AML (Anti-Money Laundering): Fighting Financial Crime AML regulations force crypto businesses to monitor and report suspicious activities. It’s the government’s attempt to prevent crypto from becoming a money laundering paradise. Anti-Money Laundering (AML) refers to laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. Crypto exchanges and businesses…
Two-Factor Authentication (2FA): Your Crypto’s Second Lock 2FA is the minimum security standard for any crypto account worth protecting. If you’re not using it, you’re basically leaving your front door unlocked. Two-factor authentication (2FA) requires two different verification methods to access your account – typically something you know (password) plus something you have (phone or…
Custodial Wallet: Someone Else Holds Your Keys Custodial wallets store your cryptocurrency private keys for you, like having a bank hold your money. Convenient but risky – if they go down, your crypto might go with them. A custodial wallet is a cryptocurrency storage service where a third party (like an exchange or wallet provider)…
Hardware Wallet: Your Crypto’s Personal Vault If you’re serious about crypto, you need a hardware wallet. It’s the difference between keeping cash in your wallet versus storing it in a bank vault. A hardware wallet is a physical device that stores your cryptocurrency private keys offline, away from internet hackers. Think of it as a…
Impermanent Loss: The Hidden Cost of Liquidity Providing Impermanent loss is the sneaky tax on liquidity providers. Your tokens can lose value even when the pool is profitable. It’s math, not magic – but it feels like getting robbed. Impermanent loss occurs when the price ratio of tokens in a liquidity pool changes compared to…
Liquidity Pool: The Fuel That Powers DEX Trading Liquidity pools are why decentralized exchanges work. They’re shared pots of tokens that enable trading without traditional buyers and sellers. A liquidity pool is a collection of tokens locked in a smart contract that provides liquidity for decentralized trading. Instead of matching buy and sell orders, traders…
Staking: Earning Rewards by Holding Crypto Staking turns your crypto into a money-making machine. Hold tokens, earn more tokens – it’s that simple. But the devil’s in the details. Staking is the process of locking up cryptocurrency tokens to support a blockchain network’s operations and earning rewards in return. Think of it as earning interest…
Yield Farming: Crypto’s High-Risk, High-Reward Game Yield farming is DeFi’s answer to traditional investing – except the yields are higher, the risks are bigger, and the game changes daily. Yield farming is the practice of lending, staking, or providing liquidity with your cryptocurrency to earn maximum returns across multiple DeFi protocols. It’s like playing musical…
Governance Token: Voting Rights in Digital Form Governance tokens turn users into stakeholders with voting power over protocol decisions. It’s democracy meets DeFi, with mixed results. A governance token grants holders voting rights on protocol decisions like parameter changes, upgrade proposals, treasury spending, and strategic direction. Token weight typically determines voting power – more tokens…
Flash Loan: Borrowing Millions Without Collateral Flash loans let you borrow millions of dollars without putting up collateral, but you must pay it back in the same transaction. It’s DeFi’s most mind-bending innovation. A flash loan is an uncollateralized loan that must be borrowed and repaid within a single blockchain transaction. If you can’t repay…