WEB3 Glossary

Free distribution of tokens to users, often to reward onchain activity or early usage of a protocol.

Synonyms : airdrops

Automated Market Maker — a mechanism that prices and executes swaps via a mathematical formula and liquidity pools, without an order book.

Synonyms : automated market maker

Annual Percentage Rate — yearly return that does not account for compounding interest.

Synonyms : annual percentage rate

Annual Percentage Yield — effective yearly return that includes compounding interest.

Synonyms : annual percentage yield

Distributed, tamper-proof ledger where transactions are grouped into cryptographically linked blocks.

Synonyms : distributed ledger, chain

Borrowing crypto assets from a lending protocol, usually by posting collateral as a guarantee.

Synonyms : borrow

A bridge lets you transfer assets or messages between two distinct blockchains.

Synonyms : cross-chain bridge

Permanent destruction of tokens by sending them to an unspendable address, reducing the circulating supply.

Synonyms : token burn, burning

Centralized exchange (e.g. Binance, Coinbase) operated by a company that custodies users' funds.

Synonyms : centralized exchange

Concentrated Liquidity Market Maker — an AMM variant where providers concentrate liquidity within a chosen price range for greater capital efficiency.

Synonyms : concentrated liquidity market maker

An asset posted as a guarantee to borrow or open a position; it can be liquidated if its value falls below a threshold.

Synonyms : collateralization

The mechanism by which network participants agree on the state of the blockchain and the order of transactions (e.g. Proof of Stake).

Synonyms : consensus mechanism

Describes an operation or application that interacts across multiple blockchains, for example through a bridge.

Synonyms : interchain, multichain

Decentralized Autonomous Organization — an entity whose rules and governance run onchain, managed by its members.

Synonyms : decentralized autonomous organization

Decentralized application — an app whose logic runs on onchain smart contracts rather than a central server.

Synonyms : decentralized application, dapps

Decentralized Finance — financial services (lending, swapping, saving) run by smart contracts without intermediaries.

Synonyms : decentralized finance

Decentralized exchange where users swap tokens directly through smart contracts.

Synonyms : decentralized exchange

Ethereum Virtual Machine — the runtime that executes Ethereum smart contracts, reused by many EVM-compatible chains.

Synonyms : ethereum virtual machine, evm-compatible

A service that hands out small amounts of tokens for free, usually on a testnet, to let you test without risk.

Synonyms : testnet faucet

Fee paid to execute a transaction or a smart contract on a blockchain such as Ethereum.

Synonyms : gas fees, transaction fees

The process by which token holders vote on a protocol's decisions and upgrades.

Synonyms : governance, onchain voting

A sub-unit of ether (1 Gwei = 10⁻⁹ ETH), commonly used to express the price of gas.

Synonyms : giga-wei

A base-layer blockchain that provides its own consensus and security (e.g. Ethereum, Bitcoin, Solana).

Synonyms : l1, base layer

A network built on top of a base blockchain (Layer 1) to increase throughput and lower fees while inheriting its security.

Synonyms : l2

Lending crypto assets on a DeFi protocol to earn yield, with borrowers posting collateral.

Synonyms : lend

Borrowing to increase the size of a position and amplify potential gains — as well as losses.

Synonyms : leveraged trading

Staking that issues a liquid token representing the locked assets, reusable across DeFi while it keeps earning rewards.

Synonyms : liquid staking token, lst

Forced closing of a leveraged position when collateral can no longer cover the losses.

Synonyms : forced liquidation

A reserve of tokens deposited into a smart contract that enables swaps and lending on a DeFi protocol.

Synonyms : lp, liquidity pool

A blockchain's main network, where transactions have real value (as opposed to a testnet).

Synonyms : main network

A marketplace to buy, sell and trade NFTs (e.g. OpenSea, Magic Eden).

Synonyms : nft marketplace

Creation of new tokens or NFTs, recorded onchain by a smart contract.

Synonyms : minting

Non-Fungible Token — a unique, indivisible digital asset used to represent ownership (art, item, access).

Synonyms : non-fungible token

Describes a wallet or service where the user keeps sole control of their private keys, and therefore their funds.

Synonyms : self-custody, non custodial

A service that feeds smart contracts trusted external data (e.g. market prices) they cannot obtain on their own.

Synonyms : price oracle

A futures-style contract with no expiry that lets you speculate on an asset's price with leverage.

Synonyms : perpetual futures, perp, perps

The secret code that proves ownership of an address and authorizes transactions. Never share it.

Synonyms : private key

A consensus mechanism where validators are selected based on the tokens they stake to produce blocks.

Synonyms : pos

A consensus mechanism where miners solve an energy-intensive computation to validate blocks (e.g. Bitcoin).

Synonyms : pow, mining

A set of smart contracts providing an automated onchain service (swapping, lending, staking).

Synonyms : protocol, defi protocol

Reusing already-staked tokens (or their liquid version) to secure additional services and earn extra yield.

Synonyms : re-staking

A Layer 2 solution that bundles (rolls up) many off-chain transactions before posting them to Layer 1 to cut costs.

Synonyms : optimistic rollup

A list of words that restores a wallet. Keep it secret: whoever holds it controls the funds.

Synonyms : recovery phrase, mnemonic phrase, mnemonic

A penalty that confiscates part of a validator's staked tokens for misbehavior or downtime.

Synonyms : slashing penalty

The difference between the expected and the actually executed price of a swap, caused by changing liquidity.

Synonyms : price slippage

A self-executing program deployed on a blockchain that automatically enforces rules without intermediaries.

Synonyms : smart contracts

A record of the blockchain's state at a given moment, often used to determine eligibility for an airdrop.

Synonyms : snapshot

The spot market, where an asset is bought or sold at the current price for immediate delivery, without leverage or expiry.

Synonyms : spot trading, spot market

A token whose value is pegged to a stable asset (often the dollar) to limit volatility.

Synonyms : stable coin

Locking tokens to secure a network or provide liquidity, in exchange for rewards.

Synonyms : stake

A direct exchange of one token for another, usually through a DEX and a liquidity pool.

Synonyms : token swap, swaps

A blockchain's test network, using valueless tokens to experiment without risk.

Synonyms : test network

A digital asset issued on a blockchain, representing a value, a right or an access.

Synonyms : tokens

Total Value Locked — the total amount of assets deposited in a DeFi protocol, a key adoption metric.

Synonyms : total value locked

A participant that validates transactions and produces blocks in a Proof of Stake network.

Synonyms : validator, validators

A smart vault that automates a yield strategy: deposited funds are managed by a smart contract.

Synonyms : yield vault

A wallet stores keys and lets you interact with the blockchain (e.g. MetaMask, Rabby).

Synonyms : crypto wallet

A token representing another asset at a 1:1 peg, letting it be used on a different chain or standard (e.g. wBTC).

Synonyms : wrapped asset

The return generated by putting crypto assets to work (staking, lending, providing liquidity).

Synonyms : return

A strategy of moving crypto assets across DeFi protocols to maximize yields and rewards.

Synonyms : farming

A type of rollup that uses zero-knowledge proofs (ZK proofs) to guarantee the validity of the bundled transactions.

Synonyms : zero-knowledge rollup, zk proof