Hi, fellow NEMbers. Recently, Defi's rapid growth enabled an open-source, permissionless, and transparent financial service ecosystem available to everyone and operates without any central authority.

NEM is working with a leading Defi solution provider, StakeHound, to wrap XEM into an ERC20 token so that every XEM holders can participate in the Defi movement.

To help all NEMbers understand Defi more, we would like to invite all of you to contribute to NEM's Defi glossary by defining Defi terms.

How to proceed with the Task?

1. Please help us define the following Defi terms:

1. Layer 1 Blockchain

2. Node

3. Supernode

4. Delegated staking

5. Staking pool

6. Metamask

7. Cross-ledger

8. DeFi ledger

9. Automated Market Maker (AMM)

10. Constant Function Market Maker (CFMM

11. Liquidity Pool

12. Liquidity Provider

13. Liquidity mining

14. Yield farming

15. Governance token 

2. Submit your definitions here (1 definition per 1 submission)

Requirements:

• You can only submit 1 definition per 1 submission.

• You can only submit a maximum of 5 submissions.

• Your submission must be original and informative. Plagiarism will not be tolerated.

• You must define these terms in English.

Rewards:

• 250 Points + 0.01 Rep per valid submission

• The most-voted submission of each term will get an additional reward of 500 Points + 0.1 Rep

• The most-voted submission of each term will be implemented by NGL

A-List of Completed NEM Defi Glossary:

• Proof of Stake 

An alternative consensus protocol, in which an individual or "validator" uses their own cryptocurrency to validate transactions or blocks. Validators "stake" their cryptocurrency, such as ether, on whichever transactions they choose to validate. If the individual validates a block (group of transactions) correctly then the individual receives a reward. Typically, if a validator verifies an incorrect transaction then they lose the cryptocurrency that they staked. Proof of Stake requires a negligible amount of computing power compared to Proof of Work consensus.

• Staking

In a blockchain network that is built using Proof of Stake (PoS), token owners create blocks and receive block rewards by "staking" their tokens to process transactions.

• Wrapped StakedXEM

Wrapped XEM (stakedXEM) is an ERC-20 token that represents a XEM token being staked by StakeHound. Every day, StakeHound distributes the rewards from staking the XEM to the stakedXEM holders. In the meantime, stakedXEM holders can freely transfer them and use them in DeFi for borrowing, providing liquidity, or participating in new economic products.

• Liquidity

The availability of liquid assets to a company or market. An asset is considered more liquid if it can easily be converted into cash. The harder the ability to turn an asset into cash the more illiquid the asset. For example, stocks are considered relatively liquid assets as they can be easily converted to cash while real estate is considered an illiquid asset. The liquidity of an asset affects its risk potential and market price.

• DeFi

Decentralized finance (often called DeFi or open finance) refers to the economic paradigm shift enabled by decentralized technologies, particularly blockchain networks. DeFi represents a shift from a centralized and closed financial system to a universally accessible economy that is based on open protocols that are interoperable, programmable, and composable.

• Uniswap

Is a cryptocurrency exchange run entirely on smart contracts, letting you trade popular tokens directly from your wallet. This is different from an exchange like Coinbase, which stores your crypto for you and holds your private keys for safekeeping. Uniswap uses an innovative mechanism known as Automated Market Making to automatically settle trades near the market price. In addition to trading, any user can become a liquidity provider, by supplying crypto to the Uniswap contract and earning a share of the exchange fees.

• Institutional-grade custodian

Institution or party who holds the asset. In the case of stakedXEM, this role is played by Copper, which is based in the UK and regulated by the FSA. Custodians such as Copper hold the keys to mint tokens.

• Testnet

An alternative blockchain developers use to test applications in a near-live environment.