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Tag: Glossary

Glossary of commonly found crypto terms, acronyms, profiles, and useful resources.

UTXO

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UTXO stands for Unspent Transaction Output. In the context of Bitcoin, it refers to the individual units of Bitcoin that have not yet been used or spent in previous transactions. Each UTXO holds a specific value, typically denoted in satoshis, the smallest unit of Bitcoin. These UTXOs are associated with the public key addresses of their recipients, allowing for the traceability and accountability of Bitcoin transactions. When a user initiates...

Bitcoin, Glossary

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APY (Annual Percentage Yield)

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APY, or Annual Percentage Yield, is a measure of the rate of return that users earn when they deposit their funds in different cryptocurrency lending protocols and yield farming platforms. APY includes the effects of compound interest, which can transform low daily or hourly yields into significant amounts over time. Since APY reflects the investment return over one year, advertised rates should only be expected if funds are deposited for that...

Glossary

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Liquidity Pool

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Crypto liquidity pools are groups of cryptocurrencies that are locked into a smart contract to provide liquidity to decentralized exchanges (DEXs). DEXs are cryptocurrency exchange platforms that do not require an intermediary, such as a bank or stock exchange. Liquidity pools allow users to buy and sell cryptocurrencies without having to trust a third party. Liquidity pools work as follows: A user deposits cryptocurrency into a pool. The...

DeFi, Glossary

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Realized Cap

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Realized cap is a market capitalization metric that values each UTXO (unspent transaction output) based on the price when it was last moved as opposed to its current value. As such, it represents the realized value of all the coins in the network, as opposed to their market value. To calculate the realized cap, you first need to find the total number of UTXOs in circulation. Then, you need to find the price at which each UTXO was last moved....

Blockchain, Glossary

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What is Layer 2?

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What are Layer 2 solutions, and how do they work? Blockchains are a powerful technology, but they have some limitations. One of the biggest limitations is scalability. Blockchains can only process a limited number of transactions per second, which can make them slow and expensive to use. Layer 2 solutions are a way to address the scalability limitations of blockchains. Layer 2 solutions are built on top of the underlying blockchain, but...

Glossary

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