Account abstraction
Wallet architecture that moves account logic into programmable contracts or related protocol mechanisms, enabling features such as batching, recovery, or fee sponsorship.
Plain-language reference
DeFi glossary
Thirty essential terms for wallets, smart contracts, stablecoins, blockchain networks, tokenized assets, and onchain risk.
Allowance
Permission granted by a token holder for a contract or address to transfer up to a defined amount of that token.
Automated market maker
A trading system that prices assets through a liquidity pool and mathematical rules rather than only a conventional order book.
Bridge
A system that transfers assets or messages between networks, often by locking, minting, burning, or routing liquidity.
Collateral factor
A protocol parameter that determines how much borrowing power an asset provides relative to its value.
Composability
The ability of smart contracts and tokens to interact as reusable building blocks across applications.
Depeg
A meaningful deviation between a stablecoin or wrapped asset and its intended reference value.
Finality
The point at which a blockchain transaction is considered sufficiently irreversible under the network’s rules.
Gas
A unit used to measure and price computational work for transactions on Ethereum and related networks.
Governance token
A token used to propose, vote on, or delegate decisions about a protocol, treasury, or parameter set.
Impermanent loss
The relative underperformance a liquidity provider can experience compared with simply holding the deposited assets as their prices diverge.
Layer 2
A network or protocol that executes activity outside a base chain while relying on it for selected security or settlement functions.
Liquid staking token
A transferable token representing a claim on staked assets and associated rewards under a protocol’s terms.
Liquidation
Forced sale or seizure of collateral when a borrowing position no longer meets required safety thresholds.
Liquidity
The ability to trade or redeem an asset at a desired size without unacceptable delay or price impact.
Mint address
The Solana account that identifies a token type and its supply authority configuration.
Oracle
A mechanism that supplies external data, such as prices or rates, to a smart contract.
Program-derived address
A Solana address derived for program control without a corresponding private key, used for deterministic account ownership and signing logic.
Real-world asset
An offchain asset, liability, or claim represented or financed through digital tokens and onchain infrastructure.
Receipt token
A token or accounting position received after depositing an asset, representing a claim on the deposited value or strategy.
Rollup
A scaling system that executes transactions outside a base chain and posts data, proofs, or commitments back to it.
Slippage
The difference between an expected trade price and the price at which the transaction actually executes.
Smart contract
Program code deployed to a blockchain that executes state changes under defined rules.
Stablecoin
A token designed to track a reference value, commonly a fiat currency, through reserves, collateral, algorithms, or a combination.
Tokenization
Representation of an asset, claim, right, or unit of value on a programmable digital ledger.
Total value locked
A rough measure of assets deposited in protocols; methodology varies and it is not a measure of safety or revenue.
Transaction simulation
A preview execution used to estimate results, balance changes, failures, and contract calls before signing or broadcast.
Upgrade authority
A key, multisignature, or governance process with power to change a deployed program or contract implementation.
UTXO
An unspent transaction output in Bitcoin that can be selected and spent as an input to a new transaction.
Wrapped asset
A token on one network designed to represent an asset controlled or referenced elsewhere, adding custody or bridge assumptions.
Turn definitions into a decision process.
Use the risk framework to connect technical vocabulary with ownership, control, liquidity, dependency, and exit questions.