Instadapp Handbook
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DeFi glossary: the vocabulary behind every Instadapp guide

Decentralised finance carries an unusually dense vocabulary, and most of it was coined by developers writing for other developers. This glossary defines the eighteen terms that appear most often across the guides and articles on this site, in language a careful reader without an engineering background can follow.

Every entry has a permanent anchor. The first time a term appears in the body text of any page, it links directly to its definition here, which means you can always resolve an unfamiliar word in one click and return with the browser back button.

DeFi

Financial services — lending, borrowing, trading, savings — built on public blockchains and executed by smart contracts instead of by a bank. Anyone with a wallet can use them, code is usually open source, and there is no customer support desk to reverse a mistake.Used in: What is Instadapp? A middleware layer for decentralised finance, Getting started with Instadapp: your first safe session

Instadapp

A middleware layer for DeFi launched in 2018. It aggregates lending markets, automation and account abstraction behind one interface so users can manage positions across several protocols without interacting with each of them separately.Used in: What is Instadapp? A middleware layer for decentralised finance, Instadapp alternatives: how the main DeFi dashboards compare

Smart account

A contract-based wallet that owns your positions. Because it is a contract, it can execute several actions in one atomic transaction — borrow, swap, repay — and it can grant limited permissions to automation without handing over your keys.Used in: Instadapp DSA smart accounts: the layer everything else stands on, Avocado: the Instadapp wallet that hides the multi-chain mess

Flash loan

An uncollateralised loan that must be borrowed and repaid inside a single transaction. If repayment fails, the whole transaction reverts and it is as if the loan never happened, which is why lenders can offer it without collateral.Used in: Flash loans on Instadapp: borrowing millions for fifteen seconds, Refinance debt with Instadapp: moving a loan without closing it

Refinance

Moving an existing loan from one lending protocol to another to obtain a lower borrowing rate, a better collateral factor or access to a different asset, usually executed atomically with a flash loan so the position is never left unbacked.Used in: Refinance debt with Instadapp: moving a loan without closing it, Instadapp fees: what you pay beyond the headline zero

Collateral

Assets you lock in a lending protocol to back a loan. The protocol values collateral through an oracle and will sell part of it if the loan becomes undercollateralised.Used in: Getting started with Instadapp: your first safe session, The Instadapp Pro dashboard explained, panel by panel

Health factor

A single number expressing how far a borrowing position is from liquidation. Above 1 the position is safe; at or below 1 it can be liquidated. Most experienced users keep a buffer well above 1.5 on volatile collateral.Used in: The Instadapp Pro dashboard explained, panel by panel, Refinance debt with Instadapp: moving a loan without closing it

Liquidation

The forced sale of part of your collateral by a third party when your position breaches the protocol's safety threshold. The liquidator repays your debt and keeps a bonus, which is paid out of your collateral.Used in: Instadapp security and risk: what can actually go wrong, Is Instadapp safe? What the risk actually looks like

LTV

Loan-to-value: the ratio of borrowed value to collateral value, expressed as a percentage. Each asset has a maximum LTV set by the protocol; borrowing above it is impossible and approaching it is dangerous.Used in: Refinance debt with Instadapp: moving a loan without closing it, How to use Instadapp Lite: automation without the dashboard

Aave

One of the largest decentralised lending protocols and the most common venue for flash loans. Instadapp connects to Aave v2 and v3 as a source of both supply yield and borrowing capacity.Used in: Refinance debt with Instadapp: moving a loan without closing it, The Instadapp Pro dashboard explained, panel by panel

Compound

An algorithmic lending market where interest rates adjust automatically with utilisation. It is one of the protocols aggregated by the Instadapp dashboard.Used in: The Instadapp Pro dashboard explained, panel by panel, Instadapp alternatives: how the main DeFi dashboards compare

MakerDAO

The protocol behind the DAI stablecoin. Users lock collateral in a vault and mint DAI against it; Instadapp's first product was a management interface for exactly these vaults.Used in: What is Instadapp? A middleware layer for decentralised finance, Refinance debt with Instadapp: moving a loan without closing it

Fluid

Instadapp's unified liquidity protocol, which combines lending, borrowing, a decentralised exchange and vaults on a shared accounting layer so the same deposited capital can serve more than one purpose.Used in: Fluid: how Instadapp merged lending, borrowing and a DEX, Instadapp Fluid vs Instadapp Lite: two different products, two different jobs

Avocado

A smart contract wallet from the Instadapp team that abstracts networks and gas: users pay fees in a single currency and transact across several chains from one address and one signing flow.Used in: Avocado: the Instadapp wallet that hides the multi-chain mess, Instadapp supported networks: where you can actually use it

Gas fee

The payment made to a blockchain network for executing a transaction. Gas is priced in the network's native token and rises with congestion, which is why bundling actions into one transaction saves money.Used in: Instadapp fees: what you pay beyond the headline zero, Instadapp supported networks: where you can actually use it

APY

Annual percentage yield: the compounded annual return of a position. In DeFi it is variable, often changing block by block with supply and demand, so a headline figure is a snapshot rather than a promise.Used in: Instadapp fees: what you pay beyond the headline zero, How to use Instadapp Lite: automation without the dashboard

Stablecoin

A token designed to track the value of a reference asset, usually the US dollar. Some are backed by off-chain reserves, others by on-chain collateral like DAI, and each design carries a different failure mode.Used in: How to use Instadapp Lite: automation without the dashboard, Fluid: how Instadapp merged lending, borrowing and a DEX

Oracle

A service that reports off-chain prices to a smart contract. Lending protocols depend on oracles to value collateral, so oracle manipulation or lag is a direct route to unfair liquidations.Used in: Instadapp security and risk: what can actually go wrong, Is Instadapp safe? What the risk actually looks like
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