Some of the Crypto terms in DeFi World

Of course its no more news that many of us in crypto world are diving towards DeFi world, purposely to safeguard their money and their investment, many of us do not trust the Centralised Exchange so we moving towards a platform where our money would be much safer.

I can boldly say many people in the crypto space do not know about investing in DeFi tokens, they are always introduced to Centralised tokens of which we know it's not safe, well thats one of the reason for this article, to open more people's eyes into Defi world.

In a nutshell, there are lots of terms involve that one has to know or learn to be able to have a smooth journey in a DeFi world, there are lots of rug pulls too, so to be able scale through or at least minimise the risk involved,

Some terms involved in DeFi World;

Smart Contract: First and first, according to google, a smart contract is a computer program or we can say a transaction protocol which is there to automatically execute, control according to the terms of agreement. On the other hand, Smart Contract are programs stored on a blockchain that run when conditions are met, in a simple word, they are used to automate the execution without anybody or intermediary involvements. In blockchain smart contract is an agreement between two people in form of computer codes, and the transactions that runs on smart contract are processed by the blockchain, meaning you can do anything without any body's consent or third party.

Liquidity; This is another biggest part in DeFi and crypto world at large, every crypto buying and selling happens when there is liquidity inputted, when the liquidity is withdrawn, there would not buying and selling of any kind anymore, in a simple term, this makes it possible for crypto buying and selling. Liquidity in cryptocurrency world at large makes it easy for tokens to be swapped to other tokens or cash, this does not only apply to cryptocurrency alone but also tradable assets, also in a simple term, liquidity is the ability of an asset to be quickly converted into other tokens or preferably cash.

Market Cap: This is also another angle to look out in crypto world, and Marketcap is the total value of all coins that have been mined. In another term, Market cap is a company's stage in its business development, meaning the growth of a company in terms of asset and investments, for example companies with a higher Market cap are mostly considered safe investing in because they can be trusted with peoples investment. It is mostly calculated by multiplying the number of coins in circulation by the current market price.

Rug Pulls: This is a term that every investor should know, rug pull means the situation whereby an unknown investor pulling out the liquidity of a crypto project or ending it abruptly without the notice of the investors, this is common in DeFi world on Dexs. Lots of people lose their funds daily due to this, especially on Binance Smart Chain and Ethereum Chain, and this would keep to continue as long as scammers live. The best way to detect a token that might be rug pulled is if the top 10 wallets holds the most of the tokens or a large percentage held in a single wallet, meaning if any of these wallets holding bigger parts of the tokens should pull out, the token will crash too bad.

Decentralised Exchanges: This is an exchange where DeFi tokens can be exchanged with one another, just like we have it in the centalised exchanges, that is how we also have it in Decentralised finance, before it can be accessed. one needs to connect to the DeFi wallet before one can be able to swap favorite tokens of any kind.

With this short explanations of mine, i hope you have learnt somethings and ready to apply them in your crypto life, well there is more to come and look forward to more writing.