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About DeFi

Smart Contracts

A smart contract is an agreement document that includes the terms of the exchange between buyer and seller being directly written into lines of code. The code and the agreement details of the Smart Contract exist across a distributed, decentralized blockchain network. The execution and transaction of NFTs are trackable and irreversible due to the code.

Automated Market Maker

Automated market makers are smart contracts that maintain liquidity reserves (or liquidity pools). Liquidity providers are responsible for funding these reserves. Anyone who deposits an equivalent value of two tokens in the pool is a liquidity provider. In return, traders pay a fee to the pool, which is distributed to liquidity providers considering their pool share.

Liquidity

Liquidity is the ability of a coin to be easily converted into other coins.

Impermanent Loss (IL)

Impermanent loss occurs when you deposit liquidity to a liquidity pool, and the value of the deposited assets changes compared to when you deposited them. The larger is the change value; the more will be impermanent loss value. In this case, the loss means less dollar value at the time of withdrawal than at the deposit time.