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Frequently Asked Questions

earnJARVIS is a Crypto Investing Solution for Wealth Managers

What Is DeFi And Web 3?

Web 3 is the broad term for all things crypto. This includes NFTs, DeFi, cryptocurrencies and the Metaverse. All these concepts use the same underlying blockchain technology to come to life.

DeFi, or decentralized finance, is focused on building applications on top of the blockchain to offer value-based services such as borrowing, lending, and swapping of digital assets. DeFi uses code to remove central intermediaries, such as banks, and allows users to interact through a peer-to-peer network.

What Is FUD, FOMO, And Diamond Hands?

FUD stands for "fear, uncertainty, and doubt". A term popularized as a traditional public relations tactic designed to shift public perception about a product, technology, or candidate by releasing information such that a negative emotional response is excited.

FOMO or "Fear of missing out" is generally used when markets are taking off. FOMO can lead to emotional trading and bad decision making.

Diamond Hands is a meme that highlights the importance of HODLing.

HODL is the most popular crypto slang, pronounced "Hoddle", simply means to buy and hold for a long time.

What Are DeFi Tokens?

DeFi tokens are an asset similar to coins. They can also be a type of cryptocurrency, however, tokens are created on a pre-existing blockchain.

For example, Ethereum’s coin is Ether, while tokens like UniSwap and Compound are non-native cryptocurrencies constructed on the Ethereum blockchain.

They can come in many different variations, like payment tokens, governance tokens, and utility tokens.

Source: Taxbit.com


What Is A Layer-1?

Layer-1 is the term for the underlying main blockchain (e.g., Ethereum Network, Solana). Layer-2 is an overlaying network that sits on top of the Layer-1 blockchain. Ethereum is the layer-1 network, while Polygon Network is layer-2.

What Are Digital Assets?

A cryptocurrency is a digital asset that is secured by cryptography, making it nearly impossible to counterfeit. Many digital assets are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A primary feature of digital assets is that they are generally not issued by a central authority.

Understanding digital assets

Digital assets or cryptocurrencies are underpinned by cryptographic systems. They allow for secure online payments without third-party intermediaries. "Crypto" refers to the many encryption algorithms that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.

Cryptocurrencies can be mined or purchased from exchanges.

Adapted from Investopedia.com

What Are Protocols?

DeFi protocols are basically autonomous programs that automate functions of the traditional finance sector through the use of smart contracts (i.e., open-source code). Protocols disintermediate the middleman (i.e., banks and other financial institutions) by allowing for computer code to drive financial functions.

DeFi protocols are introducing financial instruments throughout the crypto economy. Many DeFi protocols have become integral parts of a crypto ecosystem with launching tokens to help govern their functions, upgrades, and feature roadmap. These protocols enable lending, borrowing, swapping, and yield generation of digital assets with no intermediary creating a more efficient financial ecosystem.

Relevance of DeFi Protocols

On a technical level, protocols can be considered as the rules written for governing tasks and activities. DeFi protocols can feature a set of rules and principles in line with established institutions.

Protocols are essential for operating the DeFi ecosystem and the broader crypto economy. DeFi protocols offer liquidity in the DeFi ecosystem while also ensuring interoperability since all code is open-source protocols are able to build ontop of one another. Because of this, multiple protocols could use other DeFi protocols for building decentralized applications.

Source:  101blockchains.com

What Is Annual Percentage Yield (APY)?

The annual percentage yield (APY) is the real rate of return earned, taking into account the effect of compounding interest. Compounding interest is calculated over measured periods and the amount is added to the balance within the measured period (typically one year). With each following period, the account balance grows so the interest paid scales accordingly. This compounding effect leads to exponential growth over time as long as the unit of value holds constant.

Calculating APY

APY standardizes the rate of yield. It does this by taking the real percentage of growth that will be earned in compound growth assuming that the value is deposited for one year. The formula for calculating APY is:

Where:

  • r = period rate
  • n = number of compounding periods

Source: Investopedia.com

What Is Staking?

Staking is when layer 1 blockchain assets (e.g., Ethereum, Solana) get locked into validators, or computers, that secure and support decentralization. Because staking requires the users to lock assets inside the blockchain, the users of the blockchain pay fees to the validators for running protocols on the network.

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