# Glossary of DeFi Terms

### Asset

Digital token/cryptocurrency that can be owned, transferred, traded, or staked on the blockchain. fly.trade allows for the trading, staking, and moving of assets.

### Automated Market Makers

AMMs, such as Uniswap, allow users to deposit their tokens into smart contract-based liquidity pools to contribute to liquidity so that they may earn fees on the trades while users get access to asset swaps at market rates.

<figure><img src="https://content.gitbook.com/content/oozlI9aW0lVBvXHbqbLa/blobs/i9rRj1i3iPej1zwRti3T/0_wFYzrQTZnyW7MWYO.webp" alt=""><figcaption></figcaption></figure>

### ERC20

Token standard for Fungible tokens on Ethereum and EVM (Ethereum virtual machine) blockchains.

### Gas Fee

The fee required to initiate a transaction or execute a smart contract on a blockchain. In short, it's the cost of using the network's computational resources, compensating network validators or miners who process and confirm the transaction. Gas is typically paid in the native token of the blockchain (ETH on Ethereum and many EVM chains, S on Sonic, SOL on Solana)

### Liquidity <a href="#docs-internal-guid-0e99ae6a-7fff-9d79-0a7b-b09595090f43" id="docs-internal-guid-0e99ae6a-7fff-9d79-0a7b-b09595090f43"></a>

Assets in pools. Token/asset pairs that are available for trading.

### Liquidity Provider or "LP" <a href="#docs-internal-guid-715d28c3-7fff-fb87-07ec-35e13f66624d" id="docs-internal-guid-715d28c3-7fff-fb87-07ec-35e13f66624d"></a>

Users who pair and pool tokens. Liquidity providers assume impermanent loss and are compensated with swap fees, emissions (on some DEXs), as well as incentives.

### Pair <a href="#docs-internal-guid-ce8cf26d-7fff-0277-ba0f-246aa8cd0b12" id="docs-internal-guid-ce8cf26d-7fff-0277-ba0f-246aa8cd0b12"></a>

A smart contract that enables trading directly between two assets.

### Price Impact <a href="#docs-internal-guid-df51fe51-7fff-6d29-3bf3-4356350ef60d" id="docs-internal-guid-df51fe51-7fff-6d29-3bf3-4356350ef60d"></a>

The effect a trade has on an asset's price due to the size of the order relative to pool liquidity. Larger trades typically result in higher price impact.

### Pools

A smart contract that enables trading between two ERC20 tokens. Blockchains and DEXs can have multiple pools with the same assets, or tokens, with differing amounts of liquidity and slight price variation.

### Slippage <a href="#docs-internal-guid-b84de979-7fff-b166-3d70-406f4aefafa8" id="docs-internal-guid-b84de979-7fff-b166-3d70-406f4aefafa8"></a>

The price change between submitting a transaction and its execution.

### Swap Fees

A small fee which goes to the liquidity providers of the token.


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