A
- Account Abstraction
- A design pattern that makes crypto wallets work more like regular online accounts. Instead of requiring users to manage private keys and pay gas directly, account abstraction lets wallets be controlled by smart contracts with features like social recovery, spending limits, and gas sponsorship. See our full guide on account abstraction.
- Airdrop
- A free distribution of cryptocurrency tokens sent to wallet addresses, usually to promote a new project or reward early users of a protocol. Airdrops are often based on past activity — for example, everyone who used a protocol before a certain date might receive tokens.
- Alpha
- Information or insight that gives you an edge before the broader market catches on. In crypto communities, "sharing alpha" means sharing early knowledge about a promising project, strategy, or upcoming event that could move prices.
- AMM (Automated Market Maker)
- A type of decentralized exchange that uses math formulas and liquidity pools instead of traditional order books to set prices and execute trades. Instead of matching buyers with sellers, an AMM lets you trade against a pool of tokens. Uniswap and Curve are popular AMMs. See our guide on liquidity pools.
- APR (Annual Percentage Rate)
- The yearly interest or reward rate you earn on a deposit or staked position, without accounting for compounding. If a protocol advertises 10% APR, you earn 10% over a year based on simple interest. Compare with APY below. See DeFi Metrics for a deeper explanation.
- APY (Annual Percentage Yield)
- The yearly return on a deposit or staked position including the effect of compounding — earning returns on your returns. APY is always equal to or higher than APR for the same rate. A 10% APR compounded daily gives roughly 10.52% APY. See DeFi Metrics.
- Arbitrage
- The practice of buying an asset on one market and simultaneously selling it on another where the price is higher, profiting from the difference. In crypto, arbitrage opportunities exist between different exchanges, chains, and liquidity pools. Bots handle most crypto arbitrage today.
- Atomic Swap
- A way to trade cryptocurrency directly between two different blockchains without using an exchange or intermediary. The swap either completes fully for both parties or not at all — hence "atomic." This is achieved through special smart contracts called hash time-locked contracts.
- AVS (Actively Validated Service)
- A service or protocol that uses restaked tokens for its security instead of building its own validator network from scratch. AVS is a concept introduced by EigenLayer on Ethereum. Examples include oracle networks, bridges, and data availability layers that borrow economic security from Ethereum validators. See our guide on restaking.
B
- Basis Trade
- A strategy that profits from the price difference between a futures contract and the spot (current) price of an asset. In crypto, traders often go long spot and short futures to lock in the premium as low-risk yield. See our guide on delta-neutral strategies.
- Bear Market
- A prolonged period where prices are falling and market sentiment is negative. In crypto, bear markets can see prices drop 70-90% from their highs and can last months or years.
- Block
- A bundle of transactions grouped together and added to the blockchain. Each block contains a reference to the previous block, forming a chain. Once a block is confirmed it becomes a permanent part of the ledger. See Blockchain Basics.
- Blockchain
- A shared digital ledger that records transactions across many computers. Once data is written to a block it cannot be changed, making the record tamper-proof. Bitcoin and Ethereum are the two most well-known blockchains. See our full guide on blockchain basics.
- Bridge
- A protocol that lets you move tokens from one blockchain to another. For example, a bridge can help you move ETH from Ethereum to Arbitrum or transfer USDC from Ethereum to Solana. Bridges carry meaningful risk because they hold large amounts of locked funds. See our guide on bridges.
- Bull Market
- A prolonged period where prices are rising and market sentiment is optimistic. Bull markets in crypto have historically seen total market values multiply several times over within a year or two.
- Burn
- Permanently removing tokens from circulation by sending them to an address no one can access. Projects burn tokens to reduce supply, which can increase the value of remaining tokens. Ethereum burns a portion of gas fees with every transaction.
C
- CEX (Centralized Exchange)
- A crypto exchange run by a company that holds your funds and processes trades on its own servers. Examples include Coinbase, Binance, and Kraken. CEXs are easy to use but require you to trust the company with your assets. Compare with DEX.
- Cold Wallet
- A cryptocurrency wallet that is not connected to the internet, making it much harder to hack. Hardware wallets like Ledger and Trezor are the most common type of cold wallet. See our guide on hardware wallets.
- Collateral
- Assets you lock up as a guarantee when borrowing in DeFi. If the value of your collateral drops below a certain threshold, your position can be liquidated — meaning the protocol sells your collateral to repay the loan. Most DeFi lending requires over-collateralization, meaning you must deposit more value than you borrow.
- Composability
- The ability of DeFi protocols to work together like building blocks. Because smart contracts on the same blockchain can interact with each other, you can combine lending, trading, and staking protocols in ways their creators never planned. This is sometimes called "money legos."
- Consensus
- The process by which all participants in a blockchain network agree on which transactions are valid and in what order. Different blockchains use different consensus mechanisms — Proof of Work and Proof of Stake are the two most common.
- CRQC (Cryptographically Relevant Quantum Computer)
- A quantum computer powerful enough to break the cryptographic algorithms that secure today's blockchains. No CRQC exists yet, but researchers are actively developing post-quantum cryptography to prepare. See our guide on the quantum threat to crypto.
- Cross-chain
- Anything that works across multiple blockchains. A cross-chain bridge moves tokens between chains; a cross-chain protocol operates on several blockchains simultaneously. Cross-chain activity is growing as crypto expands beyond any single chain. See our guide on bridges.
- Custodial
- A service where a third party holds and controls your crypto on your behalf. Centralized exchanges are custodial — they hold your private keys and your funds. The opposite is non-custodial or self-custodial, where you hold your own keys. See crypto wallets.
D
- DAO (Decentralized Autonomous Organization)
- An organization governed by its members through token-based voting rather than by a traditional management structure. Token holders propose and vote on decisions — from treasury spending to protocol upgrades. DAOs run on smart contracts that enforce the voting results automatically.
- dApp (Decentralized Application)
- An application that runs on a blockchain instead of a traditional server. dApps use smart contracts for their core logic, which means no single company controls them. Examples include Uniswap (trading), Aave (lending), and OpenSea (NFT marketplace).
- DeFi (Decentralized Finance)
- Financial services — lending, borrowing, trading, insurance — built on blockchains using smart contracts instead of traditional banks or brokers. Anyone with an internet connection and a crypto wallet can use DeFi. See our full guide on what is DeFi.
- Delta Neutral
- A portfolio or strategy designed so that it does not gain or lose value when the price of the underlying asset moves up or down. In crypto, delta-neutral strategies typically combine long and short positions to isolate yield from price risk. See our guide on delta-neutral strategies.
- DEX (Decentralized Exchange)
- A crypto exchange that runs on smart contracts and lets you trade directly from your own wallet, without a middleman holding your funds. Uniswap, Curve, and Jupiter are popular DEXs. See our guide on Uniswap.
- Diamond Hands
- Crypto slang for someone who holds their investments through extreme price drops without selling. The opposite of paper hands.
- Dust
- Tiny amounts of cryptocurrency left in your wallet that are too small to be worth sending or trading because the transaction fee would exceed the value. Dust can accumulate across wallets over time and clutter your portfolio view.
E
- EIP (Ethereum Improvement Proposal)
- A formal proposal for changes to the Ethereum network. EIPs describe new features, processes, or standards. For example, EIP-1559 changed how Ethereum transaction fees work by introducing a base fee that gets burned.
- ERC-20
- The most common standard for creating tokens on Ethereum. ERC-20 defines a set of rules that all tokens following the standard must obey, which makes them compatible with wallets, exchanges, and DeFi protocols out of the box. USDC, DAI, and UNI are ERC-20 tokens. See Token Types.
- ERC-721
- The standard for non-fungible tokens (NFTs) on Ethereum. Unlike ERC-20 tokens, which are interchangeable, each ERC-721 token is unique and has its own identity. This standard powers digital art, collectibles, and game items. See our guide on NFTs.
- Ethereum
- The second-largest blockchain by market cap and the platform where DeFi originated. Ethereum introduced smart contracts, enabling developers to build applications on top of a blockchain. It moved from Proof of Work to Proof of Stake in 2022. See our guide on what is Ethereum.
- EVM (Ethereum Virtual Machine)
- The computing environment that runs smart contracts on Ethereum. Many other blockchains — including Polygon, Arbitrum, and BNB Chain — are "EVM-compatible," meaning they can run the same smart contracts written for Ethereum.
- Explorer
- A website that lets you look up any transaction, wallet address, or smart contract on a blockchain. Etherscan is the most popular explorer for Ethereum. Explorers make blockchain data transparent and accessible to anyone.
F
- Faucet
- A website or tool that gives away small amounts of cryptocurrency for free, usually on test networks so developers can test their applications without spending real money. Some faucets distribute small amounts of real tokens to help new users pay their first gas fees.
- FDV (Fully Diluted Valuation)
- The total market cap a token would have if every token that will ever exist were already in circulation at today's price. FDV can be much higher than the current market cap if a large portion of tokens have not been released yet. A high FDV relative to market cap can signal future selling pressure as new tokens unlock. See DeFi Metrics.
- Flash Loan
- A loan that is borrowed and repaid within a single blockchain transaction — usually a few seconds. If the borrower cannot repay, the entire transaction is reversed as if it never happened. Flash loans require no collateral and are used for arbitrage, liquidations, and collateral swaps. See our guide on flash loans.
- Floor Price
- The lowest price at which any item in an NFT collection is currently listed for sale. The floor price is a quick way to gauge the minimum cost of entry into a collection.
- Fork
- A change to a blockchain's rules. A "soft fork" is a backward-compatible update. A "hard fork" creates a new, separate blockchain that is incompatible with the old one. Ethereum Classic is a hard fork of Ethereum, and Bitcoin Cash is a hard fork of Bitcoin.
- Front-running
- Placing a transaction ahead of someone else's known pending transaction to profit from the price movement it will cause. In crypto, bots scan the mempool for large trades and insert their own transactions first. This is a form of MEV.
- Funding Rate
- A periodic payment between long and short traders in perpetual futures contracts that keeps the futures price close to the spot price. When the funding rate is positive, longs pay shorts; when negative, shorts pay longs. Traders use funding rates as a signal of market sentiment.
G
- Gas
- The fee you pay to execute a transaction or run a smart contract on a blockchain like Ethereum. The fee compensates validators for the computing resources needed to process your request. Gas prices rise when the network is busy and fall when demand is low. See our guide on gas fees.
- Governance
- The process by which a decentralized protocol makes decisions. Governance token holders can propose and vote on changes to protocol parameters, fee structures, treasury allocations, and upgrades. Major DeFi protocols like Uniswap, Aave, and MakerDAO use on-chain governance.
- Governance Token
- A token that gives its holder the right to vote on decisions about a protocol's future. Examples include UNI (Uniswap), AAVE (Aave), and MKR (MakerDAO). Some governance tokens also entitle holders to a share of protocol revenue.
- Gwei
- A tiny unit of Ether used to measure gas prices on Ethereum. One Gwei equals 0.000000001 ETH (one billionth of an ETH). When people say "gas is 20 gwei," they mean each unit of gas costs 20 billionths of an ETH.
H
- Halving
- An event that cuts the reward for mining new Bitcoin blocks in half, which happens roughly every four years. Halvings reduce the rate at which new Bitcoin enters circulation and have historically preceded major price increases. The most recent halving occurred in April 2024.
- Hardware Wallet
- A physical device that stores your cryptocurrency private keys offline, protecting them from hackers and malware. Ledger and Trezor are the best-known brands. A hardware wallet is widely considered the safest way to store crypto you do not need to access frequently. See our full guide on hardware wallets.
- Hash
- A fixed-length string of characters produced by running data through a cryptographic function. Hashes are used extensively in blockchains — every block includes the hash of the previous block, every transaction has a unique hash, and mining involves finding hashes that meet certain criteria.
- HODL
- Crypto slang for "hold" — meaning to buy and hold cryptocurrency for the long term regardless of price drops. The term originated from a misspelled Bitcoin forum post in 2013 and became one of the most iconic memes in the crypto community.
- Hot Wallet
- A cryptocurrency wallet that is connected to the internet, making it convenient for frequent transactions but more vulnerable to hacking than a cold wallet. Browser extensions like MetaMask and mobile apps like Phantom are common hot wallets. See crypto wallets.
I
- Impermanent Loss
- The loss you experience when the price ratio of tokens you deposited into a liquidity pool changes compared to when you deposited them. The greater the price change, the larger the loss. It is called "impermanent" because if prices return to their original ratio, the loss disappears. See our full guide on impermanent loss.
- Interoperability
- The ability of different blockchains and protocols to communicate and work with each other. True interoperability means you could use an asset on one chain as collateral on another without manual bridging. Bridges, cross-chain messaging protocols, and standards like IBC (Inter-Blockchain Communication) are all attempts to improve interoperability.
J
- Jito
- A liquid staking protocol on Solana that gives you JitoSOL in return for staking SOL. Jito distributes staked SOL across validators and passes on MEV rewards in addition to standard staking rewards, often resulting in higher yields than standard Solana staking. See our guide on staking.
K
- KYC (Know Your Customer)
- Identity verification required by regulated financial services, including centralized crypto exchanges. KYC typically involves submitting a government-issued ID and proof of address. DeFi protocols generally do not require KYC because users interact directly with smart contracts without creating an account.
L
- L1 (Layer 1)
- The base blockchain network itself — Ethereum, Bitcoin, Solana, and Avalanche are all L1s. Layer 1 is where final transaction settlement happens. L1 blockchains provide security and consensus for the entire ecosystem built on top of them.
- L2 (Layer 2)
- A network built on top of a Layer 1 blockchain that processes transactions faster and cheaper while inheriting the security of the L1 below it. Arbitrum, Optimism, and Base are popular Ethereum L2s. See supported chains.
- Leverage
- Using borrowed funds to increase the size of a trade beyond what your own capital allows. For example, 5x leverage means you control a position five times the size of your deposit. Leverage amplifies both gains and losses — if the market moves against you, losses are multiplied too.
- Liquidation
- The forced closing of a leveraged or collateralized position when its value drops below the required threshold. In DeFi lending, if the value of your collateral falls too far relative to your loan, the protocol automatically sells your collateral to repay the debt. See how you can lose money in DeFi.
- Liquidity
- How easily an asset can be bought or sold without significantly moving its price. High liquidity means large trades can happen with minimal price impact. Low liquidity means even small trades can cause big price swings.
- Liquidity Mining
- Earning bonus token rewards for providing liquidity to a DeFi protocol. Projects use liquidity mining programs to attract deposits and build up the liquidity their protocols need to function. The bonus tokens are on top of any trading fees you earn. See yield farming.
- Liquidity Pool
- A collection of tokens locked in a smart contract that enables trading on a decentralized exchange. Instead of matching buyers and sellers, a liquidity pool lets anyone trade against the pooled funds. Liquidity providers earn a share of trading fees. See our full guide on liquidity pools.
- LRT (Liquid Restaking Token)
- A token that represents a restaked position. Just as stETH represents staked ETH, an LRT like eETH or pufETH represents ETH that has been both staked and restaked through a protocol like EigenLayer. LRTs let you keep your capital liquid while earning staking and restaking rewards. See our guide on restaking.
- LST (Liquid Staking Token)
- A token you receive when you stake through a liquid staking protocol. Examples include stETH (Lido), rETH (Rocket Pool), and JitoSOL (Jito). LSTs represent your staked tokens plus accumulated rewards and can be freely traded or used in DeFi. See our guide on staking and token types.
M
- Market Cap
- The total value of a cryptocurrency, calculated by multiplying the current price by the number of tokens in circulation. Market cap is a rough measure of a project's size. Bitcoin has the largest market cap in crypto, followed by Ethereum.
- Memecoin
- A cryptocurrency created around an internet meme, joke, or cultural trend rather than a specific technology or use case. Dogecoin and Shiba Inu are well-known memecoins. Memecoins are highly speculative and extremely volatile. See our guide on memecoins.
- Mempool
- The waiting area where unconfirmed transactions sit before validators pick them up and include them in a block. Transactions in the mempool are visible to everyone, which is why front-running and sandwich attacks are possible.
- MEV (Maximal Extractable Value)
- The profit that validators and searchers can extract by reordering, inserting, or censoring transactions within a block. MEV includes front-running, sandwich attacks, and arbitrage. It is sometimes called an "invisible tax" on regular users. See our full guide on MEV.
- Minting
- The process of creating new tokens or NFTs on a blockchain. When you mint an NFT, you are creating a new unique token and writing it to the blockchain for the first time. Minting also refers to the creation of new cryptocurrency by a protocol's inflation mechanism.
- Multisig (Multi-signature)
- A wallet that requires multiple private keys to authorize a transaction — for example, 2 out of 3 keys must sign. This eliminates single points of failure: if one key is compromised, the attacker still cannot move funds. See our full guide on multisig wallets.
N
- NFT (Non-Fungible Token)
- A unique digital token on a blockchain that represents ownership of a specific item — artwork, music, a game item, or any digital asset. Unlike regular cryptocurrency tokens, each NFT is one-of-a-kind and cannot be swapped one-for-one with another. See our full guide on NFTs.
- Node
- A computer that runs blockchain software and maintains a copy of the blockchain's entire transaction history. Nodes verify and relay transactions, keeping the network decentralized. Anyone can run a node for most public blockchains.
- Nonce
- A number used once. In Ethereum, each transaction from an account has an incrementing nonce to ensure transactions are processed in order and prevent double-spending. In Proof of Work mining, miners adjust the nonce to find a valid block hash.
O
- Off-chain
- Activity that happens outside of the blockchain. Off-chain transactions are faster and cheaper but do not have the same security guarantees as on-chain transactions. Centralized exchange trades and Layer 2 computations are examples of off-chain activity.
- On-chain
- Activity that is recorded directly on a blockchain and can be verified by anyone. On-chain transactions are transparent, permanent, and secured by the network's consensus mechanism. Swaps on a DEX and staking transactions are on-chain.
- Oracle
- A service that feeds real-world data — like asset prices, weather, or sports results — into smart contracts on a blockchain. Smart contracts cannot access external data on their own, so oracles act as the bridge between blockchains and the outside world. Chainlink is the most widely used oracle network. See our guide on blockchain oracles.
- Order Book
- A list of all open buy and sell orders for an asset, organized by price. Traditional exchanges and some DEXs use order books to match buyers with sellers. The order book shows the market depth — how many orders exist at each price level.
P
- Paper Hands
- Crypto slang for someone who sells their holdings at the first sign of a price drop. The opposite of diamond hands.
- Peg
- The target price a stablecoin is designed to maintain, usually one US dollar. When a stablecoin trades above or below its peg, it has "depegged." Maintaining a stable peg is the most important function of any stablecoin. See our guide on stablecoins.
- Permissionless
- A system that anyone can use without needing approval from a central authority. Public blockchains are permissionless — anyone can send transactions, deploy smart contracts, or run a node. This is a core principle of DeFi and Web3.
- Pool
- A collection of funds locked in a smart contract for a specific purpose, such as trading (liquidity pool), lending (lending pool), or staking. Pools aggregate capital from many users so that protocols can offer services that individual users could not provide alone. See liquidity pools.
- Private Key
- A secret string of characters that proves ownership of a crypto wallet and lets you sign transactions. Anyone who has your private key has full control of your funds. You must never share your private key. See crypto wallets and how people lose crypto.
- Proof of Stake (PoS)
- A consensus mechanism where validators lock up ("stake") tokens as collateral to participate in block creation and transaction validation. Validators are chosen based on the amount they stake, and they risk losing their stake if they act dishonestly. Ethereum, Solana, and Cosmos all use Proof of Stake. See our guide on staking.
- Proof of Work (PoW)
- A consensus mechanism where miners compete to solve complex mathematical puzzles to add new blocks to the blockchain. The first miner to solve the puzzle earns the block reward. Proof of Work is extremely energy-intensive. Bitcoin uses Proof of Work.
- Protocol
- A set of smart contracts that together provide a specific financial service on a blockchain. Uniswap is a trading protocol, Aave is a lending protocol, and Lido is a staking protocol. In crypto, "protocol" is often used interchangeably with "platform" or "project." See supported protocols.
Q
- Quorum
- The minimum number of votes or signatures needed for a decision to be valid. In DAOs, a governance proposal typically needs to reach a quorum — a minimum percentage of total voting power — before it can pass. In multisig wallets, the quorum is the number of signatures required (for example, 3 of 5).
R
- Reentrancy
- A type of smart contract vulnerability where an attacker tricks a contract into calling itself repeatedly before the first call finishes, draining funds. The most infamous reentrancy attack was The DAO hack in 2016, which led to Ethereum splitting into Ethereum and Ethereum Classic. See biggest crypto hacks.
- Restaking
- Using tokens that are already staked to secure additional networks or services, earning extra rewards on top of base staking yield. EigenLayer pioneered restaking on Ethereum. Restaking increases capital efficiency but adds layers of risk. See our full guide on restaking.
- Rollup
- A Layer 2 scaling solution that processes transactions off the main chain but posts compressed transaction data back to Layer 1 for security. There are two main types: optimistic rollups (Arbitrum, Optimism) assume transactions are valid unless challenged, and zero-knowledge rollups (zkSync, StarkNet) use math proofs to verify correctness.
- Rug Pull
- A scam where project creators suddenly withdraw all funds from their protocol and disappear, leaving investors with worthless tokens. Rug pulls are one of the most common forms of fraud in crypto, especially with new tokens and memecoins. See staying safe in crypto.
- RWA (Real-World Asset)
- A physical or traditional financial asset — like real estate, government bonds, or commodities — that has been tokenized and brought on-chain. RWA tokenization aims to make traditionally illiquid assets more accessible and composable with DeFi protocols.
S
- Sandwich Attack
- A form of MEV where a bot places one transaction right before yours and another right after, profiting from the price impact your trade creates. You end up getting a worse price while the attacker pockets the difference. See our guide on MEV.
- Seed Phrase
- A list of 12 or 24 words that serves as the master backup for your crypto wallet. Anyone with your seed phrase can recreate your wallet and access all your funds. Write it down on paper and store it securely — never store it digitally or share it with anyone. See how people lose crypto.
- Slashing
- A penalty where a portion of a validator's staked tokens is destroyed because the validator violated network rules — such as going offline for an extended period or double-signing blocks. Slashing is how Proof of Stake networks enforce honest behavior. See staking.
- Slippage
- The difference between the price you expect when you submit a trade and the price you actually get when the trade executes. Slippage increases with trade size and decreases with liquidity. Most DEXs let you set a maximum slippage tolerance.
- Smart Contract
- A program stored on a blockchain that runs automatically when predefined conditions are met. Think of it as a vending machine: you put in the right input and the contract executes the agreed action without needing a middleman. See our full guide on smart contracts.
- Stablecoin
- A cryptocurrency designed to maintain a fixed value, usually pegged to one US dollar. Popular stablecoins include USDC, USDT, and DAI. They are widely used in DeFi because they let you hold value and earn yield without exposure to crypto price swings. See our full guide on stablecoins and stablecoin risks.
- Staking
- Locking your cryptocurrency tokens to help secure a Proof of Stake blockchain network and earning rewards in return. Staking is one of the most common ways to earn passive income in crypto. See our full guide on what is staking.
- Swap
- Exchanging one cryptocurrency for another, typically through a decentralized exchange. A swap on Uniswap, for example, lets you trade ETH for USDC directly from your wallet in a single transaction.
T
- Token
- A digital asset created on an existing blockchain rather than having its own chain. Tokens can represent currency, governance rights, ownership of real-world assets, or access to a service. Most tokens on Ethereum follow the ERC-20 standard. See token types.
- Tokenomics
- The economic design of a cryptocurrency — how tokens are created, distributed, and managed over time. Tokenomics includes supply schedules, inflation rates, vesting periods, burn mechanisms, and fee distribution. Understanding tokenomics helps you evaluate whether a project's incentives are sustainable.
- Total Value Locked (TVL)
- The total amount of assets deposited into a DeFi protocol, measured in dollars. TVL is one of the most widely used metrics for gauging the size and adoption of a protocol. Higher TVL generally indicates more trust and usage, but TVL alone does not tell you whether a protocol is profitable or safe. See our full guide on TVL and DeFi metrics.
- Transaction
- Any action recorded on a blockchain — sending tokens, executing a smart contract, minting an NFT, or voting in a DAO. Each transaction has a unique hash, costs gas, and is permanently recorded once included in a block.
- Trust Assumptions
- The set of things you must trust when using a protocol or system. A centralized exchange requires you to trust the company. A DeFi protocol requires you to trust the smart contract code and its auditors. A bridge requires you to trust its validator set. Understanding trust assumptions helps you assess the real risk of any crypto activity. See understanding risk.
- Trustless
- A system where you do not need to trust any single party because the rules are enforced by code and cryptography. Bitcoin is trustless — you can verify every transaction yourself without trusting a bank or government. In practice, "trustless" often means "trust is distributed across many parties" rather than eliminated entirely.
U
- Uniswap
- The largest decentralized exchange on Ethereum, pioneering the automated market maker (AMM) model. Instead of an order book, Uniswap uses liquidity pools where anyone can deposit tokens and earn trading fees. It has been forked and imitated across dozens of blockchains. See our full guide on Uniswap.
- UTXO (Unspent Transaction Output)
- The way Bitcoin tracks ownership of funds. Instead of maintaining account balances (like Ethereum), Bitcoin uses UTXOs — individual pieces of unspent currency left over from previous transactions. When you send Bitcoin, you consume existing UTXOs and create new ones.
V
- Validator
- A computer that participates in a Proof of Stake network by staking tokens and verifying transactions. Validators propose and confirm new blocks and earn rewards for doing so. If a validator behaves dishonestly, it can be slashed. See staking.
- Vault
- A smart contract that automates a yield-generating strategy on behalf of depositors. You deposit tokens into a vault, and the vault's code automatically stakes, lends, or compounds your assets to maximize returns. Yearn Finance popularized the vault concept.
- Vesting
- A schedule that gradually releases tokens over time instead of all at once. Projects use vesting to prevent team members, investors, and early supporters from selling all their tokens immediately after launch, which could crash the price.
- Volatility
- How much and how quickly an asset's price changes. Crypto is known for high volatility — it is common for prices to move 5-10% in a single day and 50% or more in a month. See our guide on why crypto is so volatile.
W
- Wallet
- Software or hardware that stores your private keys and lets you send, receive, and manage cryptocurrency. The wallet does not actually hold your coins — they live on the blockchain — but it holds the keys that prove ownership. See our full guide on crypto wallets.
- Web3
- A vision of the internet where applications are built on decentralized networks like blockchains, giving users ownership of their data, identity, and digital assets. Web3 encompasses DeFi, NFTs, DAOs, and decentralized social media.
- Whale
- An individual or entity that holds a very large amount of a cryptocurrency — enough that their trades can noticeably move the market. Whale wallets are closely watched by traders looking for signals about market direction.
- Wrapped Token
- A token on one blockchain that represents an asset from another blockchain. Wrapped Bitcoin (WBTC) is Bitcoin represented as an ERC-20 token on Ethereum, allowing BTC to be used in Ethereum DeFi. The original asset is held in custody and the wrapped version is minted at a 1:1 ratio. See token types.
X
- xToken
- A common naming convention for staked or reward-bearing versions of tokens in DeFi. For example, xSUSHI represents staked SUSHI that earns protocol revenue. The "x" prefix typically indicates the token is a receipt that accrues value over time.
Y
- Yield
- The return or income you earn on your crypto holdings. Yield can come from staking rewards, lending interest, liquidity pool fees, or protocol incentives. In DeFi, yield is usually expressed as APR or APY. See DeFi metrics.
- Yield Farming
- The practice of moving crypto assets between DeFi protocols to maximize returns. Farmers deposit tokens into liquidity pools, lending markets, or vaults and earn rewards in the form of trading fees, interest, or bonus tokens. Yield farming can be highly profitable but carries significant risk. See our full guide on yield farming.
Z
- Zero-Knowledge Proof
- A cryptographic method that lets you prove something is true without revealing the underlying information. For example, you could prove you have enough funds to make a transaction without revealing your total balance. Zero-knowledge proofs are the foundation of zkRollups and privacy-focused protocols.
- zkEVM
- A zero-knowledge rollup that is compatible with the Ethereum Virtual Machine, meaning developers can deploy existing Ethereum smart contracts on it without rewriting code. zkEVM combines the scaling benefits of zero-knowledge proofs with the developer experience of Ethereum. Polygon zkEVM and zkSync Era are leading examples.
- zkRollup (Zero-Knowledge Rollup)
- A Layer 2 scaling solution that bundles many transactions off-chain and produces a cryptographic proof that all transactions in the batch are valid. Only this compact proof is posted to the Layer 1 blockchain, making transactions much cheaper and faster while inheriting the security of the base chain.
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