Glossary
This glossary provides definitions for common terms used throughout the Brava platform and the broader DeFi ecosystem.
Brava-Specific Terms
Conservative Yield Strategy A low-risk strategy offered by Brava that prioritizes capital preservation while generating reliable yields from proven DeFi protocols, utilizing Entry-level Nexus Mutual cover.
Balanced Yield Strategy A medium-risk strategy offered by Brava that balances yield generation and security, employing protocols with Essential-level Nexus Mutual cover.
Advanced Yield Strategy A higher risk strategy offered by Brava designed to seek higher returns through advanced DeFi strategies, secured by Elite-level Nexus Mutual cover.
Exit Hatch A standalone application provided by Brava that allows users to withdraw their funds under any circumstances, regardless of the main platform’s operational status.
Yield Layer Brava’s comprehensive framework for delivering transparent information about the underlying protocols that power each strategy, including their yield sources and risk profiles.
Risk Monitoring System Brava’s internal system that continuously tracks protocol TVLs, stablecoin prices, and other key metrics to enable real-time alerts for potential risk events.
Strategy & Yield Terms
APY (Annual Percentage Yield) The annualized rate of return, accounting for compounding. This reflects the total returns you could expect over a year if current rates remain constant and yields are reinvested.
APR (Annual Percentage Rate) The simple annualized rate of return without accounting for compounding effects.
Rebalancing The process of adjusting portfolio allocations to maintain a desired risk/reward profile or to optimize for changing market conditions.
Yield Source The specific mechanism or activity that generates returns, such as lending, liquidity provision, staking, or farming.
TVL (Total Value Locked) The total value of crypto assets deposited in a protocol. A higher TVL generally indicates greater adoption and liquidity.
Risk-Adjusted Return A measure of return that takes into account the level of risk involved in a particular strategy or position.
DeFi Protocol Types
Lending Protocol Platforms that enable users to lend or borrow crypto assets based on over-collateralization (examples: Aave, Compound).
DEX (Decentralized Exchange) Peer-to-peer trading venues for cryptocurrencies without intermediaries (examples: Uniswap, Curve).
Yield Aggregator Platforms that automatically allocate user funds across multiple protocols to optimize for the highest yields (examples: Yearn Finance).
Liquidity Pool A collection of funds locked in a smart contract to facilitate trading, lending, or other financial services.
AMM (Automated Market Maker) A type of DEX that determines asset prices using mathematical formulas instead of an order book (examples: Uniswap, Curve).
Yield Generation Methods
Lending Yields Returns earned by lending assets to borrowers through over-collateralized loans on platforms like Aave or Compound.
Liquidity Provision Yield generated by supplying assets to liquidity pools, typically earning trading fees.
Yield Farming Strategic deployment of crypto assets across various protocols to maximize returns, often involving governance token incentives.
Fixed Income Strategies that offer predictable returns over a set timeframe, similar to traditional bond-like instruments.
Protocol Staking Locking tokens in a protocol to provide security or governance participation, receiving rewards in exchange.
Leveraged Yield Strategies that amplify potential returns by borrowing additional capital—while also increasing risk exposure.
Stablecoin Types
Fiat-Collateralized Stablecoins Tokens backed 1:1 by fiat currency reserves, typically USD (examples: USDC, USDT).
Crypto-Collateralized Stablecoins Tokens backed by cryptocurrency collateral, usually over-collateralized to manage price volatility (examples: DAI, sUSD).
Algorithmic Stablecoins Tokens that maintain their peg through algorithms regulating supply and demand (examples: FRAX, GHO).
Hybrid Stablecoins Tokens that combine multiple stabilization mechanisms (examples: FRAX, crvUSD).
Security & Risk Terms
Smart Contract Audit A thorough review of smart contract code by security experts to detect and address vulnerabilities.
Protocol Cover Protection against smart contract failures or exploits, often delivered through specialized providers like Nexus Mutual.
Slippage The difference between the expected price of a trade and the actual price at execution.
Impermanent Loss The temporary loss that liquidity providers may experience when token prices in an AMM pool change relative to their initial deposit ratios.
Governance Attack A scenario where malicious actors gain control of a protocol’s governance mechanism to manipulate it for personal gain.
Rug Pull An exit scam in which project creators abandon a protocol and withdraw all funds.
Oracle Failure When a price feed providing data to smart contracts is manipulated or fails, causing potential system malfunctions.
Technical Terms
Gas Fees Transaction fees paid to network validators for processing operations on blockchains like Ethereum.
Blockchain A distributed, immutable ledger that records transactions across a network of computers.
Smart Contract Self-executing code on a blockchain that automatically enforces agreements under predefined conditions.
Non-Custodial A system where users retain full control of their private keys and assets rather than entrusting them to a third party.
ERC-20 The standard for fungible tokens created on the Ethereum blockchain, detailing how tokens behave.
Web3 A vision for a decentralized internet built on blockchain technology, emphasizing user ownership and control.
Multi-signature (Multisig) A security feature requiring multiple private key signatures to approve a transaction, enhancing asset protection.
Nexus Mutual Terms
Nexus Mutual A decentralized alternative that provides cover against smart contract exploits and DeFi-related risks.
Entry Cover Nexus Mutual’s foundational level of protection, utilized by Brava’s Conservative Yield Strategy.
Essential Cover The intermediate tier of Nexus Mutual coverage, applied in Brava’s Balanced Yield Strategy.
Elite Cover Nexus Mutual’s most comprehensive coverage level, applied in Brava’s High-Growth Yield Strategy.
Cover Claim A request for compensation when a covered event (such as a smart contract exploit) occurs.
Cover Duration The time period during which Nexus Mutual protection is active, typically measured in days or months.
Wallet Infrastructure
Safe (formerly Gnosis Safe) A smart contract wallet emphasizing enhanced security and multisig functionality, used as the foundation of Brava’s self-custodial architecture.
Hardware Wallet A physical device that stores private keys offline, providing a high level of security for crypto holdings.
Hot Wallet A cryptocurrency wallet connected to the internet, offering convenient access but less security than an offline option.
Seed Phrase A series of words that can restore a crypto wallet if the device is lost or damaged.
Gas Optimization Techniques to reduce transaction fees on Ethereum and similar networks by optimizing contract code or batching transactions.
Financial Terms
Diversification The practice of distributing assets across various strategies or protocols to reduce overall risk.
Benchmark A standard or reference point used to measure a strategy’s performance.
Volatility A measure of how much an asset’s price fluctuates over time, often associated with higher uncertainty.
Liquidity The ease with which an asset can be converted to other assets or cash without significantly affecting its market price.
Yield Curve A representation of the relationship between yield and maturity for a set of similar financial instruments.
Risk Premium The additional yield expected for taking on higher risk in a strategy or position.
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