand from buyers and supply from sellers.
3. Boost values: In general, a boost value is a factor or multiplier that is used to increase the value or effectiveness of a particular action or activity.
4. Collect fee: Typically refers to the process of collecting a fee or commission for a particular transaction or activity on a blockchain network. Fees can be collected for a variety of reasons, such as to compensate miners or validators for processing transactions, or to support the maintenance and development of a particular protocol or network.
5. DAO: Decentralized Autonomous Organization, which is an organization that operates in a decentralized manner, without the need for a central authority or management.
6. DEFI: Decentralized Finance, which refers to a financial system built on top of a blockchain network that operates in a decentralized manner
7. Draw: is a process for selecting a winner or winners from a pool of participants in a decentralized finance (DeFi) protocol or other blockchain-based activity.
8. Decay constant: Refer to a parameter used in various mathematical models to describe the rate at which a value or quantity decreases over time. In the context of decentralized finance (DeFi), decay constants can be used to model the rate at which certain parameters or values change over time,
9. Deposite: Refers to the act of transferring cryptocurrency or other digital assets from a user’s wallet to a smart contract or other decentralized application (dApp).
10. Emission rate: Refers to the rate at which new tokens or other digital assets are created and distributed on a blockchain network.
11. Fiat currency: Refers to a government-issued currency that is not backed by a physical commodity, such as gold or silver. Fiat currencies are used as a medium of exchange and a store of value, and are widely used in traditional financial systems.
12. Fraction: refers to a mathematical representation of a portion or part of a whole number. Fractions are often used in decentralized finance (DeFi) protocols to represent ownership or shares of a particular asset or pool.
13. Health factor: Refers to a metric used in decentralized finance (DeFi) protocols to measure the risk associated with a particular loan or other financial activity. The health factor is calculated by dividing the value of the collateral by the value of the loan,
14. Impermanent Loss: Impermanent loss occurs when one token in a liquidity pair grows or decreases significantly.
15. Incentive key: s a type of cryptographic key that is used to secure and authenticate transactions on a blockchain network.
16. Liquidate: refers to the process of selling or redeeming collateral that has been pledged as security for a loan or other financial transaction.
17. liquidation pair: refers to a pair of assets in a decentralized finance (DeFi) protocol that can be used to provide liquidity for loans or other financial activities. Liquidation pairs are often used in collateralized lending protocols, where borrowers can deposit one asset as collateral and borrow another asset.
18. Lp Token (liquidity provider token): Is a type of token that is issued to liquidity providers who deposit their cryptocurrency assets into a liquidity pool on a decentralized exchange (DEX) or other decentralized finance (DeFi) protocol.
19. Pool: Refers to a smart contract that holds a reserve of two or more tokens, which can be used to provide liquidity for decentralized exchanges (DEXs) and other decentralized finance (DeFi) protocols.
20. Recipient: refers to the address or account that is intended to receive a transfer of digital assets, such as tokens or cryptocurrencies.
21. Reserve: refers to the amount of a particular asset that is held in a liquidity pool or other decentralized finance (DeFi) protocol.
22. Slippage / Price Slippage: Refers to the difference between the expected price of an asset and the actual price at which the asset is bought or sold on a decentralized exchange (DEX) or other decentralized finance (DeFi) protocol.
23. Stake: Refers to the act of holding cryptocurrency or other digital assets in a wallet or other platform to support the operations of a blockchain network or other decentralized application (dApp).
24. Stake token: is a type of cryptocurrency or other digital asset that is used to support the operations of a blockchain network or other decentralized application (dApp). Staking tokens are typically used to participate in staking protocols, where users can lock up their tokens to support the network and earn rewards in the form of additional tokens.
25. Vault: vault refers to a smart contract that is used in decentralized finance (DeFi) protocols to store and manage assets that are used for liquidity provision, staking, or other activities. Vaults can also be used to provide collateral for loans or other financial activities.