Is Crypto Jargon Confusing You?!
In my younger days I used to trade absolute return strategies, looking to capture alpha from mean reversion in highly correlated stock pairs. The strategies we employed had high sharpe ratios and low beta to indices and other major asset classes.
The traditional world of finance is full of confusing jargon like the above aimed at making the protagonist appear intelligent. They could easily have said, ‘when two things that have generally followed each other in price move in different directions, buy the cheap one and sell the expensive one,’ however that lacks the gravitas of the previous explanation.
Cryptocurrency was always touted as an inclusive asset class in which anyone, regardless of economic standing or geography could participate. Open, peer-to-peer networks meant, for the first time, that the whole world could access an ‘internet of value’.
However, crypto has quickly created its own jargon as equally confusing and cliquish as that created by the Ivy Leaguers of the traditional world of finance. Take the below Twitter conversations:
Confusing for the uninitiated! With this in mind we thought it might be useful to deconstruct some of the more common terms. For a full breakdown check out this great guide by Coinmarketcap.
Stables / Stablecoins – these are cryptocurrencies whose value is pegged to that of a real world asset. The most common are US dollar cryptocurrencies like USDC. Their value tracks the price of a dollar. Stablecoins could, however, be pegged to anything from property, art or music rights.
LP / Liquidity provider – these are exchanges where you can buy or sell crypto. You can get LP tokens when you, as an investor, provide liquidity to exchanges. These can then used to generate yield.
Farm / Yield Farming – this is where investors use their cryptocurrency holdings to stake assets with decentralised exchanges to earn yield. The farming acronym is useful as you ‘harvest’ returns and use them to grow additional returns.
Leverage – using borrowed funds to enhance the profit / loss of an investment
FUD – ‘Fear, Uncertainty and Doubt’. You will see this thrown around as a derogatory term on Twitter when people are talking down crypto.
Diamond Hands – those who never sell even as markets are collapsing
HODL – ‘Hold on for dear life’ attributed to an early Bitcoin forum where someone spelt hold wrong!
Mooning / send it – coins that are appreciating rapidly or about to.
Degens – is a collective term for the participants of early DeFi project. They can usually be found causing trouble on Telegram and Discord, where they share information about new DeFi projects through which they think they can generate profits.
The list goes on and on but it is fair to say that if you want to stay up to date with crypto you need to engage with the culture that is being created or risk being left behind. Crypto remains an excellent place to find high yielding investments if you understand the risks that are present. GCISL engages with multiple DeFi services to deliver the best yields to earn interest on crypto for its customers, all with a simple, jargon free user experience.