DeFi Definitions

DeFi Definitions

What is Ethereum?

Ethereum is a global, open-source platform for decentralized applications.
You can think of it as a world computer that cannot be shut down.

DeFi are Decentralized Applications (Dapps) that provide financial services.

What is a Smart Contract?

A smart contract is a programmable contract that allows two counterparties to set conditions of a transaction without needing to trust another third party for the execution.

Vitalik Buterin said: ‘To be clear, at this point I quite regret adopting the term “smart contracts”. I should have called them something more boring and technical, perhaps something like “persistent scripts”.’

What is Ether (ETH)?

Ether is the native currency of the Ethereum blockchain.

What is Gas?

Gas refers to the unit of measure on the amount of computational effort required to execute an operation or a smart contract. The more complex the execution is, the more gas is required to fulfill that operation.

Transactions with the highest gas fee associated with it will be prioritized for validation.

What are analogies?

Blockchain == Database
Smart Contract == Stored Procedure

The primary difference between a blockchain and a database is centralization. While all records secured on a database are centralized, each participant on a blockchain has a secured copy of all records and all changes so each user can view the provenance of the data.