A Balancer Pool is an automated market maker with certain key properties that cause it to function as a self-balancing weighted portfolio and price sensor.Balancer turns the concept of an index fund on its head: instead of paying fees to portfolio managers to rebalance your portfolio, you collect fees from traders, who rebalance your portfolio by following arbitrage opportunities.Balancer uses a Constant Mean Market Maker (CMMM)that enables non-equal weights for pools (e.g., 80/20 vs. 50/50) and also allows LPs to provide single-sided liquidity.
an algorithmic, autonomous interest rate protocol built for developers, to unlock a universe of open financial applications.Compound was built using community built interfaces, and is an example of traditional institutional investors and CIIs (Cryptocurrency Institutional Investors) collaborating together on a product that benefits both groups of investors, and the CeFi and DeFi communities.
"organization represented by rules encoded as a computer program that is transparent, controlled by the organization members and not influenced by a central government. A DAO's financial transaction record and program rules are maintained on a blockchain."When implemented well, a DAO allows for real world experiments in decentralized democratic organization and control, with more freedom of action and less regulatory oversight for DAO controlled projects and products when compared to legacy corporate structures and organizations.
Derivatives can be used to hedge a position, speculate on the directional movement of an underlying asset, or give leverage to holdings. Their value comes from the fluctuations of the values of the underlying asset. Originally, derivatives were used to ensure balanced exchange rates for goods traded internationally.In DeFi, since 2020 there now exists a crypto derivative that is a new type of investment or asset class. This crypto derivative is a representation of an underlying digital base asset such as Ethereum, Dai, Curve or YFI. Examples of their respective derivatives are yETH, aDAI, yCRV, and yYFI.
Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.It usually requires fiat exchanged at a CEX or through local means such as Bitcoin ATMs to be able to purchase cryptocurrency with fiat currency.
In the context of cryptocurrencies, forced liquidation happens when the investor or trader is unable to fulfill the margin requirements for a leveraged position. The concept of liquidation applies to both futures and margin trading.
a large organization, such as a bank, pension fund, labor union, or insurance company, that makes substantial investments on the stock exchange.In CeFi & DeFi, traditional institutional investors have an easier on-ramp into cryptocurrency should they seek higher yields albeit at higher risks.
Andre states: "The design of this system allows any asset that has a financial primitive to be insured, be it a base asset such as DAI, or a composite asset such as aDAI or yDAI." Investors of yInsure provide Liquidity to be used to execute crypto insurance smart contracts. In return, investors hope to provide an insurance service and profit from this service.
"The MakerDAO Collateralized Debt Position (CDP) is a smart contract which runs on the Ethereum blockchain. It is a core component of the Sai Stablecoin System whose purpose is to create Sai in exchange for collateral which it then holds in escrow until the borrowed Sai is returned."
The design of this system allows any asset that has a financial primitive to be insured, be it a base asset such as DAI, or a composite asset such as aDAI or yDAI.
- 1.Lending - Where assets are lent out via lenders such as Aave, Compound, and dYdX.
- 2.Trading - Assets provided to Uniswap, Balancer, and Curve earn trading fees.
- 3.Liquidity incentives - Protocols and markets such as Compound, Balancer, and Curve provide liquidity incentives.By applying the voting power of governance tokens, the power of delegated funds are used to vote for additional incentive rewards for providing liquidity, which can sometimes be reward multipliers for volume users. These multipliers can greatly enhance the ROI of deposited funds.