Time Weighted Average Price (TWAP) represents the average price of an asset over a specified time.

In the context of decentralized finance (DeFi), TWAP refers to the average price of a DeFi asset, such as a cryptocurrency or token, over a specific period of time.

TWAP is an important concept in DeFi, as it can provide insight into the performance and value of a particular asset. TWAP is typically calculated by taking the sum of the prices of the asset at regular intervals over a specified period of time, and then dividing that sum by the total number of intervals. This produces an average price for the asset that reflects the changes in its price over the specified period of time.

TWAP is often used in DeFi as a reference point for other financial instruments, such as futures contracts or options. These instruments are often based on the TWAP of the underlying asset, and they can provide investors with additional ways to gain exposure to the DeFi market and to hedge their risks.

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