Staking

Participation in a proof-of-stake (PoS) system to lock your tokens to serve as a validator to the blockchain and receive inflationary rewards. 

Liquidity Mining

Liquidity mining occurs when a yield farming participant earns token rewards as additional compensation. This practice came to prominence after Compound started issuing COMP, its governance token, to its platform users who engaged in lending & borrowing transactions.

Governance Tokens

Governance tokens are tokens that developers create to allow token holders to help shape the future of a protocol. Governance token holders can influence decisions concerning the project such as deciding new feature proposals and changing the governance system itself. In several instances, governance tokens stake a claim to cash flows generated by transactions executed on a platform.

Yield Farming

Yield farming protocols incentivize liquidity providers ("LP’s") to stake or lock up their crypto assets in a smart contract-based liquidity pool. These incentives can be a percentage of transaction fees, interest from lenders or distribution of a platform's governance token. Returns are expressed as an annual percentage yield (APY). Yields in liquidity pools are derived mainly from TVL, volume in the trading pair and any additional incentives offered by platforms to subsidize activity 

Collateralized Lending

A collateralized debt position ("CDP") is the position created by locking collateral in a platform like Compound, AAVE & Maker. This system was introduced to the decentralized finance world by the MakerDAO team and is how its decentralized stablecoin DAI is created. Other platforms allow you to borrow against your collateral, in various collateral ratios, across a wide variety of assets.