DeFi Key Terms You Need to Know

Jun 11 / BlockDAG Academy
In this post I have listed some of the Key Terms you should be familiar with in DeFi Applications.

In particular when working with or developing DeFi Applications on the BlockDAG Network
  • BlockDAG (Block Directed Acyclic Graph): A blockchain structure where new blocks can be appended in a graph-like format rather than a strict chain, potentially increasing transaction throughput and finality speed.

  • DeFi (Decentralized Finance): Financial services built on distributed blockchain networks—examples include decentralized exchanges, lending platforms, and stablecoins.

  • Bridges: Systems that allow tokens or data to move between different blockchains. They often lock an asset on one chain and mint an equivalent “wrapped” asset on another.

  • Stablecoins: Cryptocurrencies pegged to a stable asset, like the US dollar (USD). Examples include USDC (USD Coin) and USDT (Tether).

  • Blue-Chip Assets: Well-established cryptocurrencies with large market capitalizations, such as ETH (Ether) and BTC (Bitcoin).

  • AMM (Automated Market Maker): A type of decentralized exchange protocol that uses algorithms and liquidity pools instead of traditional buy/sell order books.

  • Oracle: A service that feeds real-world data (like asset prices or weather data) into blockchain smart contracts so that on-chain applications can use external information.

  • Multisig (Multi-Signature) Wallet: A type of wallet that requires a predetermined number of signatures (approvals) out of a set of authorized signers to execute transactions, enhancing security.

  • MPC (Multi-Party Computation) Wallet: A cryptographic approach to manage private keys by splitting the key among multiple parties, reducing the single point of failure risk.

  • Indexing: The process of organizing and making blockchain data queryable, enabling dApps (decentralized applications) to quickly fetch useful information like account balances or transaction histories.

  • Roadmap: A strategic schedule or plan detailing the progression from alpha/testnet stages to a stable mainnet launch.