"Degen" and "Ape" are terms frequently seen in Twitter's DeFi community. What do they mean, and how are they translated in Chinese? Chain News has compiled 20 English terms to help you navigate the DeFi wave and become the trendiest cryptocurrency investor.
(Selected terms are sourced from Ethereum tech company Consensys and Chain News interviews.)
20 Common DeFi Terms Explained
1. DeFi
Decentralized Finance (DeFi) refers to financial systems built on blockchain, eliminating intermediaries like banks. It’s also called Democratized Finance, emphasizing open access. Most DeFi platforms run on Ethereum, offering decentralized trading, lending, insurance, and more. While promising for financial inclusion, DeFi is often used for speculation.
2. CeFi
Centralized Finance (CeFi) includes traditional platforms like Binance and OKEx, offering savings, staking, and yield products. Unlike DeFi, CeFi relies on centralized control. Hybrid platforms like Binance Smart Chain (BSC) blur the lines, dubbed CeDeFi (Centralized DeFi).
3. Total Value Locked (TVL)
TVL measures the total assets deposited in a platform (e.g., DeFi protocols, Ethereum 2.0 staking). Sites like Defi Pulse track TVL rankings, though it doesn’t always reflect success—trading volume matters too.
4. DEX
Decentralized Exchanges (DEXs), like Uniswap and SushiSwap, operate via smart contracts, enabling peer-to-peer trading without intermediaries. Regulatory scrutiny is expected to rise.
5. Automated Market Makers (AMM)
AMMs replace order books with liquidity pools. For example, Uniswap’s WBTC-ETH pool uses the formula x * y = k, adjusting prices algorithmically as trades occur.
👉 Learn how AMMs revolutionize trading
6. Liquidity Providers (LPs)
Users who deposit assets into AMM pools (e.g., ETH and DAI) earn fees from trades. However, they face impermanent loss (see below).
7. Yield Farming / Liquidity Mining
Users earn platform tokens by providing liquidity (e.g., lending, staking). Similar to ICOs, but rebranded with DeFi jargon.
8. Impermanent Loss
Temporary loss occurs when pooled assets’ values diverge. If ETH rises in a DAI-ETH pool, arbitrageurs profit at LPs’ expense. Loss becomes permanent if LPs withdraw early.
9. Gas Tracker
Ethereum’s gas fees fluctuate with network demand. Tools like Gas Tracker help optimize transaction costs. Upgrades like EIP-1559 aim to stabilize fees.
10. Layer 2 (L2) Solutions
L2 networks (e.g., Rollups, Plasma) boost Ethereum’s scalability by processing transactions off-chain. DeFi platforms increasingly adopt L2 for faster, cheaper transactions.
11. Staking
Locking crypto to support blockchain operations (e.g., validating transactions) and earn rewards. Exchanges like Binance offer simplified staking services.
12. Aggregators
Platforms like 1inch and DODO pool liquidity from multiple DEXs to find the best swap rates. Some even aggregate other aggregators (“Aggs of aggs”).
13. Swapping & Slippage
Slippage happens when large trades move prices in illiquid pools. Users should compare platforms to minimize losses.
14. Flash Loans
Borrow assets without collateral, repay in the same transaction. Used for arbitrage but exploited in hacks.
15. Governance Tokens / DAOs
Decentralized Autonomous Organizations (DAOs) let token holders vote on protocol changes. Think: borderless shareholder meetings.
👉 Discover how DAOs reshape governance
16. Rug Pull
Scams where developers abandon projects after stealing funds. Common in low-cap, copycat DeFi projects.
17. SFYL (Sorry For Your Loss)
A sardonic condolence for crypto losses, popularized during Bitcoin’s 2018 crash.
18. Shilling
Promoting projects aggressively (like a hype-man). Example: Michael Saylor “shilling” Bitcoin.
19. Degen
Short for degenerate, describing DeFi gamblers who chase high-risk, high-reward plays—often ignoring audits or fundamentals.
20. Ape
To “ape in” means investing impulsively. Apes thrive in bull markets by acting boldly, while overthinkers miss opportunities.
FAQ: Degen vs. Ape
Q: Is a Degen always a savvy investor?
A: Not necessarily. Some degens are developers creating novel DeFi strategies, while others are reckless speculators.
Q: Are Apes just reckless?
A: In bull markets, apes often outperform cautious investors by capitalizing on momentum. As the saying goes: “Ape first, research later.”
Q: How do I avoid Rug Pulls?
A: Stick to audited projects with transparent teams and avoid “too-good-to-be-true” APYs.
Risk Warning: Cryptocurrency investing is highly volatile. You could lose your entire investment. Assess risks carefully.