DeFi Glossary: APY, TVL, LP, Impermanent Loss, Liquidation...

All the vocabulary of decentralized finance: swaps, pools, yields, lending, staking, restaking, stablecoins, governance and risks, explained in plain English.

DeFi · Débutant + · 13 min read · Publié le October 13, 2026

The essentials

The core principles

DeFi / CeFi: decentralized finance (smart contracts, you keep your keys) / centralized crypto finance (a company holds your funds).
Protocol: the set of smart contracts behind a DeFi service (Aave, Uniswap...).
TVL (Total Value Locked): the total value deposited in a protocol or on a chain. A measure of size, not of safety or profitability.
Permissionless: no authorization needed; anyone can use the protocol or list a token on it.
Composability: protocols fit together like Lego. Convenient, but a problem in one building block spreads to the others.
Non-custodial: the protocol doesn't hold your keys; your funds remain under the control of the contracts and your wallet.

Swapping

DEX: a decentralized exchange (Uniswap, Curve, Jupiter...). See making your first swap.
AMM (Automated Market Maker): a DEX that sets the price with a formula and a liquidity pool, without an order book.
Liquidity pool: a reservoir of two tokens (or more) in which swaps take place.
LP (Liquidity Provider): someone who deposits into the pool and earns a share of the fees. They receive an LP token (or an NFT position on Uniswap v3/v4) as a receipt.
Concentrated liquidity: the LP chooses a price range; if the price leaves it ("out of range"), they stop earning fees.
Impermanent loss: an LP's shortfall compared with simply holding the tokens when their prices diverge. See AMMs and impermanent loss.
Slippage: the gap between the displayed price and the price obtained. Slippage tolerance: the maximum gap you accept.
Price impact: the price change your own order causes in the pool.
Aggregator: a service that splits your order across several DEXs to find the best price (CoW Swap, Jupiter, 1inch...). See aggregators and slippage.
Intent / solver: you describe the desired outcome, and "solvers" compete to execute it as well as possible. See intents and solvers.
MEV (Maximal Extractable Value): the value that block producers or bots extract from the ordering of transactions. Sandwich: a bot buys before you and sells right after. See MEV and sandwich attacks.

Yield

APR (Annual Percentage Rate): simple annual return, without reinvestment.
APY (Annual Percentage Yield): annual return with compound interest. At an equal rate, APY is always higher than APR.
Yield: return in general.
Yield farming: moving your funds around to capture the best yields and rewards. See staking and yield farming.
Liquidity mining: a protocol distributes its own tokens to LPs to attract liquidity.
Emissions: the new tokens distributed as rewards. A high APY paid in emissions can melt away if the token falls.
Real yield: a return paid from the protocol's real revenue (fees), not from new tokens.
Auto-compounding: automatic reinvestment of gains.
Vault: a vault that applies a strategy automatically. Curator: the team that chooses the risks and markets of a vault (Morpho's model, for example).
Mercenary capital: liquidity that leaves as soon as rewards drop.
Leverage looping: depositing, borrowing, redepositing in a loop to multiply a yield. It also multiplies liquidation risk.

Lending and borrowing

Lending protocol: a lending market (Aave, Morpho, Spark...). See lending and borrowing.
Collateral: what you deposit as security to borrow.
Overcollateralization: borrowing less than the value deposited (for example $70 for $100 of collateral).
LTV (Loan-To-Value): the ratio between the loan and the collateral.
Health factor: the health indicator of a position on Aave; below 1, the position can be liquidated.
Liquidation: the forced sale of your collateral when it no longer covers the debt sufficiently, with a penalty.
Variable / fixed rate: most DeFi rates vary with supply and demand.
Flash loan: an uncollateralized loan borrowed and repaid within the same transaction. A tool for arbitrage... and for attacks.
CDP (Collateralized Debt Position): a position where you deposit collateral to create a stablecoin.

Staking and restaking

Staking: locking tokens to secure a PoS network in exchange for a reward.
Liquid staking / LST (Liquid Staking Token): you stake and receive a tradable token that represents your position (stETH, for example). See liquid staking.
Rebase: a token whose balance increases on its own in your wallet (stETH). Its "wrapped" version (wstETH) keeps a fixed balance whose value goes up.
Restaking / LRT (Liquid Restaking Token): reusing a staked asset to secure other services, with extra yield and extra slashing risk. See restaking and LRTs.
Unbonding period: the waiting time to get staked tokens back.

Stablecoins

Stablecoin: a token that aims at a stable value, often $1. See stablecoins: uses and risks.
Fiat-backed: reserves in dollars and Treasury bills (USDC, USDT).
Crypto-backed: overcollateralized by other cryptos.
Synthetic / delta-neutral: the value is maintained by hedging positions (Ethena's USDe, for example). See decentralized and synthetic stablecoins.
Algorithmic: maintained by a mint-and-burn mechanism; several have collapsed.
Peg / depeg: the anchoring to $1 / the loss of that anchoring.
Yield-bearing stablecoin: the version that pays a return (sUSDe, sUSDS...), with the risks of the underlying strategy. See basis trade and yield-bearing stablecoins.
RWA (Real World Assets): real assets (Treasury bills, real estate, stocks) represented by tokens. See RWAs.

Governance and tokens

Governance token: a token that gives the right to vote on protocol decisions.
DAO: the organization that governs a protocol through votes. Proposal: a proposal submitted to a vote. Quorum: the minimum number of votes for it to be valid. See governance and DAOs.
Timelock: a mandatory delay before a decision is executed, which leaves time to react.
veToken (vote-escrow): you lock your tokens for a long time to get more voting power (veCRV at Curve). Bribes: payments to voters to steer rewards. See vote-escrow.
Treasury: the protocol's treasury.
Buyback / burn: the protocol buys back its token with its revenue, then holds or destroys it.
Protocol-owned liquidity (POL): liquidity owned by the protocol itself rather than rented from LPs.
TGE, vesting, cliff, unlock: see the airdrops glossary and tokenomics and unlocks.

Risks

Smart contract risk: a bug in the code can lose funds, even on a well-known protocol.
Audit: a review of the code by a security firm. An audit reduces risk; it doesn't eliminate it.
Bug bounty: a reward offered to those who report a flaw instead of exploiting it.
Exploit / hack: the attack that diverts a protocol's funds.
Admin keys / upgradable proxy: the team can modify the contract; that is a power, hence a risk.
Oracle manipulation: distorting the price a protocol reads in order to borrow or liquidate wrongly.
Bridge risk: "wrapped" assets are worth what the bridge that backs them is worth.
Rug pull: see spotting a rug pull.