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Web3 Glossary

Web3 Glossary

51% Attack

If more than half the computer power or mining hash rate on a network is run by a single person or a single group of people, then a 51% attack is in operation. This means that this entity has full control of the network and can negatively affect a cryptocurrency by taking over mining operations, stopping or changing transactions, and double-spending coins.

ABI

ABI is an acronym for Application Binary Interface, and it is an interface between two binary program modules at the level of machine code, not source code.

AML (Anti-money Laundering)

A set of international laws enacted to diminish the potential for criminal organizations or individuals to launder money. These rules and laws are applied to cryptocurrencies with varying effects in different jurisdictions.

Api

API is an acronym for Application Programming Interface which is an interface between computers or programs that allows information to pass between them.

Asic (Application Specific Integrated Circuit)

ASICs are silicon chips designed to do a specific task. In ASIC use for mining cryptocurrencies, the ASIC will perform a calculation to find values that provide a desired solution when placed into a hashing algorithm.

ATH - All Time High

The highest price an asset has ever had.

ATL - All Time Low

The lowest price an asset has ever had.

Account

An object containing an address, balance, nonce, and optional storage and code. An account can be a contract account or an externally owned account (EOA).

Address

Most generally, this represents an EOA or contract that can receive (destination address) or send (source address) transactions on the blockchain. More specifically, it is the rightmost 160 bits of a Keccak hash of an ECDSA public key.

Airdrop

A marketing technique in which crypto projects send their native tokens directly to the wallets of their users in an effort to increase awareness and adoption.

Alpha

Valuable or insider information, usually regarding the value of digital assets like cryptocurrencies and NFTs; a measure of the return on an investment over and above the return offered by the market or other benchmark.

Altcoin

Initially used to refer to any cryptocurrency that wasn't Bitcoin, altcoin may now refer to any new cryptocurrency with a relatively small market cap.

Alts

Short for altcoins.

Ape

Someone who invests heavily into a cryptocurrency or stock, or the act of doing so. This is sometimes a reaction to hype and FOMO, or done without much knowledge of the asset. It should be noted, though, that this is generally a self-assigned term and does not carry a negative connotation. Is it a Planet of the Apes reference? Maybe a reference to the sheer physical strength of apes? The origins are a bit blurry, but one thing is certain — apes together strong.

Archival Nodes

An archival node is a full node in the blockchain that keeps a complete history of transactions and address state changes since the genesis block.

Assert

In Solidity, assert(false) compiles to 0xfe, an invalid opcode, which uses up all remaining gas and reverts all changes. When an assert() statement fails, something very wrong and unexpected is happening, and you will need to fix your code. You should use assert() to avoid conditions that should never, ever occur.

Bips

Bitcoin Improvement Proposals. A set of proposals that members of the Bitcoin community have submitted to improve Bitcoin. For example, BIP-21 is a proposal to improve the Bitcoin uniform resource identifier (URI) scheme.

Buidl

Ostensibly coined (see what we did there) by Gitcoin's Kevin Owocki. It reflects the Ethereum-focused mindset of not just investing in a cryptocurrency as a store of value, but rather investing in it as an ecosystem and a platform for public goods and software; it complements, in this sense, the now-infamous HODL.

Base Fee

The base fee is an algorithmically determined fee that users on the Ethereum blockchain must pay to complete a transaction. The base fee is designed to help smooth transaction fees and prevent sudden spikes by targeting 50% full blocks. Depending on how full the new block is, the Base Fee is automatically increased (the block is more than 50% full) or decreased (the block is less than 50% full).

Beacon Chain

The Beacon Chain (always capitalized) is one element in the infrastructure being built to scale Ethereum, and is the foundation for a transition from a Proof of Work (PoW) consensus mechanism to Proof of Stake (PoS). For more information, see this guide.

Bear Market

A prolonged period of decline in a financial market.

Bearish

Similar to a bear market, this refers to holding a pessimistic view of a market or asset's value. If you are bearish on a certain cryptocurrency, you believe its value will decrease over time. Those who are bearish may be referred to as

Big-endian

A positional number representation where the most significant digit is first. The opposite of little-endian, where the least significant digit is first.

Bitcoin (Btc)

The first cryptocurrency based on a Proof of Work (PoW) blockchain. Bitcoin was created in 2009 by Satoshi Nakomoto — a pseudonym for an individual whose real identity is unknown — and the concept of cryptocurrency was outlined in a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Use “Bitcoin” for the blockchain/network; “bitcoin” for the cryptocurrency. The plural of bitcoin is just bitcoin; the abbreviation is BTC, with a space: I have 250 BTC.

Block

A batch of transactions written to the blockchain. Every block contains information about the previous block, thus, chaining them together.

Block Explorer

A tool for browsing information on a blockchain, such as transactions, wallet addresses, market caps, and hash rates.

Blockchain

A blockchain is a distributed database that is shared among the nodes of a computer network. Blockchains store a continuously growing historical ledger of information (e.g. accounts and transactions) into blocks without the need for a central authority. Blockchains are the core technology on which cryptocurrency protocols like Bitcoin and Ethereum are built.

Bridge

A protocol allowing separate blockchains to interact with one another, enabling the transfer of data, tokens, and other information between systems.

Bull Market

A period where market prices are rising.

Bullish

Similar to a bull market, this refers to holding an optimistic view that a market or asset will rise in price. If you are bullish on Bitcoin, you believe that its value will continue to rise over time.

Burn

The process of removing tokens from a cryptocurrency's circulating supply, usually done by sending them to an inaccessible wallet address. Other digital assets, such as NFTs, can also be burned via the same process.

Bytecode

An abstract instruction set designed for efficient execution by a software interpreter or a virtual machine. Unlike human-readable source code, bytecode is expressed in numeric format.

Byzantium Fork

A “hard fork” in the Ethereum network that occurred in October of 2017. For detailled information, see here; see also “hard fork”.

Cex - Centralized Exchange

A cryptocurrency exchange managed by a centralized business or entity.

Cancel Transactions

A cancel transaction is a type of replacement transaction where a user submits an identical transaction with a higher gas limit so it is mined before the previous transaction. Once the new replacement transaction is confirmed, the original transaction will get dropped.

Cefi - Centralized Finance

Centralized businesses that participate in crypto.

Centralized

A hierarchical structure in which authority and control are concentrated within a small group of decision makers.

Coin

A cryptocurrency built on its own native blockchain, intended to be used as a store of value and medium of exchange within that ecosystem.

Cold Wallet

An offline device used to store cryptocurrencies. Cold wallets can be hardware devices or simply sheets of paper containing a user's private keys. Because cold wallets are not connected to the internet, they are generally a safer method of storing cryptocurrencies.

Collateral

Any asset accepted as security for a loan, such as a physical asset like real estate, or a digital asset like an NFT.

Compiling

Converting code written in a high-level programming language (e.g., Solidity) into a lower-level language (e.g., EVM bytecode).

Confirmed Transaction

A confirmed transaction is a transaction that has been included in a block and permanently added to the blockchain.

Consensys

Short for Consensus Systems, ConsenSys is the software engineering leader of the blockchain space. But you're here, so you already knew that.

Consensus

The state of agreement amongst the nodes on a blockchain. Reaching consensus is necessary for new transactions to be verified and new blocks to be added to the blockchain.

Consensus Mechanism

A process through which nodes on a blockchain come into agreement on a transaction or state of the network.

Consensus Rules

The block validation rules that full nodes follow to stay in consensus with other nodes. Not to be confused with consensus.

Constantinople Fork

One of the “hard forks” made to the Ethereum network, in February 2019. For more detailed information, see here; see also “hard fork”.

Contract Account

An account containing code that executes whenever it receives a transaction from another account (EOA or contract).

Contract Creation Transaction

A special transaction, with the 'zero address' as the recipient, that is used to register a contract and record it on the Ethereum blockchain (see 'zero address').

Cryptocurrency

A digital asset designed to be used as a medium of exchange. Cryptocurrencies are borderless, secure, and maintained by blockchains as opposed to centralized banks or governments.

Dao

A Digital Decentralized Autonomous Organization (DAO, pronounced like the Chinese concept) is a powerful and very flexible organizational structure built on a blockchain.Alternatively, the first known example of a DAO is referred to as The DAO. The DAO served as a form of investor-directed venture capital fund, which sought to provide enterprises with new decentralized business models. Ethereum-based, The DAO's code was open source. The organization set the record for the most crowdfunded project in 2016. Those funds were partially stolen by hackers. The hack caused an Ethereum hard-fork which lead to the creation of Ethereum Classic.

Dapp

Decentralized application. At a minimum, it is a smart contract and a web user interface. More broadly, a DApp is a web application that is built on top of open, decentralized, peer-to-peer infrastructure services. In addition, many DApps include decentralized storage and/or a message protocol and platform.

Dd - Due Diligence

The process of conducting your own research on a cryptocurrency, stock, or other asset before investing. Doing your own DD is essential, as opposed to making an investment based on what someone else says or does.

Dex

DEX is an abbreviation for Decentralized Exchange. This type of crypto exchange enables users to transact in a direct peer-to-peer manner without any intermediary.

Dyor - Do Your Own Research

Similar to DD, this phrase is used to remind people to conduct their own investigation into an asset before investing in it.

Dapp - Decentralized Application

An application built on open-source code that lives on the blockchain. Dapps exist independent of centralized groups or figures and often incentivize users to maintain them through rewarded tokens.

Data

In the context of the internet, data refers to a user's personal information, such as name, age, location, interests, browsing history, device usage, purchasing habits, etc. Web3 aims to protect this personal data and give ownership of it back to the user.

Defi

DeFi is an abbreviation of Decentralized Finance, or an open financial system that doesn't rely on centralized authorities or intermediaries like banks to conduct financial activities permissionlessly like trading, borrowing, lending, and investing.

Decentralized

A system that operates without the control of a central figure or authority, and replaces it with a distributed peer-to-peer network.

Deed

Non-fungible token (NFT) standard introduced by the ERC721 proposal. Unlike ERC20 tokens, deeds prove ownership and are not interchangeable, though they are not recognized as legal documents in any jurisdiction—at least not currently (see also 'NFT').

Degen

Initially short for “degenerate gambler.” While this still refers to individuals involved with risky bets, degen may also refer more broadly to anyone involved in crypto and financial spaces. Like with “ape,” this is generally a self-assigned term and does not carry a negative connotation. Degens are a proud people who enjoy ridiculous call options on GME, buying the dip before paying their rent, and occasionally aping into shitcoins.

Devcon

This is shorthand for the Ethereum Developers' Conference.

Diamond Hands

A term implying that you are extremely bullish on a certain asset, and have no plans to sell regardless of market volatility, FUD, or extreme drops in price. Someone who holds onto a cryptocurrency or stock as it drops 40% in a day is said to have diamond hands.

Difficulty

The level of computing power needed to verify transactions and mine blocks on a proof-of-work blockchain.

Difficulty Bomb

The process of increasing the difficulty of a proof-of-work blockchain in order to motivate the transition to another consensus algorithm (such as proof-of-stake in the case of Ethereum).

Digital Signature

A short string of data a user produces for a document using a private key such that anyone with the corresponding public key, the signature, and the document can verify that (1) the document was 'signed' by the owner of that particular private key, and (2) the document was not changed after it was signed.

Distributed Denial Of Service (Ddos) Attack

A type of cyber-attack in which the perpetrator continuously overwhelms the system with requests in order to prevent service of legitimate requests.

Dropped Transaction

A dropped transaction is a transaction that was not mined and confirmed on the blockchain, and subsequently has been dropped from the transaction queue in the mempool. Common causes of dropped transactions include a low nonce value, high nonce value, and insufficient gas.

Ecdsa

Elliptic Curve Digital Signature Algorithm. A cryptographic algorithm used by Ethereum to ensure that funds can only be spent by their owners.

Eip

Ethereum Improvement Proposal. A design document providing information to the Ethereum community, describing a proposed new feature or its processes or environment. For more information, see https://github.com/ethereum/EIPs (see also 'ERC').

Eip (Ethereum Improvement Proposal)

EIPs describe standards for the Ethereum platform, including core protocol specifications, client APIs, and contract standards. They are, precisely, proposals for modifications to the network and the way it functions; the official repository is here.

Eip-1559

Also known as Ethereum Improvement Proposal 1559, EIP-1559 was part of Ethereum's London hard fork and it was deployed across the Ethereum network on August 5th, 2021. EIP-1559 introduced a Base Fee which is paid by users and is eventually burned (i.e. removed from circulation), and it replaced the current gas limit with two values: a “long-term average target” (equal to the current gas limit), and a “hard per-block cap” (twice the current gas limit).

Ens

The Ethereum Name Service is a protocol to assign human-readable and easy-to-remember addresses to Ethereum addresses and assets, homologous to the traditional internet's DNS.

Eoa

Externally Owned Account. An account created by or for human users of the Ethereum network.

Eoa Transaction

An EOA transaction is a transaction between one or more externally owned accounts (EOA, or an individual user in the Ethereum network). EOA transactions do not include transactions between smart contracts (internal transactions).

Erc

Ethereum Request for Comment, or ERC, is a bit of a misnomer, as it is used to refer to suggestions for modifications that have already made it through the Ethereum Improvement Protocol (EIP) process and have been made standard on Ethereum. An ERC is, essentially, a set of standards for a given operation or topic on the Ethereum network. The authoritative list can be found here.

Erc-1155

An Ethereum token standard which allows for fungible, non-fungible, and semi-fungible tokens to be managed by a single smart contract simultaneously. These are commonly used in gaming and collectible trading to reduce the number of necessary transactions.

Erc-20

The Ethereum token standard, providing a standardized smart contract structure for fungible tokens.

Erc-20 Token Standard

ERC is the abbreviation for Ethereum Request for Comment and is followed by the assignment number of the standard. ERC-20 is a technical standard for smart contracts which is used to issue the majority of tokens (in particular, cryptocurrency tokens) extant on Ethereum. This list of rules states the requirements that a token must fulfill to be compliant and function within the Ethereum network.

Erc-721

An Ethereum token standard that allows for the formation of unique tokens, otherwise known as NFTs, or non-fungible tokens. Unlike the ERC-20 standard, ERC-721 tokens have specific properties that allow each to be uniquely identified and valued independently of one another.

Evm (Ethereum Virtual Machine)

The EVM is a virtual machine that operates on the Ethereum network. It is Turing complete and allows anyone, anywhere to execute arbitrary EVM bytecode. All Ethereum nodes run on the EVM. It is home for smart contracts based on the Ethereum blockchain.

Evm Assembly Language

A human-readable form of EVM bytecode.

Enterprise Ethereum Alliance (Eea)

A group of Ethereum core developers, startups, and large companies working together to commercialize and use Ethereum for different business applications. Website here.

Entropy

In the context of cryptography, lack of predictability or level of randomness. When generating secret information, such as private keys, algorithms usually rely on a source of high entropy to ensure the output is unpredictable.

Ethash

A proof-of-work algorithm for Ethereum 1.0. For more information, see https://github.com/ethereum/wiki/wiki/Ethash.

Ether

The native cryptocurrency used by the Ethereum ecosystem, which covers gas costs when executing smart contracts. Its symbol is Ξ, the Greek uppercase Xi character.

Ethereum

A public blockchain network and decentralized software platform upon which developers build and run applications. As it is a proper noun, it should always be capitalized.

Ethereum 2.0

Ethereum 2.0 is a deprecated term that was used to describe the consensus layer of Ethereum as part of it's migration from a Proof-of-Work consensus mechanism to Proof-of-Stake consensus. Additionally, Eth1 is now referred to as the 'execution layer.'

Ethereum Virtual Machine (Evm)

The Ethereum Virtual Machine (EVM) is a software application that blockchain developers use to deploy decentralized applications (Dapp) on the Ethereum blockchain. The EVM interacts with Ethereum's accounts, smart contracts, and distributed ledger.

Event

Allows the use of EVM logging facilities. DApps can listen for events and use them to trigger JavaScript callbacks in the user interface.

Fomo - Fear Of Missing Out

A feeling of anxiety, stemming from missing out on an opportunity. In investing, this usually coincides with investors buying an asset after it has already seen a considerable increase in price, hoping to get in and out before a pullback occurs. This is known as “FOMOing in” or “aping in.”

Fud - Fear, Uncertainty, And Doubt

News around an asset that seems negative, but turns out to be false or blown out of proportion.

Failed Transaction

A failed transaction is a transaction on the Ethereum blockchain that does not succeed, cannot be reversed, canceled, or refunded.

Fallback Function

A default function called in the absence of data or a declared function name.

Faucet

A service that dispenses funds in the form of free test ether that can be used on a testnet.

Few

Short for “Few understand”. A rallying cry that crypto folks are still early in this space and will make a lot of money when mass adoption comes.

Fiat

A currency established as legal tender, often backed and regulated by a government, such as the US Dollar.

Finney

A denomination of ether. 1015 finney = 1 ether.

Flippening

A reference to the possible event of Ethereum becoming more valuable than Bitcoin, in terms of market cap. DISCLAIMER: Please do not mention the flippening to Bitcoin maxis. They will not think it is funny, and they will proceed to explain why Ethereum is a shitcoin.

Forge

One of the most commonly used Ethereum development frameworks.

Fork

A change to a blockchain's protocol. When these changes are minor, this results in a soft fork. When the changes are more fundamental, this may result in a hard fork, leading to the formation of a separate chain with different rules.

Fractionalize

The process of locking an NFT into a smart contract, and then dividing it into smaller parts which are issued as fungible tokens. This lowers the price of ownership and allows artwork and other digital assets to be owned by a community.

Frontier

The initial test development stage of Ethereum, which lasted from July 2015 to March 2016.

Full Nodes

A full node is any computer or server that downloads the entire Ethereum blockchain, address states, and validates new blocks. Miners are a common example of servers that run full nodes on the Ethereum network.

Fungible

Interchangeable; exchangeable with something else of the same kind.

Gmi

Short for “gonna make it.” This term is frequently thrown around on Twitter to voice support for a project or person.

Ganache

A personal Ethereum blockchain that you can use to run tests, execute commands, and inspect state while controlling how the chain operates.

Gas

Gas is a unit of measurement that represents the computational effort required to complete a transaction. How much a user spends to complete a transaction is determined by the total amount of gas multiplied by the gas price. This fee is dependent upon the transaction's complexity as well as the current demand on the network.

Gas Fees

Gas fees are the fees users must pay in Ethereum's native currency, Ether (ETH), to complete a transaction. Gas fees are used to compensate miners for providing the computational work required to process and validate transactions.

Gas Limit

The gas limit is the maximum amount of gas miners are authorized to consume to complete a transaction.

Gas Price

The gas price is the amount of Ether (ETH) a user is willing to pay for every unit of gas required to complete a transaction (denominated in Gwei).

Gavin Wood

A British programmer who is the cofounder and former CTO of Ethereum. In August 2014 he proposed Solidity, a contract-oriented programming language for writing smart contracts.

Genesis Block

The first block in a blockchain, used to initialize a particular network and its cryptocurrency.

Geth

Go Ethereum. One of the most prominent implementations of the Ethereum protocol, written in Go.

Gwei

A minuscule and common denomination of ETH, and the unit in which gas prices are often specified. See 'ether (denominations)' entry for more information.

Görli

Görli is a cross-client, community-based, proof-of-authority (PoA) Ethereum testnet where Web3 developers can test smart contracts in a sandbox.

Hd Wallet Seed

A value used to generate the master private key and master chain code for an HD wallet. The wallet seed can be represented by mnemonic words, making it easier for humans to copy, back up, and restore private keys.

Hfsp- Have Fun Staying Poor

A phrase commonly aimed at individuals who do not own any cryptocurrencies, or don't believe in the value of a certain asset.

Hodl

An expression meaning “hold” and frequently taken to be an acronym for Hold On for Dear Life. This term actually began its life as a typo on an old forum, Bitcointalk.org, where user GameKyuuby explained that he was “HODLING” his bitcoin as the price dropped. The misspelling quickly caught on and is still used today.

Hard Fork

A permanent divergence in the blockchain; also known as a hard-forking change. One commonly occurs when nonupgraded nodes can't validate blocks created by upgraded nodes that follow newer consensus rules. Not to be confused with a fork, soft fork, software fork, or Git fork.

Hash

A fixed-length fingerprint of variable-size input, produced by a hash function.

Hash Rate

Also referred to as hash power, this is the rate at which a computer can generate guesses to a cryptographic puzzle. Hash rate can also refer to the overall power being used by the entire network on a proof of work blockchain.

Hashing

The process of taking an input of any size and producing a corresponding fingerprint of a fixed-length. Hashing allows a set of data to be secured, stored, and recalled using a unique identifier code. This is the backbone of blockchain technology, allowing data and transactions to be verified and stored in a secure manner.

Holding The Bag

This is the unfortunate position you find yourself in when an asset you own quickly drops in value but you do not sell. You are thus left holding a bag of worthless coins or stocks. Those who end up in this position are referred to, unsurprisingly, as

Homestead

The second development stage of Ethereum, launched in March 2016 at block #1,150,000.

Hyperledger

Hyperledger is an ecosystem of open-system tools, libraries, and products designed to enable and support enterprise-grade blockchain technology. In general, the products focus on creating solutions for permissioned blockchains-that is, non-public blockchains, with alternative consensus mechanisms other than Proof of Work (PoW) or Proof of Stake (PoS).That said, there are use cases where such institutions would want to integrate with public blockchains, and for that reason Hyperledger Besu and Hyperledger Burrow are actively developed projects, the former being a Java-based Ethereum client, the latter being a smart contract platform which supports EVM bytecode.

Icap

Inter-exchange Client Address Protocol. An Ethereum address encoding that is partly compatible with the International Bank Account Number (IBAN) encoding, offering a versatile, checksummed, and interoperable encoding for Ethereum addresses. ICAP addresses use a new IBAN pseudo-country code: XE, standing for 'eXtended Ethereum,' as used in nonjurisdictional currencies (e.g., XBT, XRP, XCP).

Ico

An Initial Coin Offering (also called ICO) occurs when a new cryptocurrency sells advance tokens in exchange for upfront capital. These have been a vehicle for fraud and scams, and as such are subject to ever-evolving regulation and legislation.

Ide

Integrated Development Environment. A user interface that typically combines a code editor, compiler, runtime, and debugger.

Ieo- Initial Exchange Offering

Similar to an initial coin offering, or ICO, an initial exchange offering is a method of selling tokens to raise capital, but with increased regulation. Unlike an ICO, which sells new tokens directly to the public, an IEO is managed by an existing cryptocurrency exchange. By working with a known and trusted exchange, IEOs seek to make the ICO process more secure.

Ipfs

InterPlanetary File System. A protocol, network, and open source project designed to create a content-addressable, peer-to-peer method of storing and sharing hypermedia in a distributed filesystem.

Ice Age

A hard fork of Ethereum at block #200,000 to introduce an exponential difficulty increase (aka Difficulty Bomb), motivating a transition to proof of stake.

Identicon / Addressidenticon / Addressicon

The colorful blob of colors that corresponds to your address. It is an easy way to see if your address is correct. More specifically, you can choose between jazzicons (created by the MetaMask team!) or blockies.

Immutable Deployed Code Problem

Once a contract's (or library's) code is deployed, it becomes immutable. Standard software development practices rely on being able to fix possible bugs and add new features, so this represents a challenge for smart contract development.

Infura

Part of ConsenSys, Infura offers backend access to the Ethereum network over established HTTP and WebSockets technology. This enables developers of dapps and websites seeking to interact with the Ethereum blockchain to do so, and at scale.

Interplanetary File System (Ipfs)

A decentralized file storage and referencing system for the Ethereum blockchain. IFPS is an open source protocol that enables storing and sharing hypermedia (text, audio, visual) in a distributed manner without relying on a single point of failure. This distributed file system enables applications to run faster, safer and more transparently.

Internal Transaction

An internal transaction is a transaction between one smart contract and another smart contract. Internal transactions do not include EOA transactions which are transactions initiated or between one or more externally owned addresses (i.e. a user's wallet).

Kdf

Key Derivation Function. Also known as a 'password stretching algorithm,' it is used by keystore formats to protect against brute-force, dictionary, and rainbow table attacks on passphrase encryption, by repeatedly hashing the passphrase.

Keccak-256

Cryptographic hash function used in Ethereum. Keccak-256 was standardized as SHA-3.

Keystore File

A JSON-encoded file that contains a single (randomly generated) private key, encrypted by a passphrase for extra security.

Know Your Customer (Kyc)

A process in which a business must verify the identity and background information (address, financials, etc) of their customers. For example, current regulations and laws require banks and other financial institutions to keep and report customers' personal information and transactions.

Kovan

Kovan is a Proof-of-Authority, publicly accessible Ethereum testnet.

L1- Layer 1

This is the blockchain platform itself, also referred to as the base layer, mainchain, or mainnet.

L2- Layer 2

Protocols, also referred to as solutions, built on top of a layer 1 blockchain and commonly used to improve scalability, privacy, and add cross-chain communication. Unlike sidechains, which use their own consensus mechanisms, layer 2 solutions are secured by their underlying mainchain.

Lambo

Short for Lamborghini. The ability to purchase Lambo is a goalpost for success, used in a myriad of phrases in the crypto and degen spaces. For instance

Leveldb

An open source on-disk key-value store, implemented as a lightweight, single-purpose library, with bindings to many platforms.

Library

A special type of contract that has no payable functions, no fallback function, and no data storage. Therefore, it cannot receive or hold ether, or store data. A library serves as previously deployed code that other contracts can call for read-only computation.

Light Nodes

A light node is a computer that connects to full nodes as a gateway to the blockchain. Light nodes do not validate blocks and do not maintain the entire blockchain and address state.

Lightweight Client

An Ethereum client that does not store a local copy of the blockchain, or validate blocks and transactions. It offers the functions of a wallet and can create and broadcast transactions.

Liquid Democracy (Delegative Democracy)

A government system where votes can be delegated or proxied to other individuals such as friends, politicians, or subject matter experts. For example, in a liquid democracy, Bernadette could give Ahmad her vote and Ahmad would then vote for both himself and Bernadette. A liquid democracy has been explored as a governance mechanism for Decentralized Autonomous Organizations where every participant is able to vote or delegate their vote to another individual.

Liquidity

Liquidity is a measure of how easily an asset can be bought, sold, or traded in a given market or on an exchange. Decentralized exchanges like Uniswap have multiple liquidity pools where asset holders can deposit their assets where traders can buy and sell them in a decentralized way in exchange for rewards.

Liquidity Pool

A collection of user-provided funds locked into a smart contract to facilitate trading on a DeFi platform. On decentralized exchanges and lending protocols liquidity must be provided by the users, as there is no central bank or figure to do so.

Metoken

Mastering Ethereum Token. An ERC20 token used for demonstration in this book.

Mev

MEV (Miner Extractable Value or Maximal Extractable Value), is the profit a miner can make by including, excluding, or re-ordering transactions in a block. Searchers use MEV tools like Flashbots to extract value from the transaction queue by identifying opportunities and submitting a package of transactions to miners to be executed.

Mainnet

Short for main network, this is a main layer 1 blockchain, as opposed to a testnet or layer 2 solution.

Market Cap

The total value of an asset based on its current market price. A cryptocurrency's market cap is found by multiplying the price of a single coin by its circulating supply.

Master Node

A blockchain node that verifies and relays transactions, stores the blockchain's complete history, and may participate in voting, governance of the blockchain, and other special operations. Master nodes generally operate on a collateral based system, similar to a Proof-of-Stake protocol.

Max Fee Per Gas

The Max Fee is the absolute maximum amount a user is willing to pay per unit of gas (gwei) to get a transaction included in a block.

Max Priority Fee

An 'optional' additional fee that is paid directly to miners, the Max Priority Fee incentivizes miners to include your transaction in a block. By monitoring mempool data, users can accurately set their max priority fee to increase the chances that their transaction is confirmed as fast as possible.

Mempool

Also known as the 'transaction pool' the 'transaction queue', or 'pre-chain,' the mempool is a set of in-memory data structures propagated across Ethereum nodes that store pending transactions before they are mined.

Merkle Patricia Trie

Often referred to simply as a “Merkle trie” (pronounced “tree”), a Merkle Patricia trie is a data structure in which a single hash code function (a type of cryptographic code) splits into smaller branches. In a similar way to a family tree, where a parent branch splits into child branches, which are then extrapolated into grandchild branches, a Merkle Patricia trie keeps a record of the filiation and history of each element. This type of data structure enables for faster verification on a blockchain network.

Mesh

ConsenSys Mesh is a network of loosely coupled, tightly aligned teams, products, and investments advancing the Ethereum ecosystem and the arrival of Web 3.0.

Message

An internal transaction that is never serialized and only sent within the EVM.

Message Call

The act of passing a message from one account to another. If the destination account is associated with EVM code, then the VM will be started with the state of that object and the message acted upon.

Metamask

MetaMask, either in its mobile app form on iOS and Android, or in its browser extension form, is a tool to access and interact with blockchains and the decentralized web. Its functions include that of a wallet, a dapp permissions manager, and token swap platform.

Metropolis

The third development stage of Ethereum, launched in October 2017.

Miner

A network node that finds valid proof of work for new blocks, by repeated hashing.

Mining

In a Proof of Work system, this is the process of verifying transactions, organizing them into blocks, and then adding blocks to the blockchain. Participants who perform this process are called

Minting

The process of validating information, such as domain ownership, and registering that onto the blockchain.

Mist

The first Ethereum-enabled browser, built by the Ethereum Foundation. It contains a browser-based wallet that was the first implementation of the ERC20 token standard (Fabian Vogelsteller, author of ERC20, was also the main developer of Mist). Mist was also the first wallet to introduce the camelCase checksum (EIP-55; see [EIP55]). Mist runs a full node and offers a full DApp browser with support for Swarm-based storage and ENS addresses.

Moon / To The Moon!

This phrase implies that the value of an asset will go so high that it will reach the literal moon. This is used by shills, bulls, and during a bull market, essentially everyone. Another form of this is “wen moon?” This is used to express one's impatience with an asset which is not increasing in value as quickly as they had hoped.

Moonboy

A term for social media “financial experts” and YouTubers who are overly optimistic and constantly explaining how a given asset is “about to go to the moon!”

Multi Signature (Multisig)

A crypto-asset wallet that requires multiple keys to access. Typically, a specified number of individuals are required to approve or “sign” a transaction before they are able to access the wallet. This is different from most wallets which only require one signature to approve a transaction.

Nft

When discussing Non-Fungible Tokens (NFTs), “fungibility” refers to an object's ability to be exchanged for another. For example, an individual dollar is considered fungible as we can trade dollars with one another. Artwork is usually deemed non-fungible as paintings, sculptures, or masterpieces are likely to be unequal in quality or value. A non-fungible token is a type of token that is a unique digital asset and has no equal token. This is in contrast to cryptocurrencies like ether that are fungible in nature.

Ngmi

Short for “not gonna make it.” This is used to imply that a certain project or asset has a low chance of becoming valuable. This can also be directed at an individual, usually someone who had made a poor trade or investment.

Network

Referring to the Ethereum network, a peer-to-peer network that propagates transactions and blocks to every Ethereum node (network participant).

Nocoiner

A term used to describe someone who does not hold any cryptocurrencies, or who is generally unfamiliar with crypto.

Node

Any device connected to a blockchain network. Different nodes have varying levels of responsibility, and may help validate transactions, store the blockchain's history, relay data, and perform other functions. Because blockchains are distributed peer-to-peer networks, nodes come together to create the network's infrastructure.

Non-fungible Token (Nft)

A non-fungible token (NFT) is a digital asset based on Ethereum's ERC-721 token standard that can be used to represent ownership of a variety of digital assets including art, photography, music, and more.

Non-fungible

Unique; not interchangeable.

Nonce

Nonce is a number associated with Ethereum transactions that increases by one with every transaction, and a value that can only be used once.

Off-chain

Off-chain means any transaction or data that exists outside the blockchain. Because committing every transaction on-chain can be expensive and inefficient, third-party tools like oracles that handle pricing data, or layer 2 solutions that execute a higher throughput of transactions, handle a bulk of the processing work off-chain, and will submit information on-chain at less frequent intervals.

Ommer

A child block of an ancestor that is not itself an ancestor. When a miner finds a valid block, another miner may have published a competing block which is added to the tip of the blockchain. Unlike with Bitcoin, orphaned blocks in Ethereum can be included by newer blocks as ommers and receive a partial block reward. The term 'ommer' is the preferred gender-neutral term for the sibling of a parent node, but this is also sometimes referred to as an 'uncle.'

On-chain

On-chain is an umbrella term that includes any transaction or data that is available on the blockchain and visible to all nodes on the blockchain network such as mempool data, historical transactions, and account information.

Oracle

Typically, an oracle is any entity or person that is relied on to report the outcome of an event. In a blockchain network an oracle (human or machine) helps communicate data to a smart contract which can then be used to verify an event or specific outcome.

P2p (Peer-to-peer)

P2P refers to interactions that happen between two parties, usually two separate individuals. A P2P network can be any number of individuals. In regards to a blockchain network, individuals are able to transact or interact with each other without relying on an intermediary or single point of failure.

Paper Hands

A term used to describe someone who sold a cryptocurrency or stock as its price was falling, usually for a loss. Someone with paper hands is said to be weak and unable to stomach market volatility.

Parity

One of the most prominent interoperable implementations of the Ethereum client software.

Pending Pool

The pending pool is a group of transactions in the mempool that are ready to be processed.

Pending Transaction

Pending is a transaction status used to describe in-flight, pre-consensus transactions that are in the mempool and have not yet been confirmed on the blockchain.

Plasma

Plasma is a term that is used to refer to one of the scaling solutions being deployed to create Layer 2 of the Ethereum network. A Plasma network functions similarly to an Optimistic rollup, inasmuch as it relies on Layer 1 Ethereum mainnet to maintain the record of transactions, and as the source for arbitration or fraud resolution. However, a Plasma network differs in other important technical ways from rollups, and is currently limited to simple operations, such as swaps and token transfers.

Poa, Pos, Pow

Acronyms standing for Proof of X consensus mechanisms: Assignment, Stake, Work. The “o” is lowercase since you wouldn't capitalize “of” when writing out the phrase. See also 'consensus', 'Proof of Authority', 'Proof of Stake', 'Proof of Work'.

Potentially Promising

First used by Elon Musk to refer to planned upgrades to Dogecoin. Referring to something as being potentially promising quickly caught on, being used both sarcastically and in a serious manner, albeit tongue-in-cheek.

Pre-chain

Pre-chain is another way to describe transactions that are currently in progress. Pre-chain transactions are also known as pre-consensus transactions, and are transactions that are currently in the mempool.

Pre-consensus

Pre-consensus is another way to describe transactions that are currently in flight and not yet confirmed on the blockchain. Pre-consensus transactions are also known as pending transactions and pre-chain transactions.

Private Key

An alphanumeric passcode required to withdraw assets from a blockchain wallet and authorize digital transactions. Because these private keys are long and difficult to memorize, wallets will generally associate them with a seed or recovery phrase that is easier to remember.

Proof Of Authority (Poa)

A consensus mechanism used in private blockchains, granting a single private key the authority to generate all of the blocks or validate transactions.

Proof Of Stake (Pos)

A consensus mechanism in which an individual or “validator” validates transactions or blocks. Validators “stake” their cryptocurrency, such as ether, on whichever transactions they choose to validate. If the individual validates a block (group of transactions) correctly then the individual receives a reward. Typically, if a validator verifies an incorrect transaction then they lose the cryptocurrency that they staked. PoS requires a negligible amount of computing power compared to Proof of Work consensus.

Proof Of Work (Pow)

A consensus mechanism in which each block is 'mined' by a group of individuals or nodes on the network. Hashing a block, which is in itself an easy computational process, under PoW requires each miner to solve for a set, difficult variable. In effect, the process of hashing each block becomes a competition. This addition of solving for a target increases the difficulty of successfully hashing each block. For each hashed block, the overall process of hashing will have taken some time and computational effort. Thus, a hashed block is considered Proof of Work, and the miner that successfully hashes the block first receives a reward, in the form of cryptocurrency. PoW is singificantly more energy-intensive than other consensus mechanisms, such as Proof of Stake.

Protocol

The foundational software layer of a program. Protocol has become a general term used to refer to both layer 1 blockchain networks and the layer 2 applications built on top of them — Bitcoin, Ethereum, Uniswap, and Lightning Network can all be considered protocols.

Public Key

Uses to point to your wallet address, this is an alphanumeric code that serves as the address for a blockchain wallet, similar to a bank account number. Other users can send digital assets to your wallet via your public key, but only you can access your wallet's contents by using the corresponding private key.

Pump And Dump

A scheme where a cryptocurrency or other asset is hyped up, leading many to buy into it, raising its price. Those who did the hyping then sell their holdings of the asset as the price rises for a short period of time. This then leads to a sharp selloff where anyone who did not sell suffers a loss.

Queued Pool

The queued pool is a pool of transactions in the mempool that are not yet ready to be processed because they are 'out of order.'

Rlp

Recursive Length Prefix. An encoding standard designed by the Ethereum developers to encode and serialize objects (data structures) of arbitrary complexity and length.

Rpc

The Remote Procedure Call is a protocol that, while not blockchain-specific, is used to transfer data between endpoints. You may often see it referred to as JSON-RPC, which is its full name.

Re-entrancy Attack

An attack that consists of an attacker contract calling a victim contract function in such a way that during execution the victim calls the attacker contract again, recursively. This can result, for example, in the theft of funds by skipping parts of the victim contract that update balances or count withdrawal amounts.

Receipt

Data returned by an Ethereum client to represent the result of a particular transaction, including a hash of the transaction, its block number, the amount of gas used, and, in case of deployment of a smart contract, the address of the contract.

Rekt

As in “wrecked” used to express that one has suffered a huge loss.

Relayer

Any party or entity which hosts an off-chain orderbook. Relayers help traders discover counter-parties and cryptographically move orders between them. 0x is an example of a popular Ethereum relayer protocol.

Replacement Transaction

Replacement transactions include 'Speed up' and 'Cancel' transactions.

Reward

An amount of ether included in each new block as a reward by the network to the miner who found the proof-of-work solution.

Rinkeby

Rinkeby is a Proof-of-Authority testnet for Ethereum where smart contract developers can test code before deploying it to Ethereum's mainnet.

Rollup

A scaling solution that aims to improve transaction throughput and decrease fees by batching multiple transactions off-chain and then submitting them to the main chain as a single transaction.

Ropsten

Ropsten is the primary Ethereum testnet (test network) where blockchain developers can test their smart contract code in a live setting without spending actual money.

Rug Pull

A scam maneuver where a crypto project takes the funds that have been invested into its protocol and runs. An inside job pump-and-dump, if you will. A rug pull can also occur in assets with highly centralized ownership. If someone is able to sell a large portion of the circulating supply at once, this rapidly increases the supply, which can cause the price of the asset to plummet.

Sdk

A software development kit (SDK), also known as a devkit, is a collection of software tools and programs developers can use to quickly deploy an application in their development environment.

Sha

Secure Hash Algorithm. A family of cryptographic hash functions published by the National Institute of Standards and Technology (NIST).

Sha-256

SHA stands for Secure Hashing Algorithm, a set of cryptographic hashing functions designed by the NSA. Essentially, SHA-256 takes an input of data and generates a long sequence of letters and numbers, called a

Satoshi Nakamoto

A pseudonymous individual or entity who created the Bitcoin protocol, solving the digital currency issue of the “double spend.” Nakamoto first published their white paper describing the project in 2008 and the first Bitcoin software was released one year later.

Satoshis/sats

The smallest denomination of BTC, equal to 0.00000001 bitcoin. Satoshis are named after Bitcoin's pseudonymous creator, Satoshi Nakamoto.

Scalability

A protocol's capacity to handle higher demand and increase transaction throughput as the network grows.

Searcher

Searchers are people who identify opportunities to extract value for miners, create executable packages of transactions, and submit them to miners.

Secret Key (Aka Private Key)

The secret number that allows Ethereum users to prove ownership of an account or contracts, by producing a digital signature (see “public key,” “address,” “ECDSA”).

Seed (Phrase) / Secret Recovery Phrase

The seed phrase, mnemonic, or Secret Recovery Phrase is a crucial part of public blockchain technology, originally created for Bitcoin, and goes by many names. However, they all refer to a set of ordered words which correspond to determined values. These values never change, and therefore the same string of words in the same order will always produce the same number-this is the underlying functionality that allows seed phrases to back up wallets. The Secret Recovery Phrase is exactly what it sounds like: something that is secret, and should be known only to the owner of the account. If the seed phrase is given to someone else, that person has complete control over the account; they can drain it of tokens and funds, execute transactions with it, etc.

Ser

Meaning “sir,” a common intentional misspelling used in crypto circles

Serenity

The fourth and final development stage of Ethereum. Serenity does not yet have a planned release date.

Serpent

A procedural (imperative) smart contract programming language with syntax similar to Python.

Sharding

A method of separating a network's nodes out into smaller groups (shards) in an attempt to increase scalability. These shards are then able to reach consensus on behalf of the entire network, removing the need for every node to process every transaction.

Shill

The act of heavily promoting a cryptocurrency, stock, or other asset in an effort to increase adoption and, in turn, raise its price. This is usually done via spamming on social media, and generally carries a negative connotation. A person who performs the act of shilling may also be referred to as a shill.

Shitcoin

A cryptocurrency with weak fundamentals and little to no use case.

Sidechain

A side chain is a blockchain that allows tokens from one blockchain to be securely used within a completely separate blockchain, but still move back to the original chain if necessary. Sidechains like xDai are popular because they offer distinct advantages to developers including cost savings and greater transaction speed by offloading transactions from the main chain in order to increase scalability or add other functionality. Sidechains are connected to their main chain, or parent chain, via a two-way link which allows data and assets to be seamlessly transferred.

Singleton

A computer programming term that describes an object of which only a single instance can exist.

Slashing

The process of burning or redistributing a validator's staked cryptocurrency as punishment for approving fraudulent charges or otherwise endangering the network.

Slippage

The price of a cryptocurrency may change between the time an order is placed and the time that order is ultimately filled. Slippage is the difference between a cryptocurrency's quoted price and the price that a trade actually executes at.

Smart Contract

Self-executing code deployed on a blockchain. Smart contracts allow transactions to be made without an intermediary figure and without the parties involved having to trust one another.

Soft Fork

A backwards compatible update to a blockchain. Unlike a hard fork, these changes do not require the creation of a separate chain.

Solidity

The programming language developers use to write smart contracts on the Ethereum network. Try it out on Remix. See also 'smart contract'.

Solidity Inline Assembly

EVM assembly language in a Solidity program. Solidity's support for inline assembly makes it easier to write certain operations.

Speed Up Transactions

Speed Up transactions are a type of replacement transaction that attempts to overwrite a currently pending transaction with a new transaction. A Speed Up transaction could be used by traders trying to exploit an arbitrage opportunity before their competitors.

Spurious Dragon

A hard fork of the Ethereum blockchain, which occurred at block #2,675,000 to address more denial-of-service attack vectors and clear state (see also 'Tangerine Whistle'). Also, a replay attack protection mechanism.

Stablecoin

A token with its value pegged to another asset. Stablecoins are usually backed by a fiat currency, like the US dollar, but can also be pegged to physical assets like precious metals, or even other cryptocurrencies like Bitcoin.

Stuck Transactions

A stuck transaction is when transactions cannot be mined. Many stuck Ethereum transactions are caused by nonce gaps, and until the nonce gap has been resolved, wallets cannot process new transactions.

Swarm

A decentralized (P2P) storage network, used along with Web3 and Whisper to build DApps.

Szabo

A denomination of ether. 1012 szabo = 1 ether.

Tld- Top Level Domain

The last segment of a domain name, or the part that follows immediately after the 'dot' symbol.

Tps- Transactions Per Second

The number of transactions that a blockchain can handle per second, used as a benchmark to measure its computational power.

Tvl- Total Value Locked

A measure of the assets locked into an dapp's smart contract, usually expressed in USD.

Tangerine Whistle

A hard fork of the Ethereum blockchain, which occurred at block #2,463,000 to change the gas calculation for certain I/O-intensive operations and to clear the accumulated state from a denial-of-service attack, which exploited the low gas cost of those operations.

Testnet

An alternative blockchain developers use to test applications in a near-live environment.

Testnet Koven

Ethereum testnet that uses Proof of Authority consensus, available through MetaMask.

Testnet Rinkeby

Ethereum testnet that uses Proof of Authority consensus, available through MetaMask.

Testnet Ropsten

Ethereum testnet that uses Proof of Work consensus and is available through MetaMask.

Tip

A tip is an 'optional' additional fee that is paid directly to miners by users to incentivize miners to include their transaction in the next block. Tips were added to Ethereum through an Ethereum Improvement Proposoal (EIP-1559).

Token

Unlike a coin, a token is a digital asset created on an existing blockchain. Tokens can be used to represent digital and physical assets, or used to interact with dapps.

Tokenomics

A portmanteau of the words 'token' and 'economics,' tokenomics refers to all the aspects of a cryptocurrency that can impact the price such as total supply, vesting, and utility.

Total Value Locked (Tvl)

Total Value Locked (TVL) is the total value of assets locked (i.e. being used) in a specific protocol. DeFi lending protocols like Compound Finance and decentralized exchanges like Uniswap use liquidity pools which lock assets in a vault, and therefore have a TVL. New transactions are verified by nodes on the network and then broadcasted to other nodes. Once enough nodes have verified the transaction, it is considered valid and added to a block.

Transaction

Data committed to the Ethereum Blockchain signed by an originating account, targeting a specific address. The transaction contains metadata such as the gas limit for that transaction.

Transaction Event Stream

A transaction event stream is a real-time stream of transaction events that are happening in the mempool.

Transaction Settlement

When the entire block is accepted, or 'hashed,' by a miner the transaction is considered settled. As the new block propagates across the network, each node executes the transactions in the block and updates its current state. At this point, the transaction is confirmed on the blockchain.

Transaction Status

The transaction status is the current state of your transaction in the blockchain. Transaction statuses include: confirmed, failed, dropped, and stuck.

Turing Complete

Any machine that can calculate on a level equal to a programmable computer is Turing Complete, or computationally universal. The EVM, despite not existing on a single physical computer, is Turing Complete.

Txn Hash

Short for transaction hash, or transaction ID. This is a unique identifier used to represent a specific transaction, written as a long string of letters and numbers. By pasting a txn hash into a block explorer like Etherscan, you can find the details of the transaction it represents.

Type 0 Transactions

Type 0 transactions are legacy transaction types from before the London hard fork in August 2021 which included the deployment of EIP-1559.

Type 2 Transactions

Type 2 transactions are based on the EIP-1559 upgrades and include Base Fee, Max Priority Fee, and Max Fee Per Gas fields instead of the Gas Price field.

Ux

UX is an abbreviation for User Experience, and is the design discipline for optimizing how users interact with and perceive an application, interface, or system.

Validium

One of the technologies developed for Layer 2 scaling of the Ethereum network; see more here.

Vaporware

A product or project that is announced and marketed but never actually materializes.

Vitalik Buterin

A Russian-Canadian programmer and writer primarily known as the cofounder of Ethereum and of Bitcoin Magazine.

Vyper

A high-level programming language, similar to Serpent, with Python-like syntax. Intended to get closer to a pure functional language. Created by Vitalik Buterin.

Wagmi

'We're All Gonna Make It,' a common saying in crypto and trading circles signaling camaraderie and a positive outlook.

Wallet

A designated storage location for digital assets (cryptocurrency) that has an address for sending and receiving funds. The wallet can be online, offline, or on a physical device.

Wallet Address

Also known as a public key, this is an alphanumeric code that serves as the address for a blockchain wallet, similar to a bank account number. Other users can send digital assets to your wallet via your public key, but only you can access your wallet's contents by using the corresponding private key.

Web 3.0

Web 3.0, also spelled Web3, is the current evolution of the internet characterized by decentralization and digital ownership, unlike Web 1.0 and Web 2.0 which were characterized by users being able to read (Web 1.0) and write (Web 2.0) content.

Web1

The first iteration of the web, commonly referred to as the “read-only web.” Web1 was characterized by static websites that displayed information. There was little to no user interaction or user-generated content.

Web2

Starting in the 90s, the “read-write web” is characterized by user-generated content and improved user interfaces. This led to the creation of blogs and social media platforms, as well as sites like Wikipedia and YouTube. Web2 placed more emphasis on user experience and interoperability between different applications and websites, giving us the vast network of connected websites and resources that we are familiar with today.

Web3

The next iteration of the web being ushered in as we speak, which leverages blockchain technology, open-source applications, and the decentralization of data and information. Web3 aims to remove control of the web from monopolistic tech companies, and return ownership of data and content to its users. Also referred to as the “read-write-trust web.”

Wei

The smallest denomination of ether, named after cypherpunk and cryptocurrency pioneer, Wei Dai. 10^18 gwei = 1 ether.

Whisper

A decentralized (P2P) messaging service. It is used along with Web3 and Swarm to build DApps.

Yolo- You Only Live Once

Investing too much money into a single asset; making a generally risky bet.

Zero Address

A special Ethereum address, composed entirely of zeros, that is specified as the destination address of a contract creation transaction.

Address / Public Key

Used to send and receive transactions on a blockchain network. An address is an alphanumeric character string, which can also be represented as a scannable QR code. In Ethereum, the address begins with 0x. For example: 0x06A85356DCb5b307096726FB86A78c59D38e08ee

Air-gapping

A method for securing computers in which the device does not connect to the internet or any other open networks.

Attestation

Under the Proof of Stake mechanism (on the Beacon Chain), every validator other than the one proposing a new block will provide an attestation, or vote, in favor of a block with which it agrees, hereby forming consensus and confirming the block and the transactions it contains. See also 'Proof of Stake'.

Block Height

The number of blocks connected together in the blockchain. For example, Height 0 would be the very first block, which is also called the Genesis Block.

Block Reward

The reward given to a miner after it has successfully hashed a transaction block. Block rewards can be a mixture of coins and transaction fees. The composition depends on the policy used by the cryptocurrency in question, and whether all of the coins have already been successfully mined. The current block reward for the Bitcoin network is 12.5 bitcoins per block.

Block Time

When we talk about 'block time', we're referring to how long it takes for a block of transactions (see 'block') to be confirmed by the network, either by miners under PoW or by validators under PoS. See also 'Proof of Work', 'Proof of Stake'.

Bounty / Bug Bounty

A reward offered for exposing vulnerabilities and issues in computer code.

Brain Wallet

A blockchain account generated from a seed phrase or password or passphrase of your choosing. Humans are not capable of generating enough entropy, or randomness, and therefore the wallets derived from these phrases are insecure; brain wallets can be brute forced by super fast computers. For this reason, brain wallet are insecure and should not be used. See also 'Seed phrase / Secret Recovery Phrase'.

Client (Ethereum)

An Ethereum client is software that accesses the Ethereum blockchain via a local computer and helps to process transactions. A client usually includes a cryptocurrency software wallet. See an up-to-date list of clients here.

Cold Wallet / Cold Storage

An offline wallet that is never connected to the internet. These wallets protect cryptocurrencies from getting hacked online.

Confirmation

A confirmation happens when the network has verified the blockchain transaction. Under a Proof of Work (PoW) consensus mechanism, this happens through a process known as mining; under Proof of Stake (PoS), the process is known as validation. Once a transaction is successfully confirmed it theoretically cannot be reversed or double spent. The more confirmations a transaction has, the harder it becomes to perform a double spend attack.

Crypto

Even though this prefix is originally Greek, our current usage comes from cryptography. Technologies that are referred to with the blanket term of “crypto” tech are underlain by cryptographic tools and processes (such as public/private key pairs) that enable them, and enable them to be secure. Of course, “cryptocurrency” often gets shortened to simply “crypto”, so this emerging field is full of instances where something “crypto” is being added to or shortened.

Crypto Bounties

Bounties paid for in cryptocurrency. See also “bug bounties”.

Crypto-compliance

A blanket term used to refer to ensuring crypto projects conform with applicable regulations and laws.

Cryptoassets

A useful blanket term that covers on-chain assets: cryptocurrencies, NFTs, and other, still emerging, products.

Cryptoeconomics

The economic analysis of decentralized finance; notably, the MIT Cryptoeconomics Lab.

Cryptography

A method for secure communication using code. Symmetric-key cryptography is used by various blockchain networks for transfer of cryptocurrencies. Blockchain addresses generated for wallets are paired with private keys that allow transfer of cryptocurrency. Paired public and private keys allow funds to be unlocked.

Decentralization

The transfer of authority and responsibility from a centralized organization, government, or party to a distributed network.

Decentralized Application (Dapp)

An open source, software application with backend code running on a decentralized peer-to-peer network rather than a centralized server. You may see alternate spellings: dApps, DApps, Dapps, and Đapps.

Decentralized Exchange (Dex)

A decentralized exchange is a platform for exchanging cryptocurrencies based on functionality programmed on the blockchain (i.e., in smart contracts). The trading is peer-to-peer, or between pools of liquidity. This is in contrast with a centralized exchange, which is more akin to a bank or investment firm that specializes in cryptocurrencies. There are important technical and regulatory differences between the two which are constantly evolving.

Deposit

Digital property put into a contract involving a different party such that if certain conditions are not satisfied that property is automatically forfeited to the identified counterparty.

Derive / Derivation

To derive something is to obtain it from an original source. In the context of crypto-technology, we often discuss “deriving” wallets and accounts from seed phrases / Secret Recovery Phrases.

Digital Asset

A digital commodity that is scarce, electronically transferable, and intangible with a market value.

Digital Identity

An online or networked identity adopted by an individual, organization, or electronic device.

Distributed Ledger

A type of database which spreads across multiple sites, countries, or institutions. Records are stored sequentially in a continuous ledger. Distributed ledger data can be either “permissioned” or “unpermissioned” to control who can view it.

Double Spend

An event during which someone on the Bitcoin network tries to send a specific bitcoin transaction to two different recipients at once. However, as each bitcoin transaction is confirmed, double spending becomes almost impossible. The more confirmations that a particular transaction has, the decreased likelihood of double spending successfully.

Encrypted Vs Unencrypted Keys

As discussed elsewhere, public and private crypographic key pairs are one of the technologies that underpins cryptocurrencies and “crypto” tech in general. In MetaMask, an unencrypted private key is 64 characters long, and it is used to unlock or restore wallets. An encrypted key is also 64 letters long and is a regular private key that has gone through the process of encryption.For example, if the world 'Apple' was your private key, then it was encrypted three letters down the alphabet, your new shortened encrypted key would be 'Dssoh'. Since you know the way to encrypt this key, you could derive the original private key from it by reversing the method of encryption. Usually encrypted private keys are kept within the extension or device they are encrypted by, and they remain out of sight from the user. This is meant to add another layer of security to keep a user's wallet information safe.

Encryption

There are many types of encryption, but for our purposes, it is a process that combines the text to be encrypted (plaintext) with a shorter string of data referred to as “a key” in order to produce an output (ciphertext). This output can be “decrypted” back into the original plaintext by someone else who has the key.

Epoch

An epoch, in general, is a measure of time, or of blockchain progression, on a given blockchain. For the Ethereum Beacon Chain, an epoch consists of 32 slots, each lasting 12 seconds, for a total of 6.4 minutes per epoch. There is additional functionality built upon the epoch measure in the Beacon Chain to help ensure security and proper operation of the Chain.

Ether (Eth)

Ether is the native currency of the Ethereum blockchain network. Ether—also referred to as ETH (pronounced with a long “e”, like “teeth” without the “t”)—functions as a fuel of the Ethereum ecosystem by acting as a medium of incentive and form of payment for network participants to execute essential operations. The cryptocurrency of Ethereum has a lowercase e. The plural of ether is just ether; its abbreviation is ETH, with a space: I have 10 ETH.

Ether (Denominations)

There are a number of denominations of the currency we know as 'ether' or ETH; for the definitive explanation, see the original Ethereum Homestead documentation here.

Exchange

A place to trade cryptocurrency. Centralized exchanges, operated by companies like Coinbase and Gemini, function as intermediaries, while decentralized exchanges do not have a central authority.

Fiat Currency

Government-issued currency. For example, US Dollars (USD), Euros (EUR), Yuan (CNY), and Yen (JPY).

Final, Finality

A transaction is considered “final” once it can no longer be changed. In a sense, this happens once there are sufficient confirmations of the transaction, but for all intents and purposes, a transaction is final once the block that contains it is mined or validated. Keep in mind that this reflects a fundamental rule of blockchains: unlike traditional financial systems where charges can be “reversed”, there is no “undoing” a transaction on the blockchain. Once finality is reached, the transaction is immutable.

Gm

Simply meaning “good morning,” gm is a common greeting used in crypto circles

Halving

Many cryptocurrencies have a finite supply, which makes them a scarce digital commodity. For example, the total amount of Bitcoin that will ever be issued is 21 million. The number of bitcoins generated per block is decreased 50% every four years. This is called “halving.” The final halving will take place in the year 2140.

Hardware Wallet

A physical device that can be connected to the web and interact with online exchanges, but can also be used as cold storage (not connected to the internet).

Hexadecimal

Hexadecimal is a base 16, rather than base 10, counting system. Used all over Ethereum for a variety of things, a hexadecimal string is comprised of the numbers 0 1 2 3 4 5 6 7 8 9 and letters A B C D E F.

Hot Wallet / Hot Storage

A wallet that is directly connected to the internet at all times, for example one that is held on a centralized exchange. Hot wallets are considered to have lower security than cold storage systems or hardware wallets.

Immutability

The inability to be altered or changed. This is a key element of blockchain networks: once written onto a blockchain ledger, data cannot be altered. This immutability provides the basis for commerce and trade to take place on blockchain networks.

Light Client

A client that downloads only a small part of the blockchain, allowing users of low-power or low-storage hardware like smartphones and laptops to maintain almost the same guarantee of security by sometimes selectively downloading small parts of the state.

Mnemonic Phrase

See 'seed phrase / secret recovery phrase'.

Node (Full Node)

Any computer connected to the blockchain network is referred to as a node. A full node is a computer that can fully validate transactions and download the entire data of a specific blockchain. In contrast, a “lightweight” or “light” node does not download all pieces of a blockchain's data and uses a different validation process.

Ommer Block

Under the Proof of Work (PoW) consensus mechanism, miners received rewards for being the first to mine a new block. However, at times a block would be mined just after, and in competition with, the last block; this block, known as an ommer and previously as an uncle, could get rolled into subsequent blocks and the miner of the original ommer would get a partial block reward. All of this functionality is deprecated as of the Beacon Chain.

Optimistic Rollup

A rollup that assumes the validity and good faith of transactions, and only runs a fraud proof in the case of fraud being alleged. See also 'rollup'.

Permissioned Ledger

A blockchain network in which access to ledger or network requires permission from an individual or group of individuals, as opposed to a public blockchain. Permissioned ledgers may have one or many owners. Consensus on a permissioned ledger is conducted by the trusted actors, such as government departments, banks, or other known entities. Permissioned blockchains or ledgers contain highly-verifiable data sets because the consensus process creates a digital signature, which can be seen by all parties. A permissioned ledger is much easier to maintain and considerably faster than a public blockchain. For example, Quorum or Hyperledger Besu are permissioned ledgers that can be more easily set up for large enterprises. In contrast, the public Ethereum blockchain is a permissionless ledger which anyone can access.

Private Blockchain

A blockchain or distributed ledger that has a closed network where participants are controlled by a single entity. A private blockchain requires a verification process for new participants. A private blockchain may also limit which individuals are able to participate in consensus of the blockchain network. See also 'permissioned ledger'.

Private Currency

A currency or token issued by a private individual or firm. Typically, the token or currency is limited to use within the network of that particular firm or individual. This is not to be confused with a “privacy cryptocurrency” which are cryptocurrency with specific privacy features, such as hidden user identities.

Public Blockchain

A globally open network where anyone can participate in transactions, execute the consensus protocol to help determine which blocks get added to the chain, and maintain the shared ledger.

Rollups

Rollups (pronounced “roll ups”) are one element in the set of tools and infrastructure being built as Layer 2, the scaling solutions for the Ethereum network. They consist, in general, of solutions in which the transaction data is still kept on Layer 1, the original Ethereum network, while transaction computation occurs on a side network, freeing up computational power on Layer. There are different ways of approaching this problem from a technical point of view, namely Zero Knowledge, or ZK, rollups, and Optimistic rollups. See the entries on both of these types of rollup for more, and more in-depth discussion here.

Self-executing

Functioning by itself, not controlled by any other party other than itself. Self-executing smart contracts cut costs/overhead by removing the need for an arbitrator and trust toward a third party.

Serialization

The process of converting a data structure into a sequence of bytes. Ethereum internally uses an encoding format called recursive-length prefix encoding (RLP).

Sidechains

A sidechain is what it sounds like — it is a separate blockchain that is Ethereum-compatible. While a sidechain is a sort of scaling tool, as a class they aren't part of Layer 2; they simply represent a way in which developers can build and enable cheaper transactions for the user (on the sidechain, in sidechain-native tokens or currencies) while maintaining compatibility with the Ethereum network. This often requires routing tokens through a special portal or bridge, as sending tokens from a sidechain to Ethereum mainnet or vice versa would result in token loss.

Slashing Condition

Under a Proof of Stake (PoS) consensus mechanism, a slashing condition is one that causes the validator's deposit to be destroyed when they trigger it. See also 'Proof of Stake'.

Slot

A slot, on the Ethereum Beacon Chain, is a 12-second period of time during which a new block may (or may not) be proposed. Every 32 slots composes an epoch. See also 'epoch'.

Smart Contracts

Smart contracts are programs whose terms are recorded in computer code. While they often contain agreements or sets of actions between parties that emulate a traditional legal contract, they are not, in and of themselves, legal documents. Smart contracts are automated actions that can be coded and executed once a set of conditions is met, and are the dominant form of programming on the Ethereum Virtual Machine.

Staking

In the Ethereum context, 'staking' of tokens or currency carries the traditional meaning of 'setting aside currency for a determined purpose'; however, 'staking' can happen in a variety of venues with different effects. For example, on decentralized exchanges (DEXes), there is no centralized authority or bank putting up the funds to allow transfers to happen between parties; rather, the parties amongst themselves have to establish liquidity pools in order to facilitate swaps. In this context, someone might 'stake' tokens into a liquidity pool, often for a promised rate of return in exchange for the use of their tokens, with the option to withdraw their tokens later.On the Beacon Chain and Ethereum 2.0, 'staking' means something a bit different: 32 ETH may be staked at a determined smart contract address in order to operate a validator on the Beacon Chain; in this way, you help ensure the good functioning and safety of the network, and are rewarded for your staking.

State

The set of data that a blockchain network strictly needs to keep track of, and that represents data currently relevant to applications on the chain.

State Channels

State channels are part of the set of tools and platforms involved in scaling Ethereum and enabling Layer 2. While a complex topic, state channels are essentially methods through which the current 'state' of the blockchain can be exported, and based on that any given number of transactions can take place off-chain, and then be moved back onto the main Ethereum chain.

Transaction Block

A collection of transactions on a blockchain network, gathered into a set or a block that can then be hashed and added to the blockchain.

Transaction Fee

A small fee imposed on some transactions sent across a blockchain network. The transaction fee is awarded to the miner that successfully hashes the block containing the relevant transaction.

Trustless

'Trustless' is a term that gets used a lot in the decentralized web, and it deserves some explanation. Traditionally, to call something 'trustless' would sound like a negative thing. In the context of decentralized technology, it has a more technical meaning: since everyone has a copy of the ledger of all transactions ever executed, there is no need for a third-party repository of 'truth' in whom trust resides. We don't rely on some centralized server somewhere that could be hacked or changed arbitrarily; anyone can verify the transactions themselves. In a way, the rules and assurances built into the blockchain provide the basis for greater trust, because the system works the same for everyone.

Validator

A participant in Proof of Stake (PoS) consensus. On the Beacon Chain, validators need to stake 32 ETH, that is to submit a sort of security deposit, in order to get included in the validator set. See also 'staking'.

Validity Proof

The proof submitted along with certain types of rollups to prove that the transactions are valid. See also 'rollups'.

Xdai Chain

XDai Chain (xDai or Gnosis Chain) is a proof-of-stake (PoS) Ethereum sidechain that offers faster and cheaper transactions compared to Ethereum. The native token of xDai Chain is DAI which is pegged to the U.S. dollar and was created by MakerDAO.

Zk-snark

Zero-Knowledge Succinct Non-interactive ARguments of Knowledge are an incredible technology, and vital to the scaling of blockchain technology and the decentralized web. They are mathematically complex and can be daunting; this explanation from the Ethereum Foundation is a good primer.

References

Last updated on May 13, 2022