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AMM stands for *Automated Market Maker*. This is an algorithm, often supplemented by oracles, that facilitates the pricing and exchange of assets between users. Assets are exchanged at market value through liquidity pools. These pools are created by Liquidity providers, LPs, who deposit assets to the exchange in pairs. This “asset pair” then allows users to swap one asset for the other through the liquidity pool. Fees are paid to the LPs who provided the liquidity. The more liquidity a pair has the less “slippage” a user experiences, meaning the less likely the user is to experience a price change in their trade.

MYTH

Blockchains are a secret way of transacting money and hiding the exchange of funds from others and authorities.

TRUTH

A blockchain is a transparent ledge, meaning that anyone can explore the transactions on it when given the tools. Those tools exist for all blockchains (except the few privacy chains that have been created that do in fact hid the exchange of funds).

Explorers allow anyone to search and explore all the transactions on the blockchain. The blockchain can be searched and explored in numerous ways using: wallet addresses, transaction IDs (TX ID), block numbers, epoch number, slot/epoch number, stake pool ticker, token ticker, staking keys. Users can also search for individual assets and transaction metadata if they have the information. Developers can use APIs to scrape data from the blockchain to inform all sorts of processes, programs, and to create data sets.

A CLMM, *Concentrated Liquidity Market Maker*, is an extension of the AMM algorithm where LPs can provide liquidity to specific price ranges of a pool of assets. They can only earn fees when the assets are traded in their chosen price range. This helps LPs guard themselves again “Impermanent loss”, which is where the price of their assets changes between the time of deposit and withdrawal.

DeFi stands for *Decentralized Finance*, and utilizes smart contracts to automate financial services and instruments that traditionally require a middleman.

DeFi enables a globally accessible financial system, without the entry requirements demanded by traditional, also known as centralized, financial services; a new system without borders or traditional barriers of entry.

DeFi allows people with small amounts of excess capital to “become the bank” and deposit their funds into a protocol to provide liquidity and generate returns in the form of yields from the financial activities conducted on the protocol.

It is important to note that DeFi is a fledgling industry. It equally important to note that there is little to no regulation, meaning there is no consumer protection i.e. if funds are lost by a protocol then the user looses their funds with little to no hope of getting them back.

DEX stands for *Decentralized EXchange*. A DEX is where users can exchange tokens and assets  peer-to-peer i.e. without using a middleman. This is done through trust-less smart contracts on the blockchain.

On a DEX users can only trade blockchain based tokens and assets, and can not use fiat money or their real world assets. However, real world assets can be represented on the blockchain, often called “synthetics”, and this allows for the trading of conventional assets in a decentralized manner.

True to the nature of decentralization, DEXs are anonymous and do not require a user to sign up, they only need to connect the wallet containing the funds they want to use for exchange. DEXs allow those who are traditionally excluded from centralized exchanges, be that because of geography, lack of identity, or many other reasons, access to the financial markets.

The code for a DEX is usually open-sourced so that users and auditors can check the code for bugs and malicious code.

*¡WARNING!* because of the lack of a centralized, managing entity mistakes made on a decentralized exchange are irreversible, make sure you *DOUBLE CHECK EVERYTHING* before committing to a trade. Also, because of the lack of regulatory oversight, make sure you Do Your Own Research, DYOR, before committing to using a particular decentralized exchange; there are malicious actors out there.

There are two main types of DEX: [order books](https://builtoncardano.com/search?q=order%20book) and Automated Market Makers, [AMM](https://builtoncardano.com/search?q=amm)

*Basic Wallet Science* Cryptocurrency wallets function through a pair of cryptographic keys, one public and one private. The public key is the wallet’s address, the private key is securely stored in the wallet. Both are required to send an asset from the wallet.

Wallets are split into two categories: [custodial](https://builtoncardano.com/search?q=custodial) and non-custodial. With a custodial wallet a 3rd party, e.g. an exchange or service provider, possesses the wallet’s private key. With a non-custodial wallet you alone possess the private key. Whoever controls the private key controls the wallet’s funds. Hence the mantra: *Not your keys not your coins*. A wallet’s security can also be increased by storing it on a [hardware wallet](https://builtoncardano.com/hardware-wallets).

Wallets are either light or full node. Full node wallets download the whole Cardano blockchain, interacting directly with it, and are less affected by network congestion than light wallets, which require other nodes to send their transactions. Full node wallets exist on computers, light wallets exist on devices and as browser extensions.

A basic wallet allows for the viewing of its balance and the sending and receiving of funds, but wallets can have many other functions, including: delegating the wallet’s funds to a stake pool, registering to vote in [Project Catalyst](https://builtoncardano.com/project-catalyst), displaying the wallets NFTs, hardware wallet integration, and using integrated DeFi services.

Games on the blockchain are games that utilize an element of blockchain technology. Amongst others, this includes: using the blockchain’s distributed nature to store the game program, using a blockchain-based oracle to certify a game’s source of randomness, and utilizing NFTs as in-game characters, items, or rewards.

Until now gamers have always had to “pay-to-play” and rarely reap any financial reward or return from their game-playing hours and monetary input. Integrating the blockchain into games provides gamers with the opportunity for financial returns, allowing them to “play-to-earn”, “learn-to-earn”, and “build-to-earn”.

This earning can be in the form of tokens or NFTs. Utilizing NFTs in games allows users to take their in-game items, characters, and achievements outside of the game, verify that they’re theirs, and to sell them to others outside of the game interface. Who can then use them in-game themselves.

NFT stands for *Non-Fungible Token*. An NFT is a unique token that cannot be changed, copied, or destroyed.

Non-fungible is the opposite of fungible, fungible means: “replaceable by an identical item”. For this reason NFTs are regularly described as irreplaceable.

An NFT is a blockchain based -also called as tokenized- representation of a digital or real world asset that can be used to verify authenticity as well as ownership.

In the ancient world oracles were people through whom the Gods spoke directly to the inhabitants of earth. In the blockchain and crypto world oracles are a service that provides off-chain data to smart contracts running on a blockchain.

On-chain functions, i.e. smart contracts, cannot access real world data on their own. This is problematic when a smart contract is trying to provide the real-time price of financial assets to users, or when it needs to determine the outcome of a sporting event for a gambling protocol, or even when it has been asked to use something measurable in the real world, such as the temperature or quantity of snowfall, in its calculations. Oracles can feed any real world data onto the blockchain for use by smart contracts.

Data is collect it in a variety of ways: APIs, websites, sensors, etc, and can be manual input by humans. This data is collect by nodes and is then passed on to the oracle service that then supplies the smart contract with the data. Having one node supplying data means a central point of failure, and a high potential for manipulation of the data. As a result oracle services usually use a network of nodes to build a consensus of the correct data point and to prevent the data from being manipulated, thereby helping to ensure trust in the data they supply.

Order books are used to record and settle buy and sell orders placed by users in a traditional financial market. On decentralized exchanges, DEXs, operating an order book orders are placed into a smart contract at either a specific price or “market price” i.e. the current price. Market price orders are executed immediately against existing trades but orders placed at a specific price are locked into the smart contract and wait for orders to come along to facilitate them. This often means waiting for the price of the asset to move to the price they stipulated for their order. During this time the user’s assets are locked in the smart contract and are not available to the user.

Users are often given the ability to put “limits” on their orders, which is a time limit that automatically cancels the order if it is not fulfilled in the stated amount of time. This returns the locked assets to the user unchanged. Users are also given the ability to cancel these trade at any time, which, again, returns the assets to the user unchanged.

Blockchains technology is being used to improve supply chains by introducing verifiability, immutability, and transparency to supply chain tracking.

Blockchains technology allows products to be verifiably tracked from source to destination, with each scan immutably stored and time stamped to the blockchain with these data points being available for anyone to view. 

Using this technology to track products from the source to the consumer helps to increase consumer confidence and to combat the counterfeiting of products; providing consumer protection whilst also foster greater trust in business partnerships.

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