# Glossary

**Web3 Wallet:** A decentralized wallet that enables users to manage their assets on the blockchain, interact with decentralized applications (dApps), and sign transactions without relying on centralized intermediaries.

**DeFi (Decentralized Finance):** DeFi encompasses a suite of financial services such as lending, borrowing, trading, and yield farming, which are built on decentralized platforms without the need for traditional financial intermediaries.

**LSDFi (Liquid Staking Derivatives Finance)**: LSDFi represents the evolving space of liquid staking derivatives, where users can stake their assets while retaining liquidity. These derivatives allow users to trade staked tokens or use them for yield farming, enabling flexibility in staking strategies.

**Yield Farming**: Yield farming refers to the practice of actively managing investments within DeFi protocols to generate returns. This process involves providing liquidity or staking assets in return for token rewards or interest over time.

**Vaults**: Vaults are decentralized smart contracts designed to receive and store assets. These vaults execute predefined strategies to generate yield, whether through lending, trading, or reward generation. The rewards are then distributed back to vault participants based on their share of the assets.

**Yield Types:** Yield types refer to different strategies or sources of yield generation in DeFi. These can include staking rewards, liquidity mining, interest from lending, or token incentives, with each type providing varying degrees of return and risk

**Rewards**: Rewards are the incentives given to participants in DeFi protocols for providing liquidity, staking tokens, or performing other network-boosting activities. These can come in the form of native platform tokens, transaction fees, or governance rewards.

**Annual Percentage Yield (APY):** The APY represents the total return on an investment over a year, including the impact of compound interest. It reflects the true yield an investor can expect from a deposit, factoring in reinvested earnings.

**Total Value Locked (TVL):** TVL represents the total value of assets locked within a protocol, typically expressed in USD. It serves as a key metric for measuring the size and growth of DeFi platforms, reflecting how much capital is being utilized within the protocol’s strategies.

**Slippage**: Slippage refers to the difference in the expected price of a transaction and the actual price at execution. It occurs due to market volatility between the time a trade is initiated and when it is completed, affecting the final transaction outcome.

**Routing**: Routing refers to the mechanism of directing assets through specific protocols or paths to achieve optimal outcomes. In DeFi, routing ensures that trades, swaps, or liquidity moves through the most cost-effective and efficient channels.

**Cross-chain Transactions:** A cross-chain transaction involves moving assets or data between different blockchain networks (e.g., from Ethereum to Optimism). These transactions enable interoperability across diverse blockchains.

**Same-chain Transactions:** Same-chain transactions occur entirely within a single blockchain, meaning both the initiation and completion of the action happen on the same network, without the need for cross-chain bridging.

**Token Standards and Form Implementations:** This refers to the set of protocols (e.g., ERC-20, ERC-4626) that define how tokens operate on the blockchain. These standards govern token issuance, transfer, and interaction with smart contracts, enabling interoperability and defining how vaults and liquidity strategies are executed.

**Arbitrary Message Bridge (AMB):** An AMB is a protocol that facilitates the transfer of messages and data between different blockchain networks, enabling more complex cross-chain operations beyond simple asset transfers. Well-known AMBs include LayerZero, Hyperlane, and Wormhole.

**The Bag:** A unified liquidity management system in Ethring that simplifies the process of interacting with different DeFi protocols by organizing and optimizing users’ assets into a single interface.
