Excerpts from CareYourPresent – a crypto enthusiast
Crypto terminologies – De-mystifying the various crypto terms
DeFi? HODL? APY? APR? TVL? FDV? CEX? Staking? Farming? NFTs? Huh? I have been seeing these terms in Crypto but what do all these terms mean?
For beginners in crypto, I am sure there are many crypto terminologies that you will find it very confusing. This post will help you understand the various crypto terms in a simple manner. Here are the crypto terminologies which you need to know.
As Crypto gains in popularity, more and more of such acronyms are created/appears.
De-mystify Crypto terms
This refers to Decentralized Finance. Instead of having the banks and institutions governing on money, financial products, and financial services, the services are rendered in a decentralized matter via blockchains.
This refers to Centralized Exchange. Centralized exchanges (CEXs) are cryptocurrency exchange sthat is operated by a company that owns it in a centralized manner.
Examples are crypto.com , Huobi, Gemini, FTX etc. This is similar to the traditional finance Hong Kong Exchange, London Exchange etc.
APY is Annual Percentage Yield whereas APR is Annual Percentage Rate. The main difference between APY and APR is APY takes compounding interest into account while APR does not. Simply put, APY refers to the compounding effect. This means that acquired interest rates contribute to the calculation of the next interest rate.
Total value locked (TVL) is the overall value of crypto assets deposited in a decentralized finance in DeFi protocols.
Market Capitalization is simply obtain by multiplying the coin’s price by the number of coins in circulation.
Fully Diluted Valuation (FDV) can simply be defined as the Market Cap of the project once the maximum number of tokens have been issued by the development team.
Other Crypto Terminologies
MCAP/TVL is the ratio of the Market Capitalization to the Total Value locked. This is a common valuation metric used in cryptocurrencies. Similar idea to the Price to Book ratio in Traditional Finance.
Wallet is is a cryptocurrency wallet that are used to send and receive cryptocurrency, and they allow you to view how many tokens you have available to use.
Example: Metamask, Solfare etc. The wallet can be “hot” or “cold” depending if it is connected to the internet. The generally recommendation is to always use Hardware wallet which is cold wallet.
Airdrop is a method where the tokens are sent to various wallet addresses who met certain criteria, example, hold certain tokens, participate in some activities.
Airdrops are usually utilized as a marketing tactic to stimulate engagement, and performance, of the respective token and underlying organization/platform, usually before launch.
Initial Coin Offering. is a method that funds are raised for a new cryptocurrency project. ICOs are similar to Initial Public Offerings (IPOs) of stocks.
Decentralized application.. Applications designed by developers and deployed on a blockchain to carry out actions without intermediaries, i.e., decentralized.
Cypto slang. WE ALL GOING TO MAKE IT!
Cypto slang. HOLD ON TO YOUR DEAR LIFE!
There are many other crypto terms which are not mentioned here. However, I will progressively explain more of these terms in the future.