Reference
Glossary
The language of markets, defined plainly — the terms our coverage uses and what they actually mean.
L
- Layer 2
- A network built on top of a base blockchain that processes transactions separately and posts results back, reducing cost and congestion on the main chain.
- Leverage
- Using borrowed money to increase the size of a position relative to the capital committed. Ten-times leverage turns a 1% move in the asset into roughly a 10% move in the account.
- Liquidation
- The forced closing of a leveraged position when its collateral no longer covers losses. On crypto derivatives venues this is automatic and can happen within seconds.
- Liquidity
- How easily an asset can be bought or sold without moving its price much. Liquid assets have many willing buyers and sellers and tight spreads; illiquid ones can only be sold quickly at a…
- Liquidity Pool
- A pot of two or more tokens locked in a contract that traders swap against, with prices set by a formula rather than an order book. Depositors earn a share of the trading fees.