Crypto glossary.
Clear, concise definitions of the terms you'll encounter across crypto — explained simply, one concept at a time. 339 terms, A to Z.
339 of 339 terms
A
Account Abstraction
Letting a wallet's authorization logic be programmable, rather than fixed to a single private key.
An account-abstraction wallet might let a user recover access through a set of trusted contacts instead of a seed phrase alone.
Accredited Investor
A legal classification, in some jurisdictions, permitting access to certain restricted investment offerings.
A security token offering might be restricted to accredited investors under applicable securities rules.
Address Poisoning
Sending transactions from a lookalike address hoping a victim copies it by mistake.
An address-poisoning attempt might leave a lookalike address in a victim's transaction history hoping it's copied later.
Air-Gapped Wallet
A wallet whose private keys are kept on a device that never connects to the internet.
An air-gapped wallet might sign a transaction offline, then transfer only the signed result via QR code to a connected device.
Airdrop
A free distribution of tokens, often to reward early users or promote a project.
A protocol might airdrop its new governance token to wallets that used the platform before its launch.
Algorithmic Stablecoin
A stablecoin that maintains its peg primarily through automated incentives rather than direct asset backing.
An algorithmic stablecoin relies on incentive mechanisms rather than direct asset reserves to hold its peg.
All-Time High
The highest price an asset has ever reached, as recorded by a given source.
An asset trading well below its all-time high is sometimes described that way in market commentary.
All-Time Low
The lowest price an asset has ever reached, as recorded by a given source.
A newer asset's all-time low is often close to its launch price, since it has less trading history.
Allowlist
A list of addresses granted early or guaranteed access to mint an NFT collection.
An allowlist spot might guarantee the ability to mint before the general public sale opens.
Altcoin
A general term for any cryptocurrency other than Bitcoin.
Ethereum, despite its size and significance, is still technically classified as an altcoin relative to Bitcoin.
Anti-Money Laundering
Regulatory requirements and practices designed to detect and prevent illicit financial activity.
A regulated exchange's AML program might flag unusually structured transaction patterns for review.
APR
Annual Percentage Rate — a simple, non-compounded yearly rate of return or cost.
A lending protocol might quote its borrowing cost as an APR rather than a compounded APY.
APY
Annual Percentage Yield — a return rate that accounts for the effect of compounding.
A savings product advertising a 5% APY accounts for compounding over the year.
Arbitrage
Profiting from a temporary price difference for the same asset across markets.
Buying an asset on one exchange and immediately selling it on another at a higher price is a simple arbitrage example.
Archive Node
A full node that retains a blockchain's complete historical state data, not just recent state.
A block explorer typically relies on archive nodes to answer historical state queries.
ASIC
Specialized hardware built specifically for efficient cryptocurrency mining.
Bitcoin mining today is dominated by ASIC hardware rather than general-purpose computers.
Atomic Swap
A trustless exchange of assets across two different blockchains that either fully completes or fully fails.
An atomic swap lets two parties trade assets across separate blockchains without a trusted intermediary.
Attestation
A recorded, signed statement that a specific fact or event is true.
A stablecoin issuer's reserve attestation is a signed statement about the reserves it claims to hold.
Automated Market Maker
A system that prices and executes trades using a formula and a pool of funds, not an order book.
An AMM-based DEX lets a user swap one token for another directly against a liquidity pool.
B
Base Fee
The minimum, algorithmically adjusted fee required for a transaction on Ethereum.
The base fee rises automatically when recent blocks have been consistently full, and falls when they haven't.
Basis Trade
A strategy that profits from the price difference between a futures contract and the spot asset.
A basis trade might hold a spot position and an offsetting short futures position to capture the price gap between them.
Bear Market
A sustained period of generally falling prices and negative market sentiment.
A prolonged decline across most major assets is often described as a bear market.
Bid-Ask Spread
The gap between the highest price buyers offer and the lowest price sellers accept.
A market order executed immediately will typically cross at least part of the bid-ask spread.
Bitcoin
The first cryptocurrency, created to allow direct digital payments without a central authority.
A person can send bitcoin to another person's wallet address anywhere in the world.
Bitcoin Improvement Proposal
A formal document proposing a change or standard for the Bitcoin protocol.
SegWit and Taproot were each introduced and documented through formal BIPs.
Blob (Ethereum)
A large data packet Ethereum introduced to let Layer 2 rollups post data more cheaply.
Rollups posting data as blobs pay substantially less than they would posting the same data as regular calldata.
Block Explorer
A website that lets anyone search and view a blockchain's public transaction and address data.
Pasting a transaction hash into a block explorer lets you independently check its confirmation status.
Block Height
The number of blocks that came before a given block in a blockchain.
A protocol upgrade might be scheduled to activate at a specific block height rather than a calendar date.
Block Reward
Newly created cryptocurrency paid to whoever successfully adds the next block.
Bitcoin's block reward decreases over time through periodic halvings.
Blockchain
A shared, tamper-evident record of information maintained by many computers at once.
Bitcoin uses a blockchain to record who owns and transfers units of the currency.
Blue Chip Crypto
An informal term for large, well-established, widely recognized crypto assets.
Bitcoin and Ethereum are commonly described informally as blue chip crypto assets.
Bonding
Locking up staked assets, often with a waiting period before they're actively earning or usable.
A newly bonded validator might need to wait through a bonding period before actively earning rewards.
BRC-20
An experimental token standard built on top of Bitcoin Ordinals inscriptions.
A BRC-20 token's supply and transfers are tracked through Ordinals inscriptions, not smart contract logic.
Bull Market
A sustained period of generally rising prices and positive market sentiment.
Rising prices across most major assets over an extended period are often described as a bull market.
Buyback and Burn
A protocol using its own revenue to purchase and destroy its token from the open market.
A protocol might commit a percentage of its revenue to a recurring buyback-and-burn program.
Bytecode
The compiled, low-level code a smart contract actually runs on-chain.
A block explorer's "verified contract" badge confirms the published source code matches the deployed bytecode.
C
Call Option
An option contract granting the right to buy an asset at a set price.
A call option becomes more valuable as the underlying asset's price rises above its strike price.
Calldata
The data sent along with a transaction that a smart contract reads as input.
A token transfer's calldata specifies the recipient address and the amount to send.
Capital Gain
The general concept of profit from selling an asset for more than its cost basis.
Selling an asset for more than its cost basis generally produces a capital gain.
Capital Loss
The general concept of a loss from selling an asset for less than its cost basis.
Selling an asset for less than its cost basis generally produces a capital loss.
Centralized Exchange
A company-operated platform that holds custody of funds and matches trades internally.
Signing up for an account with a username and password to trade crypto typically describes a centralized exchange.
Checksum Address
A wallet address format with built-in error detection using mixed letter case.
A wallet might reject an address with an invalid checksum, catching a likely typo before funds are sent.
Child-Pays-For-Parent
A technique using a new, higher-fee transaction to help an earlier low-fee transaction confirm.
A recipient of a slow, low-fee transaction can use CPFP to help it confirm, without needing the sender's involvement.
Circulating Market Cap
Market capitalization calculated using only currently circulating supply, not total or max supply.
Circulating market cap only counts tokens actually available in the market today, not locked or future supply.
Circulating Supply
The number of coins or tokens currently available and able to be traded.
Market cap is generally calculated as price multiplied by circulating supply.
Coinbase Transaction
The special first transaction in a block that issues newly created cryptocurrency to the miner.
A miner's block reward is paid out through that block's coinbase transaction.
Cold Storage
Keeping crypto keys on a device or medium that stays offline, reducing exposure to remote attacks.
A hardware wallet kept offline between uses is a common form of cold storage.
Cold Storage Multisig
Combining offline key storage with a multi-signature requirement for maximum custody security.
An institution might hold treasury funds in cold storage multisig requiring signatures from geographically separated keys.
Cold Wallet
A crypto wallet kept offline, reducing exposure to remote, internet-based attacks.
A hardware wallet kept unplugged between uses is a common form of cold storage.
Collateral
An asset pledged to secure a loan, which can be seized if the loan isn't repaid properly.
A DeFi loan might require depositing collateral worth significantly more than the amount borrowed.
Collateral Factor
The percentage of a deposited asset's value a lending protocol allows to be borrowed against.
A stablecoin typically has a higher collateral factor than a more volatile token.
Composability
The ability for different DeFi protocols to integrate and build on top of one another.
A new protocol might be built by composing an existing lending protocol with an existing DEX.
Concentrated Liquidity
An AMM design letting liquidity providers focus capital within a specific price range.
A liquidity provider using concentrated liquidity might focus their capital in a narrow range around the current price.
Confirmation
A block added on top of the one containing a transaction, adding confidence it's permanent.
An exchange might require several confirmations before crediting a deposit to a user's account.
Consensus Finality
The point at which a transaction or block is considered permanently, irreversibly settled.
A network with fast, absolute finality doesn't require waiting through multiple confirmations for certainty.
Consensus Mechanism
The rules a network uses to agree on which transactions and blocks are valid.
Bitcoin's consensus mechanism is proof of work; Ethereum's is proof of stake.
Content Addressing
Identifying stored data by a hash of its actual content, rather than its storage location.
A content-addressed file's identifier changes automatically if its underlying content is altered.
Conviction Voting
A governance model where voting power on a proposal grows the longer it stays supported.
Under conviction voting, a proposal steadily supported over time can accumulate more effective voting weight.
Correlation
A measure of how closely two assets' prices tend to move together.
Two assets with historically low correlation may not both decline sharply at the same time.
Cost Basis
Generally what you originally paid to acquire an asset, used to work out a gain or loss later.
If a unit of cryptocurrency was bought for $100 and later sold for $150, the $100 purchase price is generally its cost basis.
Cross Margin
A margin mode where a trader's entire account balance backs all open leveraged positions together.
A trader using cross margin has their full account balance available to support each open position.
Cross-Chain Bridge
A system that lets assets or data move between two different blockchain networks.
A cross-chain bridge might let a user move a token from Ethereum to a different Layer 1 network.
Crypto Options
A derivative contract granting the right, but not the obligation, to buy or sell a crypto asset at a set price.
A crypto option buyer's maximum possible loss is generally limited to the premium they paid.
Cryptocurrency
A digital asset that uses cryptography and a blockchain to record ownership and transfers.
Bitcoin and Ethereum are both examples of cryptocurrencies, each with different designs and goals.
Custodial Wallet
A wallet where a third party holds and controls the private keys on your behalf.
Funds held in an account on a centralized exchange are typically held in a custodial wallet.
Custody
Who actually holds and controls the private keys to a set of crypto assets.
A person using a hardware wallet has custody of their own assets directly.
Custody Risk
The risk that a third party holding your crypto fails, is hacked, or restricts access.
Funds held on an exchange are subject to that exchange's own custody risk, separate from the underlying asset's own risks.
D
Danksharding
A planned Ethereum scaling design intended to dramatically increase data availability capacity.
Danksharding is designed primarily to make posting Layer 2 data to Ethereum cheaper and more scalable.
DAO
A decentralized autonomous organization coordinated through code and member voting.
A DAO might vote on how to allocate funds from a shared treasury.
Dark Pool
A private trading venue where order details are not publicly visible before execution.
A large trade routed through a dark pool doesn't reveal its size on the public order book beforehand.
Data Availability
Whether the data needed to verify a blockchain's state is actually accessible to the network.
A rollup posting full transaction data to its base chain is prioritizing data availability over cost savings.
Decentralization
Spreading control across many independent participants instead of one central party.
A network run by thousands of independent, geographically spread nodes is generally more decentralized than one run by a handful of servers.
Decentralized Exchange
A trading platform where trades execute through code, without a central operator holding funds.
Many decentralized exchanges use an automated market maker model instead of a traditional order book.
Decentralized Identity
An identity model where an individual controls their own credentials rather than a central authority.
A decentralized identity credential can be verified without necessarily sharing every underlying detail.
Decentralized Storage
A data storage system spread across many independent nodes rather than one central server.
NFT images are commonly stored on decentralized storage rather than directly on-chain, due to cost.
DeFi
Blockchain-based financial applications that use smart contracts instead of relying entirely on traditional intermediaries.
A decentralised exchange can let users trade against a liquidity pool.
Delegate
Someone entrusted with another token holder's voting power in a governance system.
A token holder might delegate their voting power to a delegate who actively follows governance proposals.
Delegated Proof of Stake
A consensus model where token holders vote to elect a smaller set of validators.
Token holders in a delegated proof of stake network vote for a limited number of validators to represent them.
Delegation (Staking)
Assigning your stake to a validator without running your own validating infrastructure.
Delegating to a validator lets a token holder earn staking rewards without running their own node.
Delta Neutral
A portfolio position structured to be largely unaffected by the underlying asset's price movement.
A delta-neutral strategy might combine a spot holding with an offsetting short position to cancel out price-direction risk.
Depeg
When a stablecoin's market price moves meaningfully away from its intended target value.
A stablecoin trading meaningfully below its intended $1 target is said to have depegged.
Derivation Path
A formula a wallet uses to generate many key pairs from a single seed phrase.
Restoring a wallet from a seed phrase in compatible software should reproduce the same addresses via the same derivation path.
Difficulty Adjustment
An automatic recalibration that keeps block production time roughly consistent.
Bitcoin's difficulty adjustment recalibrates roughly every two weeks based on recent block times.
Difficulty Bomb
A mechanism designed to make mining exponentially harder to force a network transition.
Ethereum's difficulty bomb was delayed multiple times before the network's actual transition to proof of stake.
Digital Signature
Cryptographic proof that a message or transaction was authorized by a specific private key holder.
Every crypto transaction includes a digital signature proving it was authorized by the sender's private key.
Diversification
Spreading holdings across different assets rather than concentrating in just one.
Holding several different assets instead of one is a basic example of diversification.
Dollar-Cost Averaging
Investing a fixed amount at regular intervals instead of all at once.
Investing a fixed amount every month, regardless of the current price, is a common dollar-cost averaging approach.
Dollar-Weighted Return
A return measure that accounts for the timing and size of each individual deposit.
An investor who added funds right before a decline will have a lower dollar-weighted return than the asset's own performance alone would suggest.
Double-Spending
Successfully spending the same digital funds more than once.
Waiting for multiple confirmations before treating a large transaction as final reduces double-spending risk.
Drawdown
The percentage decline from a portfolio or asset's peak value to a subsequent low point.
An asset that fell 60% from its all-time high experienced a 60% drawdown from that peak.
Dust Limit
The smallest transaction output amount a network's nodes will typically relay.
An attempted transaction output below the dust limit is typically rejected by network nodes.
Dusting Attack
Sending tiny amounts of crypto to many addresses to try to de-anonymize their owners.
Receiving an unexpected tiny, unsolicited crypto deposit can be a sign of a dusting attack.
Dynamic NFT
An NFT whose metadata or appearance can change based on external conditions.
A dynamic NFT representing a game character might visually change as the character levels up.
E
Eclipse Attack
Isolating a specific node so it only sees connections controlled by the attacker.
An eclipse attack targets a specific node's view of the network, not the network's global consensus directly.
Elliptic Curve Cryptography
The mathematical basis most crypto wallets use to generate key pairs.
Bitcoin and Ethereum both rely on elliptic curve cryptography to generate and verify key pairs.
Emissions Schedule
The predetermined rate and timeline at which a protocol issues new tokens.
A high emissions schedule relative to demand can put ongoing downward pressure on a token's price.
Epoch
A fixed period of time or set number of blocks used to organize validator duties in proof of stake.
A proof-of-stake network might organize its validator schedule into epochs of a fixed number of slots.
ERC-1155
A token standard that lets a single contract manage both fungible and non-fungible tokens.
A game might use ERC-1155 to manage both stackable in-game currency and unique item NFTs in one contract.
ERC-20
The technical standard most fungible tokens on Ethereum follow.
Most stablecoins and governance tokens on Ethereum are issued as ERC-20 tokens.
ERC-721
The technical standard most non-fungible tokens (NFTs) on Ethereum follow.
Most digital art and collectible NFT projects are issued as ERC-721 tokens.
Ethereum
A public blockchain for transactions and programmable applications, with ether as its native asset.
A user pays a gas fee in ETH when interacting with many Ethereum applications.
Ethereum Virtual Machine
The runtime environment that executes smart contract code on Ethereum.
A smart contract compiled to run on the EVM will produce identical results on any EVM-compatible network.
Extended Public Key
A key that lets someone generate and view all addresses in an HD wallet, without spending access.
Sharing an extended public key lets someone view all of a wallet's addresses without any spending access.
F
Fair Launch
A token launch with no early or privileged allocation for the team or investors.
A fair launch project has no team or investor allocation acquired ahead of the public.
FIFO
First in, first out — one general method for deciding which units of an asset were sold.
Under FIFO, if someone bought crypto at three different times and later sold some, the earliest purchase is treated as sold first.
Finality
The point at which a transaction is considered permanent and extremely unlikely to be reversed.
Waiting for more block confirmations generally increases a transaction's practical finality.
Flash Loan
An uncollateralized loan that must be borrowed and repaid within a single transaction.
A flash loan might be used to exploit a brief price difference between two exchanges within one transaction.
Floor Price
The lowest currently listed asking price within an NFT collection.
A collection's floor price rising can indicate increasing demand for even its least expensive items.
Fractionalized NFT
An NFT split into multiple fungible tokens representing partial ownership.
A high-value NFT might be fractionalized so multiple people can each own a partial share.
Front-Running
Placing a transaction ahead of a known pending one to profit from its anticipated price impact.
A large pending swap visible in the mempool can attract front-running attempts.
Full Node
A network participant that independently downloads and verifies the entire blockchain.
Running your own full node lets you verify transactions without trusting a third-party service.
Fully Diluted Valuation
A token's price multiplied by its maximum possible supply, not just current circulating supply.
A token with a large gap between its market cap and FDV has substantial future supply still to be issued.
Funding Rate
A periodic payment between long and short traders that keeps a perpetual contract's price near spot.
A consistently positive funding rate can indicate more traders are positioned long than short.
Fungible Token
A token where each unit is identical and interchangeable with any other unit.
One bitcoin is interchangeable with any other bitcoin, making it a fungible asset.
Futarchy
A governance model that uses prediction markets to help decide policy outcomes.
A futarchy-based DAO might use prediction market pricing to decide between two competing proposals.
G
Gas Fee
A fee paid to compensate a network for the computing resources used to process a transaction.
Sending a token on a busy network may require a higher gas fee than sending it during a quiet period.
Gas Limit
The maximum amount of computational work a transaction is allowed to use.
A simple transfer generally requires a much lower gas limit than a complex smart contract interaction.
Generative Art
Art algorithmically created by combining a set of possible traits according to defined rules.
A generative art NFT collection might combine background, clothing, and accessory traits algorithmically.
Genesis Allocation
The initial distribution of a token's supply at a network's launch.
A project's genesis allocation shows how supply was initially divided among the team, investors, and public.
Genesis Block
The very first block ever created on a blockchain.
Bitcoin's genesis block was mined in January 2009 and included a short embedded text message.
Governance Token
A token that grants holders voting rights over a protocol's decisions.
Holding a governance token might let a user vote on a proposed change to a protocol's fee structure.
Gwei
A small denomination of ETH commonly used to express Ethereum gas prices.
A wallet might show an estimated gas price of 25 gwei for a pending transaction.
H
Halving
A scheduled event that cuts a network's block reward, and new issuance rate, in half.
Bitcoin's block reward is cut in half roughly every four years through scheduled halvings.
Hard Fork
A protocol change that is not compatible with older versions of the software.
A hard fork might be used to add a new feature that changes how blocks are validated.
Hardware Security Module
A dedicated physical device designed to securely generate and store cryptographic keys.
An exchange might use enterprise-grade hardware security modules to protect its own reserve private keys.
Hardware Wallet
A physical device built specifically to store private keys and sign transactions offline.
A hardware wallet is a common way to implement cold storage for larger crypto holdings.
Hash Function
A mathematical process that turns any input into a fixed-length string of characters.
Each block typically includes the hash of the previous block, linking them into a chain.
Hash Rate
A measure of how much computing power is being used to mine a network.
A rising network hash rate is often cited as a sign of growing miner participation.
Hash Rate Distribution
How a proof-of-work network's total computational power is spread across different miners or pools.
A network with hash rate concentrated among just a few large pools is considered more centralized.
Health Factor
A ratio showing how close a lending position is to liquidation.
A health factor well above 1 generally indicates a position has a meaningful buffer before liquidation risk.
Hierarchical Deterministic Wallet
A wallet that generates many key pairs from a single seed, following a standard derivation structure.
Most modern crypto wallets are HD wallets, generating many addresses from one seed phrase.
HIFO
Highest In, First Out — an accounting method assuming the highest-cost units are sold first.
Under HIFO, units originally purchased at the highest price are treated as the ones sold first.
Homomorphic Encryption
Encryption that allows computation directly on encrypted data without first decrypting it.
Homomorphic encryption could theoretically let a smart contract compute on private data without ever decrypting it.
Honeypot Scam
A malicious smart contract designed to let victims buy in but prevent them from selling.
A honeypot token might allow a small test purchase to succeed while blocking any attempt to sell.
Hot Wallet
A crypto wallet that stays connected to the internet, trading convenience for exposure.
A mobile wallet app used for everyday spending is a common example of a hot wallet.
Howey Test
A legal test, from U.S. case law, used to determine whether something qualifies as an investment contract.
U.S. regulatory discussions of a token's status often reference the Howey Test's specific criteria.
I
Iceberg Order
A large order split so only a small portion is visible on the order book at a time.
An iceberg order might show only 5% of its total size on the order book at any given moment.
Impermanent Loss
A potential shortfall liquidity providers face when pooled asset prices diverge.
Impermanent loss tends to be larger when the two pooled assets' prices diverge significantly from each other.
Impermanent Loss Calculator
A tool that estimates the impermanent loss from providing liquidity given a price change.
An impermanent loss calculator can show the estimated loss for a range of possible price changes.
Impermanent Loss Protection
A mechanism some protocols offer to compensate liquidity providers for impermanent loss.
A protocol offering impermanent loss protection funds it from reserves or additional token emissions.
Implied Volatility
The market's expectation of future price volatility, derived from current option prices.
Rising implied volatility generally makes both call and put options more expensive.
Indexer
A service that organizes raw blockchain data into a more easily queryable format.
A wallet app typically relies on an indexer to quickly display your transaction history.
Institutional Investor
An organization that invests substantial pooled funds on behalf of others or itself.
A large fund allocating client capital into crypto assets is acting as an institutional investor.
Interoperability
The ability of different blockchain networks to communicate and work with each other.
A cross-chain bridge is one tool used to improve interoperability between two blockchains.
Isolated Margin
A margin mode where only the collateral assigned to a specific position is at risk.
A trader using isolated margin on one position can prevent losses there from affecting their other holdings.
L
Layer 1
A base blockchain network that settles transactions and provides its own consensus and security rules.
Ethereum is a Layer 1 that supports smart contracts and Layer 2 networks.
Layer 2
A system built on or alongside a base blockchain to process activity with different performance trade-offs.
An Ethereum Layer 2 can batch user activity before settling information to Ethereum.
Lazy Minting
Deferring the on-chain minting of an NFT until it is actually purchased.
A lazily-minted NFT collection doesn't cost the creator gas until each individual item actually sells.
Lending Protocol
A DeFi application that lets users lend or borrow crypto directly through smart contracts.
A lending protocol might let a user deposit one token to earn interest while others borrow it against collateral.
Leverage
Using borrowed funds to increase the size of a position beyond your own capital.
Using 5x leverage means a position is five times larger than the trader's own posted capital.
LIFO
Last In, First Out — an accounting method assuming the most recently acquired units are sold first.
Under LIFO, the most recently purchased units are treated as the ones sold in a given transaction.
Light Client
A network participant that verifies transactions without downloading the full blockchain.
A mobile wallet often operates as a light client rather than running a full node itself.
Limit Order
An order to buy or sell only at a specific price or better.
A limit order to buy below the current price will only fill if the price drops to that level.
Liquid Restaking Token
A tradeable token representing a position that is both staked and restaked.
An LRT can be traded or used in other DeFi protocols while the underlying position remains staked and restaked.
Liquid Staking
Staking an asset while receiving a tradeable token representing the staked position in return.
A liquid staking participant can trade their received token even while their original assets remain staked.
Liquid Staking Token
The tradeable token received in exchange for participating in liquid staking.
A liquid staking token can often be used as collateral in a separate DeFi lending protocol.
Liquidation
The forced sale of collateral when a loan's safety threshold is breached.
A sudden price drop in collateral can trigger liquidation faster than a borrower expects.
Liquidation Price
The price at which a leveraged position is automatically closed to prevent further loss.
A highly leveraged position has a liquidation price much closer to its entry price than a lightly leveraged one.
Liquidity
The amount of an asset available to trade or exchange without causing a large price change.
A large trade in a small liquidity pool may receive a worse execution price.
Liquidity Pool
A shared pool of tokens that traders swap against, often funded by other users.
A liquidity pool might hold two different tokens in a ratio that determines their relative price.
Liquidity Provider
Someone who deposits assets into a liquidity pool, usually in exchange for a share of fees.
A liquidity provider might deposit equal values of two tokens into a pool to start earning fees.
Long Position
A position that profits if an asset's price increases.
Buying an asset because you expect its price to rise is the simplest example of going long.
M
Mainnet
The live, real version of a blockchain network where transactions have real value.
Ethereum's mainnet is the live network where real ETH and real transactions exist.
Maker Order
An order that adds new liquidity to an order book rather than filling an existing order.
A limit order that sits on the book waiting to be filled is typically classified as a maker order.
Man-in-the-Middle Attack
An attack where a third party secretly intercepts and possibly alters communication between two parties.
Using an unsecured public network can increase risk of a man-in-the-middle attack.
Margin Call
A warning that additional collateral is needed to avoid a leveraged position being liquidated.
A margin call gives a trader a chance to add collateral before a position is automatically liquidated.
Margin Trading
Trading with funds borrowed against collateral you've deposited with an exchange.
A margin trader posts collateral to borrow additional funds for a larger position.
Market Cap
The total value of all circulating units of a cryptocurrency, used to gauge its relative size.
A cryptocurrency with a higher price but a smaller circulating supply can have a lower market cap than one with a lower price and larger supply.
Market Depth
How much buy and sell order volume exists at prices near the current market price.
A market with strong depth can absorb a large order without moving the price significantly.
Market Dominance
A specific asset's market cap as a percentage of the total crypto market's combined market cap.
Bitcoin dominance is commonly tracked as a general indicator of relative market sentiment toward Bitcoin versus other assets.
Market Order
An order to buy or sell immediately at the best currently available price.
A market order to buy will fill immediately at the lowest available sell prices until the order is complete.
Max Supply
The absolute maximum number of coins or tokens that will ever exist.
Bitcoin has a max supply of 21 million coins, enforced by its protocol.
Maximal Extractable Value
Extra value a block producer can capture by choosing how to order or include transactions.
A large decentralized exchange trade can attract MEV activity from parties trying to profit off its price impact.
Maximum Drawdown
The largest peak-to-trough decline an asset or portfolio experienced over a period.
An asset with a historical 80% maximum drawdown has, at some point, fallen 80% from a prior peak.
Meme Coin
A cryptocurrency created primarily around internet humor or cultural trends, often with limited utility.
A meme coin's value is often driven primarily by community sentiment and online attention rather than underlying utility.
Mempool
The waiting area where broadcast transactions sit before being included in a block.
During periods of high network demand, the mempool can become congested with many pending transactions.
Merkle Proof
A compact proof that a specific piece of data is included in a larger Merkle tree, without needing the full tree.
A light client can use a Merkle proof to verify a transaction's inclusion without downloading the entire block.
Merkle Tree
A data structure that efficiently summarizes many transactions into a single hash.
A block header typically stores only the Merkle root, not every individual transaction hash.
MiCA
The European Union's comprehensive regulatory framework for crypto assets.
A stablecoin issuer operating in the EU is subject to MiCA's specific reserve and disclosure requirements.
Mining
The process of using computing power to validate transactions and secure a proof-of-work network.
Bitcoin relies on mining as part of its proof-of-work consensus process.
Mining Pool
A group of miners who combine computing power and share rewards proportionally.
A miner might join a pool to receive smaller, more frequent rewards instead of rare, larger ones alone.
Minting
The process of creating a new token or NFT and recording it on-chain for the first time.
A collector minting a new NFT directly from the project is creating it on-chain for the first time.
Modular Blockchain
A blockchain design that separates core functions like execution and data availability across specialized layers.
A modular blockchain design might use a separate, specialized layer specifically for data availability.
Monolithic Blockchain
A blockchain design that handles execution, consensus, and data availability all within a single layer.
Bitcoin's base-layer design is commonly described as monolithic, handling core functions within one integrated chain.
Multi-Party Computation
A cryptographic technique letting multiple parties jointly compute a result without revealing their private inputs.
An MPC wallet can require multiple parties to jointly participate in signing, without any one holding a full private key.
Multi-Signature Wallet
A wallet that requires approval from more than one key before a transaction can be sent.
A two-of-three multisig wallet requires any two of three designated keys to approve a transaction.
N
Nakamoto Consensus
Bitcoin's original approach combining proof of work with the longest-valid-chain rule.
Many early cryptocurrencies adapted Nakamoto Consensus from Bitcoin's original design.
Native Token
The primary asset built directly into a blockchain's own protocol.
ETH is Ethereum's native token, used to pay gas fees on the network.
NFT Metadata
The descriptive data (image, traits, name) associated with a specific NFT.
An NFT's image and traits are generally defined by its metadata, not stored directly in the token itself.
NFT Royalty
A percentage of a resale price intended to be paid automatically to an NFT's original creator.
An NFT collection might set a 5% royalty intended to be paid to the creator on every resale.
Node
A computer that runs blockchain software and helps maintain the network.
Anyone can typically download and run node software to participate in a public blockchain network.
Node Provider
A company or service offering managed access to blockchain nodes for developers.
Many wallets and applications rely on a node provider rather than running their own full node infrastructure.
Non-Custodial Wallet
A wallet where the user alone holds and controls the private keys.
Most standalone mobile and hardware wallets are non-custodial by design.
Non-Fungible Token
A token representing a unique item, where each unit is distinct and not interchangeable.
Two NFTs from the same collection can have very different value depending on their individual attributes.
Nonce
A number used once, either in mining or to track the order of a wallet's transactions.
A miner may try billions of different nonce values before finding one that produces a valid block hash.
O
Off-Chain
Activity or data that happens outside a blockchain's own public record.
Trades between two users on a centralized exchange's internal order book happen off-chain until a withdrawal occurs.
On-Chain
Activity or data that is recorded directly on a blockchain itself.
A confirmed transaction is recorded on-chain, visible to anyone who looks it up.
Opcode
A single low-level instruction that a blockchain's virtual machine executes.
A smart contract's bytecode is ultimately a sequence of opcodes the virtual machine executes in order.
Open Interest
The total value of outstanding derivative contracts that have not yet been closed or settled.
Rising open interest alongside rising price can indicate growing leveraged long positioning.
Oracle
A service that brings real-world data onto a blockchain for smart contracts to use.
A DeFi lending protocol might use a price oracle to determine when a loan should be liquidated.
Oracle Manipulation
An attack that exploits or distorts a price feed a smart contract relies on.
A protocol relying on an easily-moved, thin-liquidity price source is more vulnerable to oracle manipulation.
Order Book
A live list of buy and sell orders at different prices, used to match trades.
A deep order book generally means large trades can execute with less price impact.
Ordinals
A protocol for inscribing arbitrary data onto individual satoshis on Bitcoin.
An Ordinals inscription attaches data directly to a specific, individually-numbered satoshi.
Orphan Block
A validly mined block that ends up excluded from the main blockchain.
Two miners solving a block at nearly the same time can result in one of the two blocks becoming orphaned.
Over-Collateralization
Requiring collateral worth more than the loan itself, to protect against price swings.
A protocol might require $150 of collateral for every $100 borrowed.
P
Paper Wallet
A physical printed copy of a wallet's public address and private key.
A paper wallet generated offline can serve as one form of cold storage.
Peg
The target value a stablecoin is designed to consistently track.
A stablecoin pegged to the US dollar aims to consistently trade at approximately $1.
Perpetual Swap
A futures-like contract with no expiry date that tracks an asset's price through a funding mechanism.
A trader might use a perpetual swap to gain leveraged price exposure without owning the underlying asset.
Phishing
An attempt to trick someone into revealing credentials or approving a harmful transaction, often by impersonating a trusted source.
A message claiming to be wallet support and asking for a seed phrase is a phishing attempt.
Pig Butchering Scam
A long-running relationship-based scam that gradually persuades a victim to invest in a fake platform.
Being encouraged by an online-only relationship to invest through an unfamiliar platform is a common pig butchering pattern.
Ponzi Scheme
A fraud that pays early investors using funds from newer investors, not genuine returns.
A crypto platform promising unusually high, consistent returns with a vague strategy may be a Ponzi scheme.
Portfolio
The full collection of assets a person or entity holds.
A portfolio might include several different cryptocurrencies in varying proportions.
Portfolio Rebalancing
Periodically adjusting holdings back toward a target allocation as prices drift.
A portfolio might be rebalanced quarterly to correct for drift caused by differing asset performance.
Pre-Mine
Tokens created and allocated before a project's public launch.
A project's pre-mine size and vesting schedule are worth reviewing before investing.
Prediction Market
A market where participants trade on the outcome of a future event.
A prediction market's price for a given outcome can be read as the market's implied probability estimate.
Priority Fee
An optional additional fee paid to a validator to prioritize a transaction.
A wallet's "fast" transaction speed option typically sets a higher priority fee than the "standard" option.
Private Key
A secret piece of data that proves ownership of crypto assets and authorizes transactions.
A wallet uses a private key behind the scenes to digitally sign an outgoing transaction.
Proof of Authority
A consensus mechanism where a limited, identified set of validators produce blocks.
An enterprise supply-chain network might use proof of authority among a small set of known validators.
Proof of Burn
A consensus mechanism where participants permanently destroy coins to earn the right to validate.
A proof-of-burn network might require destroying an existing coin to earn mining rights on a new chain.
Proof of History
A method for cryptographically ordering events before consensus, used alongside proof of stake on some networks.
A network combining proof of history with proof of stake can process transactions with high throughput.
Proof of Stake
A consensus method that uses committed assets and validator rules to coordinate blockchain updates.
Ethereum uses proof of stake to coordinate validators.
Proof of Work
A consensus method that uses computational work to help choose and secure new blockchain blocks.
Bitcoin uses proof of work to coordinate block production.
Proposal
A formal, documented suggestion for a specific governance action, submitted for a vote.
A governance proposal might request allocating a specific amount of treasury funds to a particular initiative.
Protocol
The set of rules that defines how a blockchain or application operates.
Bitcoin's protocol defines its 21 million coin supply cap and proof-of-work consensus rules.
Protocol-Owned Liquidity
Liquidity that a protocol itself owns, rather than renting it from external liquidity providers.
A protocol might use its treasury to directly acquire and own its own liquidity pool positions.
Pruned Node
A full node that discards old, already-verified historical data to save storage space.
Many individuals run pruned nodes at home specifically because of their far lower storage requirements.
Pseudonymity
Being identified by an address rather than a real-world identity, though not fully anonymous.
Bitcoin transactions are pseudonymous, tied to addresses rather than names, but publicly viewable.
Public Key
A piece of data derived from a private key that can be shared publicly and is used to verify signatures or derive wallet addresses.
A user shares a wallet address, derived from a public key, so someone else can send them funds.
Put Option
An option contract granting the right to sell an asset at a set price.
A put option becomes more valuable as the underlying asset's price falls below its strike price.
Pyramid Scheme
A fraud where profit mainly comes from recruiting new participants, not a genuine product or service.
A crypto "opportunity" emphasizing recruiting new members over any actual product is a pyramid scheme warning sign.
Q
Quadratic Voting
A voting model where the cost of additional votes on one option rises quadratically.
Under quadratic voting, casting 4 votes toward one option costs more than 4 times what a single vote costs.
Quorum
The minimum participation required for a governance vote to be considered valid.
A governance proposal might require at least 4% of circulating tokens to vote before it can pass.
R
Real Yield
DeFi yield paid from genuine protocol revenue rather than newly issued reward tokens.
A protocol paying yield from trading fees it actually collects is commonly described as offering real yield.
Realized Gain
A gain that has actually been locked in by selling or disposing of an asset.
Selling an appreciated asset converts an unrealized gain into a realized one.
Rebalancing
Adjusting a portfolio's holdings back toward a previously chosen target allocation.
A portfolio targeting a 50/50 split might need rebalancing after one asset significantly outperforms the other.
Reentrancy Attack
A smart contract exploit where a malicious contract repeatedly re-enters a function before it finishes.
A reentrancy attack repeatedly calls back into a vulnerable function before its state update completes.
Regulatory Sandbox
A supervised program letting companies test new financial products under relaxed regulatory conditions.
A crypto startup might test a new product within a regulatory sandbox before full commercial launch.
Reorg
When a blockchain's recent history is replaced by a different, competing chain of blocks.
A shallow, single-block reorg is a normal, expected occasional occurrence on many networks.
Replace-By-Fee
A Bitcoin feature letting a sender rebroadcast an unconfirmed transaction with a higher fee.
A transaction stuck unconfirmed due to a low fee can sometimes be sped up using RBF.
Replay Attack
Reusing a previously valid transaction, potentially on a different network, without authorization.
A hard fork without proper replay protection can let a transaction on one chain be unintentionally replayed on the other.
Reserve Attestation
A third-party report confirming a stablecoin issuer's reserves match its circulating supply.
A stablecoin issuer might publish a monthly reserve attestation from an independent accounting firm.
Restaking
Using already-staked assets or a liquid staking token to simultaneously secure an additional protocol.
A restaking participant's already-staked assets can help secure an additional protocol beyond the base network.
Retail Investor
An individual, non-professional investor trading with their own personal funds.
A retail investor typically buys crypto directly through an exchange with their own personal funds.
Reveal (NFT)
The moment a minted NFT's final artwork and traits become visible to its owner.
Before a reveal, a minted NFT typically shows a placeholder image instead of its final artwork.
Rollup
A Layer 2 scaling method that bundles many transactions before settling them on a base chain.
Rollups are a common Layer 2 approach used to reduce fees on busy base blockchains.
RPC Node
A node that applications connect to in order to read data from or send transactions to a blockchain.
A wallet app typically connects to an RPC node to check balances and submit transactions.
Rug Pull
A scam where a project's creators abandon it and take investor funds with them.
A token whose liquidity is suddenly removed by its creators, crashing its price, is a common rug pull pattern.
S
Sanctions Screening
Checking transactions or users against government sanctions lists for compliance purposes.
A regulated exchange's sanctions screening might flag a wallet address linked to a sanctioned entity.
Sandwich Attack
Placing trades both before and after a victim's trade to profit from its price impact.
A large swap on a decentralized exchange with a public mempool can be a target for a sandwich attack.
Satoshi
The smallest unit of Bitcoin, equal to one hundred-millionth of a single BTC.
A Lightning Network payment might be denominated in satoshis rather than whole bitcoin.
Security Token
A crypto token that represents an investment contract or ownership interest subject to securities regulation.
A token sold with promises of profit derived from a third party's efforts may be evaluated as a security token.
Seed Phrase
A sequence of words that can recreate a wallet's private keys and access its assets.
Writing a seed phrase on paper and storing it securely can provide a physical backup.
SegWit
A Bitcoin protocol upgrade that restructured transaction data to increase effective capacity.
A Bitcoin address starting with "bc1" is typically a SegWit-compatible address.
Self-Custody
Holding and controlling your own private keys instead of relying on a third party.
Moving funds from an exchange to a personal hardware wallet is a common way to move into self-custody.
Sequencer
The party or system that orders transactions on a Layer 2 rollup before they're posted to the base chain.
A rollup's sequencer being temporarily offline can prevent new transactions from being processed on that network.
SHA-256
A specific hash function that produces a fixed 256-bit fingerprint of input data, used by Bitcoin.
Bitcoin miners repeatedly compute SHA-256 hashes as part of the proof-of-work mining process.
Sharding
Splitting a network's data and workload across multiple smaller parts to increase capacity.
Sharding is one of several approaches networks explore to increase transaction throughput.
Shared Sequencer
A sequencer service used by multiple Layer 2 rollups instead of each running its own.
Multiple rollups using the same shared sequencer can potentially coordinate transaction ordering across chains.
Sharpe Ratio
A measure of return earned per unit of volatility risk taken.
Two assets with the same raw return but different volatility will have different Sharpe ratios.
Short Position
A position that profits if an asset's price decreases.
A trader who expects a price to fall might open a short position to try to profit from that decline.
Short Squeeze
A rapid price rise that forces short sellers to buy back their positions, accelerating the move further.
A short squeeze can cause a price to rise sharply and quickly, beyond what typical demand alone would produce.
Sidechain
A separate blockchain connected to a main chain, often used to extend its capabilities.
A sidechain might process transactions faster or more cheaply than the main chain it connects to.
SIM Swap
An attack where someone transfers your phone number to their device to intercept codes.
A SIM swap can let an attacker bypass text-message-based two-factor authentication on an exchange account.
Slashing
A penalty that removes part of a validator's staked funds for provable misbehavior.
A validator caught double-signing conflicting blocks can be slashed under many proof-of-stake designs.
Slashing Condition
A specific type of validator misbehavior that triggers a stake penalty.
Double-signing conflicting blocks is a common, severely-penalized slashing condition across many networks.
Slippage
The difference between the expected price of a trade and the price at which it executes.
A large swap in a shallow pool can experience more slippage than a small swap in a deep pool.
Slot
A fixed time window in which one validator may propose a block in proof of stake.
A proof-of-stake network might have a new slot roughly every 12 seconds.
Smart Contract
Self-executing code stored on a blockchain that runs automatically when its conditions are met.
A smart contract can automatically release funds once two parties both confirm a condition has been met.
Snapshot Voting
Off-chain governance voting based on token holdings recorded at a specific past block.
A DAO might use snapshot voting to gauge community sentiment without the gas cost of an on-chain vote.
Social Engineering
Manipulating a person, rather than software, into giving up access or funds.
Someone posing as customer support and asking for a seed phrase is using social engineering.
Social Recovery Wallet
A wallet that lets trusted contacts help restore access without a traditional seed phrase.
A social recovery wallet might require agreement from 3 of 5 trusted guardians to restore access.
Soft Fork
A protocol change that remains compatible with nodes running older software.
A soft fork might reduce the maximum allowed block size, which older nodes would still see as valid.
Solidity
The most widely used programming language for writing Ethereum smart contracts.
Most Ethereum DeFi protocols have their core smart contracts written in Solidity.
Soulbound Token
A non-transferable token permanently tied to a specific wallet.
A completed course credential might be issued as a soulbound token rather than a tradeable NFT.
Stablecoin
A cryptocurrency designed to maintain a stable value, often by tracking a currency like the US dollar.
A stablecoin tracking the US dollar aims to stay close to a value of one dollar per unit.
Staking
Committing crypto to help secure a proof-of-stake network, often in exchange for rewards.
Ethereum validators stake ETH to participate in the network's proof-of-stake consensus.
Staking Pool
A group of token holders combining their stake to meet a minimum requirement or improve reliability.
A staking pool can let someone participate in staking rewards without meeting a network's full minimum stake requirement alone.
State Channel
An off-chain channel letting participants exchange many updates before settling a final state on-chain.
The Lightning Network's payment channels are a specific, payments-focused application of the state channel concept.
Stop-Loss Order
An order that automatically closes a position once a specified loss-limiting price is reached.
A trader might set a stop-loss order 10% below their entry price to cap potential loss on a position.
Stratum Protocol
A communication protocol used by miners to coordinate work with a mining pool.
Mining hardware typically connects to a pool's server using the Stratum protocol to receive work.
Strike Price
The predetermined price at which an option contract can be exercised.
A call option is generally only worth exercising if the market price is above its strike price.
Subgraph
An open API that indexes and organizes blockchain data for a specific application.
A DeFi application might use a subgraph to efficiently query its own protocol's historical activity.
Sybil Attack
Creating many fake identities to gain disproportionate influence over a network.
An airdrop program might implement anti-Sybil measures to prevent one person claiming many times via fake accounts.
Sybil Resistance
A system's ability to prevent a single actor from gaining disproportionate influence via fake identities.
Proof of stake achieves Sybil resistance by tying influence to staked capital rather than identity count.
Synthetic Asset
A crypto-based token designed to track the price of another asset without directly holding it.
A synthetic asset might track a stock's price without the protocol actually holding shares of that stock.
T
Take-Profit Order
An order that automatically closes a position once a specified gain-locking price is reached.
A trader might set a take-profit order at a specific target price to automatically lock in gains.
Taker Order
An order that immediately fills against existing liquidity on an order book.
A market order that fills instantly against existing orders is a taker order.
Taproot
A Bitcoin upgrade that improved transaction privacy, flexibility, and efficiency for complex spending conditions.
A Taproot transaction using a complex spending condition can look similar on-chain to a simple transfer.
Taxable Event
An action, such as selling or trading an asset, that may need to be reported and could result in owing tax.
Trading one cryptocurrency for another can be a taxable event in many jurisdictions, even without ever converting to traditional currency.
Testnet
A separate version of a blockchain used for testing, with no real value at stake.
Developers often deploy and test a new smart contract on a testnet before releasing it on mainnet.
Threshold Signature
A signature scheme requiring a minimum number of participants to jointly produce one valid signature.
A threshold signature scheme might require 3 of 5 participants to jointly produce one valid signature.
Timelock
A mandatory delay between a governance proposal passing and its actual execution.
A protocol upgrade might be subject to a 48-hour timelock after a governance vote passes.
Token
A digital asset represented by rules on a blockchain, often through a smart contract.
A stablecoin is a token designed to track the value of another asset.
Token Approval
Permission you grant a smart contract to move a specific token from your wallet.
Using a decentralized exchange typically requires approving it to spend a specific token first.
Token Generation Event
The point at which a project's token is first created and distributed.
A project's TGE is when its token is actually created and first distributed, not necessarily its first fundraise.
Token Sink
A mechanism that permanently or semi-permanently removes tokens from circulating supply.
A protocol might design a fee-burning mechanism specifically as a token sink.
Token Standard
A common technical specification that lets different tokens work consistently together.
ERC-20 is a widely used token standard for fungible tokens on Ethereum-compatible networks.
Token Unlock
The scheduled release of previously locked tokens into circulating supply.
A large scheduled token unlock is commonly watched as a potential source of increased sell pressure.
Token Velocity
How frequently a token changes hands within a given period.
A token used primarily for quick transactions tends to have higher velocity than one primarily held long-term.
Tokenomics
The design of a token's supply, distribution, and incentives.
A project's tokenomics might allocate portions of supply to the team, investors, and the public.
Total Supply
All coins or tokens that currently exist, including those not yet in public circulation.
A project's total supply may be higher than its circulating supply if some tokens are still locked or vesting.
Total Value Locked
The total value of crypto assets deposited into a DeFi protocol's smart contracts.
A lending protocol's TVL reflects the total value users have supplied and locked as collateral.
Trading Pair
Two assets quoted against each other, showing how much of one buys the other.
A BTC/USD trading pair shows the price of Bitcoin quoted in US dollars.
Trading Volume
The total amount of an asset bought and sold over a given period of time.
A sudden spike in trading volume often accompanies major news about an asset.
Travel Rule
A regulatory requirement that certain transaction and identity information travel with a transfer between platforms.
A large transfer between two regulated exchanges might trigger Travel Rule information-sharing requirements.
TWAP
Time-Weighted Average Price — the average price of an asset evenly weighted across a period.
A TWAP execution strategy splits a large order into smaller pieces spread evenly over time.
Two-Factor Authentication
A login security method requiring a password plus a second, separate verification step.
Enabling 2FA on an exchange account adds a meaningful layer of protection beyond a password alone.
U
Unbonding
A waiting period required before staked assets can be fully withdrawn after unstaking.
A network might require a multi-day unbonding period before withdrawn staked assets become available.
Unrealized Gain
A paper profit on an asset you still hold, which hasn't been locked in yet.
An asset purchased for $100 that's now worth $150 has a $50 unrealized gain while still held.
Unstaking
Withdrawing previously staked crypto, which may involve a waiting period.
Some networks require waiting several days after requesting to unstake before funds become available.
Utility Token
A crypto token intended primarily to grant access to a specific product or service.
A token required to pay for a specific application's services is commonly described as a utility token.
UTXO
An unspent transaction output — a discrete chunk of cryptocurrency ready to be spent.
Bitcoin uses a UTXO model, while many other networks use an account-based model instead.
V
Validator
A participant who helps confirm transactions and produce blocks in a proof-of-stake network.
Ethereum validators must stake ETH to participate in proposing and attesting to blocks.
Validator Commission
The percentage fee a validator deducts from staking rewards before paying delegators.
A validator charging 5% commission keeps 5% of earned rewards, distributing the rest to delegators.
Validator Set
The current group of participants authorized to validate blocks on a proof-of-stake network.
A network's validator set size can affect its overall decentralization and security assumptions.
Vanity Address
A wallet address deliberately generated to contain a specific, chosen pattern of characters.
A vanity address might be generated to start with a recognizable, chosen sequence of characters.
Vault (DeFi)
A smart contract that pools deposited funds and automates a specific investment strategy.
A vault might automatically compound staking rewards back into the original position on a regular schedule.
Verifiable Credential
A cryptographically signed digital claim that can be independently verified.
A verifiable credential's signature can be checked independently, without contacting the original issuer.
Vesting
A schedule that gradually releases tokens over time instead of all at once.
A team's tokens might vest gradually over several years rather than unlocking immediately at launch.
Virtual Asset Service Provider
A regulatory classification for businesses that provide crypto-related financial services.
A centralized exchange is commonly classified as a VASP in jurisdictions that use this framework.
Virtual Machine
The software environment that runs smart contract code consistently across a network.
The Ethereum Virtual Machine (EVM) is widely used, and several other networks have built compatibility with it.
Volatility
How much and how quickly an asset's price tends to move over a given period.
A cryptocurrency that moves 10% in a single day is considered highly volatile.
Vote-Escrowed Token
A governance token that must be locked for a period to gain voting power and rewards.
A longer lock period in a vote-escrowed model typically grants more voting power per token.
VWAP
Volume-Weighted Average Price — the average price of an asset weighted by trading volume over a period.
A large order executed below VWAP for a buy (or above VWAP for a sell) is generally considered a favorable execution.
W
Wallet
A tool that stores the keys needed to access and manage your cryptocurrency.
A mobile wallet app lets a user view their balances and send transactions from their phone.
Wallet Address
A shareable identifier that others use to send you cryptocurrency.
Sharing a wallet address lets someone send you cryptocurrency without giving them any control over your funds.
Wash Sale Rule
A general tax rule concept that can disallow a loss if a substantially similar asset is quickly repurchased.
A wash sale rule, where applicable, can disallow a tax loss from a quick sell-and-repurchase of a similar asset.
Wash Trading
Trading with yourself, directly or through coordinated parties, to fabricate the appearance of activity.
Wash trading can inflate a token or NFT collection's apparent trading volume without genuine demand behind it.
Watch-Only Wallet
A wallet that can view balances and activity for an address without holding its private key.
A watch-only wallet lets you monitor a hardware wallet's balance from your phone without exposing its private key.
Whale
A term for an individual or entity holding a very large amount of a given asset.
A wallet holding an unusually large share of a token's total supply might be referred to as a whale.
Whitepaper
A document explaining a project's purpose, design, and technical approach.
Bitcoin's original whitepaper described its design for a peer-to-peer electronic cash system.
Wrapped Token
A token that represents another asset on a different blockchain, one-to-one.
A wrapped version of Bitcoin lets it be used within Ethereum-based DeFi applications.
Y
Yield Aggregator
A protocol that automatically moves deposited funds across strategies to pursue the best available yield.
A yield aggregator vault might automatically move deposited funds between two lending protocols as rates change.
Yield Farming
Actively moving crypto between DeFi protocols to try to maximize returns.
A yield farmer might move funds between several lending protocols as available rates change.
Z
Zero-Knowledge Proof
A method for proving something is true without revealing the underlying information.
Some Layer 2 rollups use zero-knowledge proofs to verify bundled transactions efficiently.
zk-SNARK
A type of zero-knowledge proof that is small and fast to verify.
A zero-knowledge rollup might use zk-SNARKs to prove a batch of transactions was processed correctly.
zk-STARK
A type of zero-knowledge proof that avoids a trusted setup, at the cost of larger proof sizes.
A project prioritizing avoiding any trusted setup might choose zk-STARKs over a zk-SNARK implementation that requires one.