APR (Annual Percentage Rate)

The yearly interest is generated by a sum, paid by borrowers to investors. In others words, the APR is the yearly cost of the loan, calculated as a percentage of the sum borrowed.

APY (Annual Percentage Yield)

The annual percentage yield (APY) is the rate of return earned on an investment over a year, taking into account the effect of compounding interest.

Utilization Rate

The percentage of a pool’s liquidity that has been loaned out.

LTV (Loan-to-value)

The ratio between the loan amount and the value of the collateral being used. Often used to assess lending risk and, consequently, calculate interest rates.


Amount of funds borrowed. In a loan, the total amount the borrower will have to pay back includes the principal plus interest (and any other added fees).


One or more assets are pledged as security for the repayment of a loan. Its purposes are to ensure that the borrower has a vested interest in repaying the loan and that the lender is less likely to incur a loss even if the borrower defaults (i.e., is unable to repay the loan).

Over and Hyper-collateralization

Over-collateralization refers to the provision of collateral that is worth more than the value of the loan by a good margin. Similarly, Hyper-collateralization occurs when the value of the collateral is largely out of proportion to the amount borrowed, resulting in a low LTV.

NFT-backed loans, as is the case with crypto-backed loans, are always over-collateralized and often hyper-collateralized in order to protect lenders against market volatility.


A borrower enters default if they fail to meet the conditions of a loan - typically by failing to repay the loan on time or, in the case of instalment loans, failing to meet the repayment schedule.


Everything related to asset valuation.

Liquidity Pool

Essentially, a bunch of tokens provided by different investors that are locked by smart contracts and bundled together. Those funds can then be used to enable decentralized transactions - in Zharta’s case, lending - that have the potential to generate returns, which are then split amongst the investors. Using a pool can automate liquidity mining for lenders and help mitigate risk - they do, however, require appropriate moderation by the platform to avoid liquidity issues.


When a user sends an NFT to another user without receiving any tokens in exchange.

Example of a swap

NFT Minting

The process for creating an NFT. An NFT is minted when a unique token associated with an asset is published on the blockchain.

Mint transfers can be valueless (in cases where mints are not associated with a sale) or they can happen in exchange for a given amount of tokens (in cases when mints are triggered by sales, and hence happen within the same transfer in the blockchain).

Mints always happen from the NULL address (0x0000000000000000000000000000000000000000) to another given address.

Mints can be executed for a single NFT or for multiple NFTs at once. In the latter case, a single transfer is registered in the blockchain, not multiple.

Example of valueless mint

Example of simultaneous mint and sale

Example of multiple mints


The opposite of minting - the moment after which the token seizes to exist on the blockchain. Burn transfers are always valueless.

Burns always happen from the owners' address to the NULL address (0x0000000000000000000000000000000000000000).

Burns can be executed for a single NFT or for multiple NFTs at once. In the latter case, only a single transfer is registered in the blockchain, not multiple.

Smart Contracts

Programs stored within the blockchain work as self-executing contracts. Once the two parties agree upon the terms, these are coded into the contract and deployed into the blockchain, thus rendering the transaction irreversible, traceable and transparent.

In principle, anyone can code a smart contract. Since not everyone can code, however, they are often generated by third-party companies or software.


Escrow is a legal arrangement in which a third party temporarily holds a bond, asset, or document until the terms pre-agreed to by both transacting parties are met.

In loans made at Zharta, the escrow is held by the smart contract.

Custodial / Non-custodial

In lending, a custodian is a third party that holds on to assets, funds, or documents for safekeeping until the conditions for their release are met.

In the case of collateralized loans, a third party typically takes custody of the collateral until either the borrower finishes their repayments, in which case the collateral returns to the borrower, or they enter default, at which point the collateral becomes property of the lender.

In a non-custodial platform like Zharta, however, no third party takes custody of the collateral. This has been made possible by blockchain technology and smart contracts and ensures that neither borrower, lender, or platform can act maliciously, since the collateral is held out of their reach until the contract’s pre-agreed conditions are fulfilled.

Blue Chip / White Chip NFTs

Blue Chip NFTs are generally valuable, well-known, well-established, and stable, and are therefore usually considered safer investments.

White Chip NFTs, on the other hand, are those that may or may not fulfil some of the Blue Chip requirements, but not enough to be considered safe. One NFT might surge in value, for example, but because its collection is new or not well known, there is less guarantee that its value will hold.

Peer-to-Peer / Peer-to-Pool Lending

In Peer-to-Peer lending, one person borrows from another without involving a financial institution as a middleman.

Peer-to-Pool lending works similarly, but instead of getting a loan from another person, the borrower takes liquidity from a pool in which several lenders have invested.

Both options have advantages and disadvantages. In Peer-to-Peer, for example, a lender might get higher interest rates, or the borrower may be able to negotiate more favourable terms. In Peer-to-Pool, while lenders share the returns, this is also true of the risk, which is therefore mitigated. For the borrower, Peer-to-Pool allows access to instant loans in which the conditions are given in real-time, cutting out the time and work that finding and negotiating with a lender entails.

Liquidity Mining

An investment strategy in the DeFi space in which investors provide liquidity to a DeFi platform/application and receive rewards in return, such as a share of the platform’s fees.

NFT Flash Loans

It is important to distinguish between instant NFT loans from NFT flash loans.

In instant loans, like those that happen here at Zharta, a borrower requests a loan, provides collateral, and is immediately presented with conditions for a smart contract which, should they accept, will give them instant liquidity from a pool of lenders. They then repay the loan within the time frame they agreed to - a week, a month, two months, etc.

Flash loans don’t require collateral, but they must be repaid, or the assets returned, in a matter of seconds. If this sounds impossible for a human to accomplish, that’s because it essentially is. Flash loans are usually aimed at developers who can code their transactions in advance so that they execute all their steps in time.

NFT Flash Loans apply this principle to borrowing NFTs instead of capital. The borrower might want to do this to reap a particular benefit from that NFT, like acquiring an NCT token, before the NFT returns to its original owner.

There are already some tools so that people who can’t or do not wish to code can use flash loans.


The end product of a blockchain protocol that has been fully developed and deployed and is available for public use. The product might still be subject to changes at this stage, however, whenever updates are deemed necessary.


An alternative to the Mainnet used for testing. Testnet assets have no real value, which allows developers and beta testers to test the product without having to use real coins.

TVL - Total value locked

The total liquidity that is currently locked in smart contracts.

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