Staking Derivative

Staking derivatives are secondary assets typical of some staking systems in which rewards are not earned with native tokens but through derivative products. In these systems, you receive the corresponding amount of tokens you had locked. For example, if you deposit 32 ETH in a derivative staking protocol, you receive 32 stETH and the staking rewards are paid in stETH. These represent the tokens being staked and the rewards that have been accrued during the staking period.

The value of the staking derivatives depends on the total amount of rewards that are distributed in the network and the performance of the primary underlying asset. They are tradable assets to all effects therefore they can be bought also from someone who does not have the real underlying tokens in staking.

Correlated words

Liquid Staking

Staking mode that allows one's stake to be used in other protocols.

TVL

Total amount of crypto blocked in a DeFi protocol or decentralised application (dApp).

Wrapped Token

A token representing the value of a cryptocurrency in another blockchain standard.

Bonding

A process in which cryptocurrencies are blocked as a form of commitment to obtain benefits or the right to perform certain activities in a network.

Yield Farming

A typical feature of decentralised finance (DeFi) that allows people to put their cryptocurrencies to work for a return.

Swap

The conversion of tokens into other tokens on a decentralised exchange.

Staking

Depositing and holding cryptocurrencies on certain blockchains to obtain cryptocurrency incentives.

Smart Contract

An agreement in digital form that allows actions to be triggered automatically if certain conditions are met.

Crypto Lending

A financial service that allows lending and borrowing cryptocurrencies on a centralised or decentralised platform

ERC-20

The Ethereum token standard that has enabled hundreds of projects to launch their own cryptocurrency on Ethereum.

DEX

A Decentralised Exchange allows cryptocurrency trading without intermediaries and directly on the blockchain.

DeFi

Decentralised Finance includes all blockchain-based and decentralised financial solutions.

DApp

Decentralised application allowing the use of a blockchain-based service.

DAO

The Decentralised Autonomous Organisation is a form of automated blockchain governance.

CeFi

Centralised finance is the centralised counterpart of DeFi, but should not be confused with traditional finance.

Arbitrage

Buying and selling in different markets in order to take advantage of the disparity in prices.

APY

A metric often used in DeFi, it indicates the percentage return per year you receive on an investment or loan.

APR

The annual percentage rate you receive for an investment or loan.

AMM

Automated Market Makers are smart contracts adopted by decentralised exchanges to automatically execute orders.

Aggregator

An online collector of similar content or services from different sources for easy access. An example is Yearn Finance