The Business Glossary
Precision definitions for digital assets, risk management, and regulatory compliance.
Account Abstraction (ERC-4337)
"A technical standard that turns wallets into 'Smart Accounts,' allowing features like social recovery, daily spending limits, and gas fee sponsorship."
Admin Key / God Mode
"A set of privileged access credentials that allow developers to modify, pause, or update a smart contract after it has been deployed."
Airdrop
"The distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses, often as a marketing or governance tactic."
Atomic Swap
"A smart contract technology that enables the exchange of one cryptocurrency for another without the need for a central intermediary or a bridge."
Blockchain
"A distributed, immutable digital ledger that records transactions across a network of computers. In a business context, it serves as a shared 'source of truth' that eliminates the need for central intermediaries."
Bridging
"The process of moving assets or data between two different blockchain networks (e.g., moving USDT from Ethereum to Solana)."
Burning
"The permanent removal of tokens from the circulating supply, usually by sending them to an 'eater address' that no one can access."
Cold Storage
"The practice of keeping digital assets in a wallet that is not connected to the internet, protecting them from remote hacking attempts."
DAO (Decentralized Autonomous Organization)
"An organization represented by rules encoded as a computer program that is transparent, controlled by the organization members, and not influenced by a central government."
Data Availability (DA)
"The guarantee that the data required to reconstruct the state of a blockchain or rollup is available to all network participants."
Decentralized Identifier (DID)
"A new type of identifier that enables a verifiable, decentralized digital identity, allowing users to control their own data without relying on a central authority."
DeFi (Decentralized Finance)
"An umbrella term for financial services (borrowing, lending, trading) built on public blockchains using smart contracts, removing traditional banks as intermediaries."
ERC-20
"A technical standard used for all smart contracts on the Ethereum blockchain for token implementation. It defines a common list of rules that an Ethereum token must follow."
ERC-721
"The standard for Non-Fungible Tokens (NFTs) on Ethereum. Unlike ERC-20, every ERC-721 token is unique."
Flash Loan
"A type of uncollateralized lending that allows a user to borrow any amount of assets as long as the loan is repaid within the same blockchain transaction."
Gas Fees
"The transaction cost required to execute an operation on a blockchain. This fee compensates network participants (miners/validators) for the computational power required to process and secure the transaction."
Governance Token
"A cryptocurrency that grants its holder the right to vote on proposals that affect the future development and management of a blockchain protocol or DAO."
Hot Wallet
"A digital asset wallet that is connected to the internet, allowing for fast and frequent transactions."
Howey Test
"A legal standard in the US used to determine whether a transaction qualifies as an 'Investment Contract' and is therefore subject to securities regulation."
Impermanent Loss
"A temporary loss of funds experienced by liquidity providers due to volatility in a trading pair. It is the price difference between holding tokens in a wallet vs. providing them to a pool."
Interoperability
"The ability of different blockchain systems to communicate, share data, and transfer assets between each other seamlessly."
KYC/AML (Know Your Customer / Anti-Money Laundering)
"Regulations designed to prevent financial crimes by requiring businesses to verify the identity of their clients and monitor for suspicious activity."
Layer 1 (L1)
"The base level of a blockchain network (e.g., Ethereum, Solana, Bitcoin) that provides the fundamental security and settlement for all transactions."
Layer 2 (L2)
"A secondary framework or protocol built on top of an existing blockchain (Layer 1) to improve scalability and reduce transaction costs."
Liquid Staking
"A service that allows users to stake their tokens (e.g., ETH) and receive a 'receipt token' (e.g., stETH) in return, which can be used in DeFi while still earning staking rewards."
Liquidity Pool
"Crowdsourced funds (usually a pair of tokens) locked in a smart contract that facilitate decentralized trading on an Automated Market Maker (AMM)."
Mainnet vs. Testnet
"Mainnet is the actual production network where transactions have real value; Testnet is a sandbox environment for developers to test code using 'valueless' tokens."
MEV (Maximal Extractable Value)
"The maximum value that can be extracted from block production in excess of the standard block reward and gas fees, typically by reordering transactions."
MiCA (Markets in Crypto-Assets)
"The European Union's comprehensive regulation governing the issuance and provision of services related to crypto-assets, stablecoins, and service providers."
Modular Blockchain
"A blockchain architecture that separates the core functions (Execution, Settlement, Consensus, Data Availability) across different specialized layers, rather than one 'monolithic' chain."
MPC (Multi-Party Computation)
"A cryptographic technique that allows multiple parties to jointly compute a function while keeping their individual inputs private. In crypto, it is used to secure wallets without a single private key."
Multisig (Multi-Signature)
"A digital signature scheme that requires two or more private keys to authorize a transaction, providing a higher level of security than traditional single-signature wallets."
NFT (Non-Fungible Token)
"A unique digital asset stored on a blockchain that represents ownership of a specific item or piece of content, such as art, real estate, or access rights."
Node
"A computer that participates in a blockchain network by storing a copy of the ledger and/or validating transactions."
On-Ramp / Off-Ramp
"Services that allow users to exchange fiat currency (like USD) for cryptocurrency (On-Ramp) and vice versa (Off-Ramp)."
Oracle
"A third-party service that provides external data (like the price of gold or a weather report) to a smart contract, allowing the contract to interact with real-world events."
Phishing & Address Poisoning
"Deceptive attacks designed to steal private keys or trick users into sending funds to the wrong address."
Private Key
"A sophisticated form of cryptography that allows a user to access their digital assets. It is effectively the 'Digital Signature' that proves ownership."
Proof of Reserves (PoR)
"An independent audit conducted by a third party or a cryptographic proof (Merkle Tree) that verifies a centralized exchange or issuer actually holds the assets it claims to."
Proof of Stake (PoS)
"A consensus mechanism where block creators are chosen based on the number of tokens they 'stake' as collateral, rather than computational power (Proof of Work)."
Re-staking (EigenLayer)
"The practice of using staked assets (like ETH) to secure additional protocols beyond the base Layer 1, earning extra yield in exchange for higher slashing risk."
Rollup (Optimistic vs. ZK)
"A Layer 2 scaling solution that executes transactions off-chain and then 'rolls them up' into a single batch to be settled on Layer 1."
Rug Pull
"A type of exit scam where developers abandon a project and run away with investors' funds after pumping the token price or draining liquidity."
RWA (Real World Assets)
"The process of bringing physical or traditional financial assets (like real estate, gold, or treasury bills) onto the blockchain as digital tokens."
Seed Phrase
"A series of 12-24 words generated by your wallet that allow you to recover your private keys and assets if your wallet device is lost or damaged."
Sidechain
"An independent blockchain that runs in parallel to a main chain, connected by a two-way bridge. It has its own consensus mechanism (unlike a Rollup)."
Slashing
"A mechanism in Proof of Stake (PoS) blockchains where a portion of a validator's staked assets is permanently confiscated due to malicious behavior or significant downtime."
Slippage
"The difference between the expected price of a trade and the actual price at which the trade is executed, often caused by low liquidity or high volatility."
Smart Contract
"Self-executing code stored on a blockchain that automatically performs actions when predefined conditions are met. They function as 'Digital SLAs' that require no human intervention for enforcement."
Smart Contract Audit
"A comprehensive security review of a smart contract's code by a third-party firm to identify vulnerabilities, logic errors, and security risks before deployment."
Soulbound Token (SBT)
"A non-transferable NFT that represents a person's identity, credentials, or affiliations on the blockchain. Once received, it cannot be sold or moved."
Stablecoin
"A type of cryptocurrency designed to have a stable value, usually pegged to a fiat currency like the US Dollar."
Sybil Attack
"A type of attack where a single actor creates multiple fake identities (accounts) to gain disproportionate influence or rewards in a decentralized network."
Time-lock
"A smart contract feature that prevents certain actions (like moving funds or updating code) from taking effect until a specified period of time has passed."
Tokenomics
"The study of the economic systems and incentives that govern a cryptocurrency's value, including supply, distribution, and utility."
Travel Rule
"A FATF requirement that financial institutions must share sender and recipient information for transactions above a certain threshold (typically $1,000-$3,000)."
TVL (Total Value Locked)
"A metric representing the total amount of assets currently deposited in a DeFi protocol's smart contracts."
Validator
"A specialized node that participates in a blockchain's consensus mechanism by verifying transactions and adding them to the ledger, earning rewards for its service."
VASP (Virtual Asset Service Provider)
"Any entity that conducts exchange, transfer, custody, or financial services related to virtual assets for or on behalf of another person."
Vesting & Cliffs
"Vesting is the process of earning tokens over time; a 'Cliff' is a specific date before which no tokens are released."
Web3 Foundation
"A non-profit organization (often Swiss-based) created to foster the development and oversight of a specific blockchain protocol or ecosystem."
Wrapped Token
"A digital asset that allows the value of one cryptocurrency from one blockchain to be used on another blockchain (e.g., Wrapped Bitcoin - wBTC on Ethereum)."
Zero-Knowledge Proof (ZKP)
"A cryptographic method by which one party can prove to another that a statement is true, without revealing any information beyond the validity of the statement itself."