Definitions
Learn more about related topics and definitions.
The Foundation
Cryptocurrency
A digital or virtual currency that uses cryptography for security and operates independently of a central bank. In a technical sense, a "coin" is the native asset of a blockchain network. It is used to pay for transaction fees (gas) and to incentivize the validators or miners who secure the network.
Blockchain
A distributed, digital ledger that records transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks. It is the foundational technology that enables decentralization and transparency. Layer 1 (L1) Networks are the foundational blockchains that settle transactions - some of them are Ethereum or Solana. Layer 2 (L2) Networks are built on top of a Layer 1 to make transactions faster and cheaper while keeping the main chain's security - some of them are Arbitrum or Base.
Proof of Work (PoW)
The original consensus mechanism (used by Bitcoin). It requires participants (miners) to use high-powered computers to solve complex mathematical puzzles. The first to solve the puzzle earns the right to add the next block. It is highly secure but energy-intensive.
Proof of Stake (PoS)
A more modern, energy-efficient alternative (used by Ethereum). Instead of using electricity and hardware, participants (validators) "stake" their own cryptocurrency. The network chooses validators to create blocks based on the amount they have staked.
Token
A digital asset built on top of an existing blockchain. Tokens can represent anything from a stake in a project (governance) to a specific utility or a unit of value (like a stablecoin).
Stablecoin
A type of cryptocurrency designed to have a stable price, typically pegged to a fiat currency like the US Dollar (e.g. USDC, USDT).
Decentralized Finance (DeFi)
A financial ecosystem built on blockchain technology that operates without central intermediaries like banks, brokerages, or clearinghouses. It uses smart contracts to automate financial services—such as lending, borrowing, trading, and asset management—allowing users to interact directly with one another (peer-to-peer).
Smart Contract
Self-executing contracts with the terms of the agreement directly written into code. They are the "engines" behind DeFi.
Protocol
A set of rules or standards that govern how data is transmitted and how different parts of a system interact. In DeFi, a protocol is often a collection of smart contracts that perform a specific financial function (like lending or trading) without a central intermediary. Some of the most well known are Uniswap, Curve or Aave.
dApp (Decentralized Application)
An application built on a decentralized network (like Ethereum) that combines a smart contract and a frontend user interface. Unlike traditional apps, dApps are typically open-source and operate without a central controlling authority.
Architecture and Operations
Non-Custodial Architecture
All user funds are held exclusively in audited, non-custodial smart contracts. fija does not have access to user deposits or private keys, ensuring funds are only withdrawable by the customer.
KYC & Whitelisting
Access to fija smart contracts is restricted to verified users. Only whitelisted addresses can interact with our strategies after completing mandatory KYC (Know Your Customer) procedures, creating a secure and compliant liquidity environment.
Rebalancing
fija strategies use a regular rebalancing process to ensure optimal allocation of funds. The rebalancing process is invoked at regular intervals, which are strategy specific. During this process, the strategy moves funds between the different DeFi contracts used to ensure an optimal risk/reward profile. Examples of moves include the adjustment of long vs. short positions or the movement of funds between different Liquidity Pools.
Trigger: Rebalancing and Harvesting functions are triggered by the Strategy Smart Contract upon pre-defined rules (set at deployment) or upon instructions from the Partner.
Harvesting
In given time intervals, the strategy contract harvests the fees paid out by the apps to which liquidity is provided. With the harvesting, the strategy is often rebalanced to achieve the initial distribution of funds into the underlying assets. During the harvesting and rebalancing process, the strategy contract receives more investment tokens, effectively compounding the returns.
Emergency Mode
In case of emergency (e.g., unexpected activities on the DeFi protocols, like a stablecoin depeg) or if a strategy is discontinued, the strategy is set to "Emergency Mode."
Action: During Emergency Mode, all funds are retrieved from the DeFi protocols and remain stored in the strategy contract in the deposit currency.
User Access: The holder of the fija token can then retrieve their funds directly through the vault. fija does not have access to the funds at any time, even during Emergency Mode.
Impact: During this mode, no profits are earned.
Gas Fees
The transaction fees paid to miners or validators to process and validate transactions on a blockchain network.
Strategies and Yield
Yield
The earnings generated on an investment over a specific period, usually expressed as a percentage (APY or APR). In crypto, yield is often generated through interest from lending, rewards from staking, or fees from liquidity providing.
Deposit Currency
The specific asset (e.g. USDC, ETH, BTC) that a user commits to a strategy or vault to begin generating yield. This is the "input" asset used to enter a position.
Staking
The process of "locking up" a cryptocurrency to support the operation and security of a Proof-of-Stake (PoS) blockchain. In exchange for securing the network, participants earn rewards in the form of additional tokens.
Liquid Staking Derivatives (LSDs)
Tokens that represent a staked asset. They allow users to earn staking rewards while keeping their capital "liquid," meaning the LSD token can still be traded, used as collateral, or moved across DeFi protocols while the underlying original asset remains staked.
Liquidity Providing
The act of depositing assets into a decentralized protocol to facilitate trading or lending. For example, on Curve, the strategy provides liquidity to both sides of a trading pair (e.g., crvUSD and USDT). In return, the strategy contract receives "Liquidity Pool Tokens" (LP Tokens) as proof of ownership. These tokens generate yield from trading fees paid by swappers and protocol incentives.
Decentralized Exchange (DEX)
A peer-to-peer marketplace where users can trade cryptocurrencies directly with one another without the need for a central intermediary or "middleman." DEXs use automated smart contracts to execute trades.
Centralized Exchange (CEX)
A platform that facilitates the buying and selling of cryptocurrencies via a central intermediary (a company). Similar to a traditional stock exchange, a CEX uses an order book to match buyers and sellers and requires users to deposit their funds into the exchange’s wallets.
TVL (Total Value Locked)
A metric used to measure the total amount of assets currently held or "staked" within a specific DeFi protocol.
Risk and Security
Smart Contract Vulnerability
Despite rigorous audits, all code carries the risk of undiscovered bugs. fija minimizes this by deploying only to battle-tested protocols with multi-year track records and big TVL, among other variables.
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