Learn-to-Earn: 16 “D” Concepts You Must Understand in the Crypto Space
Informed by DPAD’s deep commitment to promoting general crypto awareness and providing educational contents on blockchain technology, we have started an A — Z Series on important Crypto concepts. Having a basic knowledge of these important concepts will make your journey into the DeFI space seamless, either as a newbie or as an ancestor in the industry. This edition simplifies some core ‘D’ concepts for your reading pleasure.
Daedalus Wallet (Cardano): An open-source desktop wallet for Cardano’s native token ADA. It is a software wallet that is operable in various computer operating systems. This HD (Hierarchical-deterministic) wallet enables users to have control over backing-up and managing their funds. Daedalus wallet features include an integrated news feed and a customizable user interface.
DAI: This is a decentralized ERC-20 and crypto-backed stablecoin token released by the MakerDAO protocol running on the Ethereum blockchain. Its function is to facilitate loans backed by collaterals without a third party or an intermediary. Each DAI is worth $1 as they are pegged in a 1:1 ratio. DAI uses cryptos like Ether (ETH) to maintain its USD peg.
Dark Web: Dark web is that part of the internet that is accessible only via special software. It is intentionally hidden from normal search engines. The Dark web has to do with illicit and cybercrime activities. It is made up of a small sliver of the bigger deep web. This is also hidden from the ordinary search engines but is not generally related to illicit activity. Web browsers for accessing the dark web use masked IP addresses to keep the users’ and site owners’ IDs hidden. Common examples are I2P and Tor.
Data Verification Mechanism (DVM): An Oracle process integrated into the UMA protocol for resolving price disputes between users. During this incident, the DVM allows UMA token owners to decide on the actual price of the synthetic token derivative contract via voting.
Datatoken (Ocean Protocol): They are ERC-20 tokens representing tokenized data services and datasets on the Ocean Protocol. Datatoken acts as both off-ramp and on-ramp for data entrance into the DeFi ecosystem. They are further monetized on the Ocean Protocol and users are free to buy a Datatoken on the Protocols data marketplace. It gives them access to the particular data services and datasets represented by the token.
Dead Coin: Dead coins are abandoned cryptos by defunct projects. The various criteria used in designating dead coins are lack of active nodes, inactive webpages, and lack of development updates. They also include a trading volume of less than $1,000 over three months. As of 2020, more than one thousand dead coins have been recorded.
Decentraland (MANA): An Ethereum integrated virtual world. A platform where users can delve into a multifaceted landscape generated by them. The landscape includes social media elements, gaming, and real estate. However, MANA is an ERC-20 token or digital asset for settling payments in Decentraland. More so, LAND is an ERC-721 non-fungible token representing virtual land ownership.
Decentralized Applications (dApps): These are applications that handle use cases such as governance, investment, gaming, and lending using blockchain technology. dApps may look similar to web applications in user experience (UX), but they make use of software wallets to communicate with Automated Smart Contracts on blockchain networks like Ethereum. dApps transactions are done in a peer-to-peer fashion instead of Web HTTP (Hypertext Transfer Protocol).
DAO: A blockchain-based organization managed by its community via an open-source self-enforcing code driven by Smart Contracts. Decentralized Autonomous Organizations incentivize their network users with a native utility token. Voting powers are also allocated to members based on their stake volume. DAOs transactions are done transparently on their underlying blockchain.
Decentralized Exchange (Dex): A platform where users carry out transactions in a peer-to-peer manner without a centralized intermediary. When we say transactions, we mean selling, buying, and trading digital assets. DEXs are not custodians of funds; rather, they represent a financial service platform where funds are managed via decentralized governance. DEXs are cheaper than Centralized Exchanges since no fee is involved.
Dex Aggregator: This is a specialized Automated Market Maker (AMM) system that enables users access to various trading options on DEX. It gives them the ability to trade, buy and sell various tokens via different exchanges in one streamlined interface. A typical example of a DEX Aggregator is 1inch. It helps to provide traders with the best asset price from various DEX protocols like KyberSwap, UniSwap, Bancor, and SushiSwap.
Decentralized Finance: DeFi is a blockchain sector that supports peer-to-peer financial services and technologies on Ethereum. Its activities are solely based on decentralization. Unlike the traditional financial services (TradFi), DeFi exchanges, investments, loans, and tokens are more trustless, transparent, interoperable, and permissionless. DeFi platform composability has led to the unlocking of more innovations like liquidity tokens and yield farming.
Derivative: A financial contract with its value derived from the underlying traits of a digital asset, interest rate, or index. Good examples are Futures and options contracts. A variety of crypto derivatives exists in the industry including bitcoin futures and synthetic cryptos. They are all blockchain-enabled and represent, for instance, a bitcoin trade agreement at a predetermined price and future date.
Digital Dollar: This refers to a potential United States Central Bank Digital Currency (CBDC). The US government agencies are researching the potential risks and benefits embedded with establishing a CBDC. But, no clear result has been announced yet.
Do Your Own Research: A term used in the crypto space to ensure that potential investors make informed investments. They are expected to study, analyze, and carry out due diligence on any project before becoming financially committed. This is targeted towards avoiding the loss of funds by first understanding a project and its associated risks.
Dollar-Cost Averaging: This is one of the discreet investment strategies for checkmating inherent volatility in the crypto industry. It entails the division of investment capital by investors to buy assets periodically for a better overall average cost price. DCA helps traders buy at good rates avoiding poorly timed lump-sum purchases. An investor, for example, may keep buying $100 worth of BTC every weekfor a long period irrespective of the price.
These crypto concepts would be understood better if you can read through them over and over again in a bid to gain a better understanding. Follow us to stay in touch for the next series!!!