/ / glossary
── 92 TERMS
Crypto
Glossary
Clear definitions of the most important terms in crypto, DeFi, and blockchain.
A
- Airdrop
- Free token distribution to users that meet certain criteria (holding a wallet, using a protocol, completing tasks). Used as a marketing and initial decentralization strategy.
- Altcoin
- Any cryptocurrency other than Bitcoin. The term comes from 'alternative coin' and includes Ethereum, Solana, XRP, and thousands more.
- AMM (Automated Market Maker)
- A decentralized protocol that uses algorithms to price assets and facilitate trades without order books or human counterparties. Uniswap and Curve are popular examples.
- APY / APR
- APY (Annual Percentage Yield) is the annualized compounded return on an investment. APR (Annual Percentage Rate) excludes compounding. Both are used in DeFi to express staking or liquidity pool rewards.
- Arbitrage
- Strategy that takes advantage of price differences for the same asset across markets or exchanges, buying where it's cheaper and selling where it's more expensive.
- ATH / ATL
- ATH (All-Time High) is the highest price an asset has ever reached. ATL (All-Time Low) is the lowest price ever recorded.
B
- Bear Market
- A prolonged period of declining prices, generally defined as a drop of 20% or more from recent highs. The opposite is a bull market.
- Blockchain
- A distributed ledger technology where data is stored in cryptographically linked blocks in chronological order. It is the foundational technology behind Bitcoin, Ethereum, and most cryptocurrencies.
- Bonding Curve
- Mathematical formula that defines the price of a token based on its circulating supply. As more tokens are bought, the price rises along the curve. Common in launchpads and token sales.
- Bridge
- A protocol that allows assets or data to be transferred between two different blockchains. For example, moving ETH from Ethereum mainnet to Arbitrum.
- Bull Market
- A sustained period of rising prices across the market. In crypto, a 'bull run' refers to especially intense price rallies.
- Bitcoin Halving
- Programmed event in Bitcoin that halves the block reward roughly every four years. Reduces inflation and has historically preceded bull cycles.
C
- CEX (Centralized Exchange)
- A cryptocurrency trading platform managed by a company, such as Binance, Coinbase, or Kraken. They require registration and KYC but offer greater liquidity and ease of use.
- Cold Wallet
- Offline wallet, usually a hardware device (Ledger, Trezor). It is the safest way to hold cryptocurrency long-term.
- Collateral
- Asset deposited as guarantee for a loan or leveraged position. If the collateral value drops below a threshold, the position gets liquidated.
- Consensus Mechanism
- The process by which blockchain nodes agree on the valid state of the ledger. The most common mechanisms are Proof of Work (PoW) and Proof of Stake (PoS).
- Correction
- A temporary price decline, typically between 10% and 20%, after a period of gains. It does not imply a long-term trend reversal.
- Cryptocurrency
- A digital asset that uses cryptography to secure transactions and control the creation of new units. It operates on a decentralized network without the need for banks or intermediaries.
D
- DAO (Decentralized Autonomous Organization)
- An organization governed by rules encoded in smart contracts and managed collectively by its members through governance tokens. It has no central leadership.
- dApp (Decentralized Application)
- Application running on a blockchain via smart contracts. Unlike traditional apps, it doesn't rely on a central server: Uniswap, Aave and OpenSea are dApps.
- DeFi (Decentralized Finance)
- An ecosystem of financial applications built on public blockchains, mainly Ethereum. It includes lending, trading, staking, and derivatives without traditional intermediaries.
- DEX (Decentralized Exchange)
- A trading platform that operates without centralized custody. Users maintain control of their funds at all times. Uniswap, dYdX, and Hyperliquid are notable examples.
E
- EIP / ERC
- EIP (Ethereum Improvement Proposal) is the formal process for proposing changes to Ethereum. ERC (Ethereum Request for Comment) is a subcategory defining token standards (ERC-20, ERC-721, ERC-1155).
- EVM (Ethereum Virtual Machine)
- Smart contract execution engine of Ethereum. Many chains (Polygon, BNB Chain, Avalanche) are 'EVM-compatible', allowing the same tooling and contracts to be reused.
F
- FOMO
- Fear Of Missing Out. The emotion that drives investors to buy rising assets for fear of missing gains, often without prior analysis.
- Fork
- A split in a blockchain. Can be a soft fork (backward-compatible) or hard fork (incompatible, creates a new chain). Bitcoin Cash emerged from a hard fork of Bitcoin.
- FUD
- Fear, Uncertainty and Doubt. Negative information, true or false, that creates panic selling in the market.
- Funding Rate
- Payment exchanged between long and short traders of perpetual futures to keep the contract price aligned with spot. Positive rate: longs pay shorts; negative: shorts pay longs.
- Futures / Perpetuals (Perps)
- Derivative contracts that let traders speculate on the future price of an asset without owning it. Perpetuals have no expiry and use funding rate to anchor price to spot.
G
- Gas
- A fee paid to execute transactions or contracts on networks like Ethereum. It is measured in gwei and varies based on network congestion.
H
- Hash / Hash Rate
- A hash is a mathematical function that converts data into a fixed-length string. Hash rate measures the computational power of a Proof of Work network.
- HODL
- A long-term strategy of holding a cryptocurrency without selling, regardless of market fluctuations. The term originated from a typo of 'hold' in a Bitcoin forum post in 2013.
- Hot Wallet
- Internet-connected wallet (browser extensions, mobile apps). Convenient for everyday use but more exposed to attacks than a cold wallet.
I
- ICO / IDO / IEO
- Initial token sale methods. ICO (Initial Coin Offering) came first. IDO uses a DEX as the sale venue. IEO is conducted through a centralized exchange.
- Impermanent Loss
- A temporary loss experienced by liquidity providers when the price ratio of deposited assets changes from the time of deposit. It is the main risk of yield farming.
- IPFS
- InterPlanetary File System. Decentralized file storage protocol. Used by NFTs to host metadata and images outside of centralized servers.
K
- KYC / AML
- KYC (Know Your Customer) is the identity verification process required by regulated exchanges. AML (Anti-Money Laundering) refers to the rules that mandate KYC.
L
- Layer 2
- A solution built on top of a main blockchain (layer 1) to improve scalability and reduce fees. Examples include Arbitrum, Optimism (on Ethereum) and Lightning Network (on Bitcoin).
- Leverage
- Use of debt or margin to amplify exposure to an asset. 10x leverage lets a trader control 10 times their capital, multiplying both gains and losses.
- Lightning Network
- Layer-2 payment network built on Bitcoin that enables instant, low-fee transactions via off-chain payment channels.
- Liquidation
- Forced closure of a leveraged position when collateral falls below the minimum threshold. The protocol sells the collateral to cover the debt, wiping out the trader's margin.
- Liquidity
- The ease with which an asset can be bought or sold without significantly impacting its price. A highly liquid market has many active buyers and sellers.
- Liquidity Pool
- A reserve of tokens locked in a smart contract that provides liquidity to a DEX. Liquidity providers earn a share of trading fees.
- Long / Short
- Derivative positions. Long bets the price will rise; short bets it will fall. They allow profiting in both bull and bear markets.
M
- MACD
- Moving Average Convergence Divergence. Technical indicator that shows the relationship between two exponential moving averages, helping detect changes in trend strength, direction and momentum.
- Margin Trading
- Trading with borrowed funds from the exchange to control more capital than you actually hold. Amplifies gains and losses and carries liquidation risk.
- Market Capitalization
- The total market value of a cryptocurrency, calculated by multiplying the current price by the circulating supply. It is the most common metric for comparing the relative size of different assets.
- Meme Coin
- Cryptocurrency built around an internet meme or community (Dogecoin, Shiba Inu, PEPE). Value depends heavily on hype and community rather than technical fundamentals.
- Mempool
- A waiting area where pending transactions sit before being included in a block by a miner or validator. During periods of high activity, the mempool becomes congested and fees rise.
- MEV (Maximal Extractable Value)
- Profit that validators can extract by reordering, including, or censoring transactions within a block. Common practices: sandwich attacks, front-running, and back-running.
- Mining
- The process by which nodes (miners) solve complex mathematical problems to add new blocks to a Proof of Work blockchain, earning cryptocurrency rewards.
- Multisig
- Wallet or smart contract that requires multiple signatures (e.g. 2 of 3) to approve a transaction. Adds security against the compromise of a single key.
N
- NFT (Non-Fungible Token)
- A unique digital asset recorded on a blockchain that certifies ownership of a digital or physical item. Unlike cryptocurrencies, NFTs are not interchangeable with each other.
- Node
- A computer that participates in a blockchain network by storing a copy of the transaction history and/or validating new blocks. Full nodes verify all protocol rules.
O
- Oracle
- Service that connects a blockchain with real-world external data (prices, weather, sports results). Chainlink is the most widely used decentralized oracle.
- Order Book
- Real-time list of pending buy and sell orders for an asset. CEXs and some advanced DEXs (dYdX, Hyperliquid) use order books instead of AMMs.
P
- Private Key
- A secret code that proves ownership of a wallet and allows signing transactions. Whoever holds the private key controls the funds. Never share it with anyone.
- Proof of Stake (PoS)
- A consensus mechanism where validators deposit (lock up) cryptocurrency as collateral to propose and validate new blocks. It is more energy-efficient than Proof of Work.
- Proof of Work (PoW)
- Bitcoin's original consensus mechanism. Miners compete to solve complex mathematical problems to add blocks and receive rewards. It requires significant energy consumption.
- Public Key / Address
- A public identifier derived from the private key. It is the 'address' you share to receive funds, similar to a bank account number.
- Pump and Dump
- Market manipulation in which a group artificially inflates an asset's price to then sell en masse (dump). Common in low caps and memecoins.
R
- Restaking
- Practice of using already-staked ETH to also secure other protocols in exchange for extra yield. EigenLayer popularized this concept in 2024-2025.
- Rollup
- A layer 2 scaling technique that bundles thousands of off-chain transactions and publishes them compressed in a single block. There are two types: Optimistic Rollups and ZK-Rollups.
- Rug Pull
- Scam in which project creators suddenly pull liquidity or abandon the project after attracting investment, leaving holders with worthless tokens.
- RWA (Real World Assets)
- Real-world assets (treasury bonds, real estate, commodities) tokenized and brought on-chain. A growing narrative aiming to bring trillions of traditional value into DeFi.
S
- Seed Phrase
- A set of 12 or 24 words that serves as the master backup for a wallet. Whoever has the seed phrase can recover all funds. Store it securely and offline.
- Sidechain
- Independent blockchain connected to another main chain via a bridge. Unlike L2s, it has its own consensus and security. Polygon PoS is the best-known example.
- Slashing
- Penalty applied to a Proof of Stake validator that acts maliciously or incorrectly (double signing, inactivity). They lose part of their stake as a sanction.
- Slippage
- The difference between the expected price of a trade and the actual execution price. It occurs in markets with low liquidity or in large-size trades.
- Smart Contract
- A self-executing program deployed on a blockchain that automatically fulfills its conditions when certain requirements are met. They are the foundation of DeFi, NFTs, and most Web3 applications.
- Snapshot
- Capture of a blockchain's state at a specific block. Used to determine airdrop recipients, eligible voters in a DAO, or for audits.
- Stablecoin
- A cryptocurrency designed to maintain a stable value, usually pegged to the US dollar. Examples include USDT, USDC, and DAI. They are key in DeFi to avoid volatility.
- Staking
- The process of locking up cryptocurrency in a Proof of Stake network to participate in transaction validation and earn rewards. It is a way to generate passive income.
- Stop Loss / Take Profit
- Automated orders that close a position at a specific price. Stop loss caps losses; take profit locks in gains. Essential for risk management.
- Supply (Circulating, Max, Total)
- Circulating supply: coins in circulation. Total supply: issued minus burned. Max supply: the hard cap that will ever exist (21M for Bitcoin).
T
- Token Burning
- Permanent destruction of tokens by sending them to an address with no known private key. Reduces circulating supply and is often used to increase scarcity and value.
- The Merge
- Name of the 2022 milestone when Ethereum moved from Proof of Work to Proof of Stake, cutting energy consumption by 99.9% and laying the groundwork for future scalability upgrades.
- Token
- A digital asset issued on an existing blockchain (as opposed to native coins like ETH or BTC). ERC-20 tokens on Ethereum are the most common example.
- Tokenomics
- Economic design of a token: supply, distribution, inflation, utility, incentives, and value-capture mechanisms. Solid tokenomics is critical for a project's sustainability.
- TVL (Total Value Locked)
- The total value of assets deposited in a DeFi protocol. It is the primary metric for measuring the size and adoption of a protocol, usually expressed in USD.
- Trading Volume
- The total amount of an asset traded during a given period (usually 24 hours). High volume indicates greater interest and liquidity in the market.
V
- Validator
- Participant in a Proof of Stake network who locks up tokens to propose and validate new blocks in exchange for rewards. PoS equivalent of the PoW miner.
- Vesting
- Time lock on tokens allocated to founders, investors or team, released gradually on a predefined schedule to prevent massive market dumps.
- Volatility
- Measure of price variation over time. Cryptocurrencies are notoriously volatile, with daily moves of 5-10% being common.
W
- Wallet
- An application or device that stores the cryptographic keys needed to access funds on a blockchain. It can be custodial (a company holds the keys) or non-custodial (the user controls their keys).
- Web3
- The concept of a decentralized internet based on blockchain where users own their data and digital identity, without relying on large centralized platforms.
- Whale
- Investor or entity holding large amounts of a cryptocurrency, capable of moving the market with their trades. Their movements are often tracked on-chain.
- Whitepaper
- Technical document published by a crypto project explaining its proposition, technology, tokenomics and roadmap. The Bitcoin whitepaper (2008) is the foundational document of the sector.
- Wrapped Token (wBTC, wETH)
- Tokenized 1:1 version of an asset on another blockchain. wBTC is Bitcoin wrapped as ERC-20 on Ethereum, enabling its use in DeFi. Requires a trusted custodian or bridge.
Y
- Yield Farming
- A DeFi strategy of maximizing returns by moving assets between different protocols to earn the best rewards. Risks include impermanent loss, smart contract bugs, and high volatility.
Z
- Zero-Knowledge Proof (ZK)
- Cryptographic technique that lets you prove a statement is true without revealing the underlying information. Foundation of ZK-Rollups and blockchain privacy.
Definitions are provided for educational purposes only. They do not constitute financial advice.