Glossary of Terms

A

AMM

AMMs, or Automated Market Makers, are algorithmically-powered decentralized exchanges through which users can trade tokens without the need for a centralized order book.

API

Application Programming Interface. APIs enable software, such as decentralized applications and blockchains, to communicate with one another.

Archive Node

Archive nodes are a type of full node that store all of a blockchain's historical data since its genesis block.

Avalanche

Avalanche is a smart contracts platform with a rapidly growing ecosystem. As a layer 1 solution, Avalanche is built for the scale of global finance, with near-instant transaction finality. AVAX is Avalanche native token.

B

Band

Band is a cross-chain data oracle, and makes it easier for developers from different blockchains to use real world data in smart contracts. BAND is Band's native token.

Bare Metal

A bare metal server is a server dedicated to a user. This is in contrast with cloud servers, that allow for multiple tenants on the same server. Running servers on bare metal gives the user more granular control over the server's specifications (e.g., RAM, CPU), allowing them to optimize server configuration for desired performance.

Bonding

Also known as bonding period or warm-up period, bonding is the process of committing funds to the network for staking. When funds are bonding they are locked and are not earning staking rewards. For example, protocol ABC has a 7-day bonding period. This means that after a validator and/or delegator signs a staking transaction, they begin bonding. For the next week, these funds are locked but not earning rewards. On day 8, the funds remain locked but are earning staking rewards.

Byzantine Generals' Problem

The Byzantine Generals' Problem describes a situation in which decentralized parties must come to consensus independent of reliance on a trusted central party.

Byzantine Fault Tolerance (BFT)

A Byzantine fault describes a situation in which different actors within a system observe contradictory truths within that system. Many systems require actors to be in consensus, despite some actors being unreliable. This is especially important in systems, such as blockchain networks, wherein system actors, such as nodes, do not need to know or trust one another. Therefore, a system that is Byzantine Fault Tolerant means that actors within that system can maintain consensus despite some actors being unreliable.

C

Cardano

Cardano is a decentralized platform that allows for complex programmable transfers of value in a secure and scalable fashion. ADA is Cardano's native token.

Cloud Server

Cloud servers are physical or virtual machines running in a cloud computing environment. This means that users can remotely access and configure a cloud server to perform a desired task or set of tasks. Many validators in the blockchain space are running on cloud servers. Popular cloud providers are Amazon's AWS, Google's GCP, and Alibaba Cloud.

Cold Storage

Cold storage refers to crypto assets stored in a cold wallet. Cold wallets are offline wallets that is not connected to the internet. This is in contrast to a hot wallet, such as Metamask, which is connected to the internet and accessible from a web browser or mobile application. Cold storage is considered to be the most secure way to store crypto assets.

Consensus

Consensus is the process by which protocol participants, namely a decentralized network of nodes, come to agreement as to who has what on the blockchain.

Cosmos

Cosmos is a decentralized network of independent parallel blockchains, each powered by Byzantine Fault Tolerant consensus algorithms like Tendermint consensus. ATOM is Cosmos' native token.

Colocation

Colocation refers to a type of data center where equipment, such as servers, and bandwidth are available for rental. Colocation centers can host customers across a range of use cases, from hosting a website to running a validator node.

Custodian

A custodian is a trusted third party that holds a user's funds. In crypto, custodians store and protect a user's private keys.

Custody

Custody refers to digital asset ownership. More specifically, custody is the manner by which users store and protect their private keys. Users can self-custody (i.e., hold their own private keys) and/or use a custodian (i.e., a trusted third party that holds the user's private keys). To take an example from the traditional financial system, when you store your funds with a bank, that bank is your custodian. Alternatively, if you store cash under a mattress, you self-custody your funds.

D

dApp

dApps, or Decentralized Applications, is self-executing code running on public decentralized blockchains. Similar to centralized applications, dApps have backend code as well as a user interface (UI) that users interact with. However, dApps differ from centralized applications in many ways. For example, dApps run on decentralized peer-to-peer networks, have code that is open-source, and can be permissionlessly combined with other dApps to create new solutions.

DeFi

DeFi, or Decentralized Finance, refers to a growing financial system that is built on public blockchains, such as Ethereum. DeFi users can transact with one another directly in a trustless and permissionless fashion. Activities core to traditional finance - such as buying, selling, lending, borrowing - are also available in DeFi.

DEX

A DEX, or Decentralized Exchange, platform where users can buy, sell, and trade digital assets.

Delegated-Proof-of-Stake (DPoS)

Delegated-Proof-of-Stake (DPoS) is a type of Proof-of-Stake (PoS) model wherein a limited number of validators are eligible to produce the next block. This is different from classic PoS models wherein any validator is eligible to produce the next block, but their likelihood to do so is determined by the percent of total stake they have. For example, in the Cosmos DPoS model, the Top 125 validators are eligible to produce the next block and, in turn, receive staking rewards.

Delegation

Delegation refers to the funds that a Delegator stakes with a Validator.

Delegator

A Delegator is a person or entity who bonds their stakeable tokens with a Validator. Unlike Validators, Delegators do not need to operate a node in order to receive staking rewards. Instead, Delegators can pay Validators a small commission of total staking rewards in return for the Validator's service.

E

Ethereum 2.0

Ethereum is a global, open-source platform for decentralized applications. Ethereum 2.0 marks a transition from Proof-of-Work to Proof-of-Stake. With the upgrade, the network will see benefits around scalability, security, and the rate at which transactions are processed. ETH is the token native to Ethereum 2.0.

Expected APY

Expected APY is equal to Real APY minus Foundry Commission

F

Fantom

Fantom is a smart contracts platform that intends to solve the scalability issues of existing public distributed ledger technologies, including speed, security, and scalability. FTM is Fantom's native token.

Flow

Flow is a fast, decentralized, and developer-friendly blockchain, designed as the foundation for a new generation of games, apps, and the digital assets that power them. FLOW is Flow's native token.

Foundry Commission

In exchange for providing staking services, Foundry charges a small fee. This commission rate is the percentage of staking rewards that Foundry takes

Full Node

Full nodes contain the entire blockchain state at any given time. They promote the security of the network by verifying transactions. Full nodes are often mistakenly conflated with archive nodes, which are full nodes that also contain a blockchain's historical data since its genesis block.

G

Genesis Block

A genesis block is the first block added to a blockchain.

H

Hedera

Hedera is a decentralized public network where developers can build secure, fair applications with near real-time consensus. HBAR is Hedera's native token.

Helium

Helium is a decentralized wireless network that enables devices anywhere in the world to wirelessly connect to the Internet and geolocate themselves without the need for power-hungry satellite location hardware or expensive cellular plans. HNT is Helium's native token.

Horizen

Horizen is an ecosystem of decentralized blockchains. The Horizen network is composed of its main chain, secured by Proof-of-Work, and an ecosystem of sidechains, secured by Proof-of-Stake. ZEN is Horizen's native token.

Hardware Security Module (HSM)

HSMs are a special type of network computer that performs cryptographic functions. Within the context of crypto and validation, these functions include key management and encryption. HSM implementation is considered a best practice for hardening the security of a Proof-of-Stake validator, although not all protocols support HSMs.

I

Inflation %

Inflation % refers to the rate at which newly minted tokens are released each year. For example, a protocol 1,000 circulating tokens that mints 50 new tokens each year has a 5% inflation rate

K

KYC

Know Your Customer, or KYC, refers to the due diligence process of collecting customer information in order to confirm certain information about the customer. Examples of KYC include collecting official government-issued identification in order to confirm a customer is not from a sanctioned jurisdiction, as well as gathering bank statements in order to validate that funds are from legitimate sources.

L

Layer 1

Layer 1 refers to base-level blockchains, such as Bitcoin, Ethereum, Avalanche, and Near Protocol. Layer 1 blockchains provide an underlying architecture upon which other blockchains and/or decentralized applications can be built and deployed.

Layer 2

Layer 2 refers to blockchains that are built on top of underlying layer 1 blockchains. Layer 2 solutions are often built to address scalability issues of the layer 1 blockchain. Examples of layer 2 solutions are Bitcoin's Lightning Network and Polygon built on Ethereum.

Liquid Proof-of-Stake (LPoS)

LPoS is a type of Proof-of-Stake based on the idea of liquid democracy. Liquid democracy is a system in which participants can both vote directly and also delegate their vote to a representative. So in a LPoS system, participants stake their tokens and participate in governance by either voting directly or by delegating their tokens to a representative.

Liquidity

Liquidity refers to how easy it is to convert an asset into another asset. For example, cash is highly liquid while real estate is highly illiquid. Some stakeable crypto assets are more liquid than other, generally determined by protocol's bonding period.

Livepeer

Livepeer is a decentralized video streaming solution. LPT is Livepeer's native token.

Lock-Up

Many protocol have a lock-up, or unbonding, period. This refers to the amount of time between when you decide to stop staking and when you can access your funds. During this period funds are not staking or earning

M

Market Cap

Market Cap is the amount of circulating tokens multiplied by the spot price. For example, a protocol with 1mm circulating tokens, each with a price of $5 USD, has a $5mm USD market cap

Minimum Required Stake

Minimum required stake refers to the minimum number of tokens a validator must have staked in order to be eligible to receive staking rewards. For example, Helium validators require exactly 10,000 HNT tokens while Avalanche requires a minimum of 2,000 AVAX tokens.

N

Near Protocol

Near Protocol is a “community-operated cloud”. It makes it easy for developers to build decentralized applications, onboard users seamlessly, and scale applications. NEAR is Near Protocol's native token.

Node

A node is a computer that is connected to a blockchain network, whose main purpose is to verify transactions on the network. There are many types of nodes, such as "miners" on Proof-of-Work networks (e.g., Bitcoin) and "validators" on Proof-of-Stake networks (e.g., Ethereum 2.0).

Nominal APY

Nominal APY is the annual rate of return, not including inflation or fees

Non-custodial

Non-custodial describes states of ownership, but the meaning can be dependent upon context. For example, a non-custodial crypto wallet is one that the wallet's creator controls the wallet's private keys. Within the context of staking, when a staking provider describes themselves as "non-custodial", that means the validator never takes control of the delegator's funds.

O

Oracle

Oracles help to bring real world data, such as weather data or financial market data, on-chain. For example, Band is a cross-chain data oracle, and makes it easier for developers from different blockchains to use real world data in smart contracts.

P

Parachain

Parachains are similar to sidechains and exist within the Polkadot ecosystem. They are independent blockchains that are connected to and run off of the Polkadot network. They run in parallel to one another, while inheriting Polkadot’s core features, such as its security.

Polkadot

Polkadot is a platform that enables decentralized blockchains, known as parachains, to communicate with one another while drawing upon the same pooled security. DOT is Polkadot's native token.

Polygon

Polygon is a layer 2 protocol and a framework for building and connecting Ethereum-​compatible blockchain networks. MATIC is Polygon's native token.

Private Key

A private key is one of two keys required to send and receive crypto assets in a cryptographically secure way. Private keys are used in tandem with public keys. The private key is used to sign transactions or, said differently, to release funds from a user's wallet. Public keys are known publicly and can be shared, while private keys should be known only to their owner and should not be shared.

Proof-of-Stake (PoS)

Proof-of-Stake (PoS) is a consensus mechanism that uses economic incentives to validate transactions and help to secure a blockchain network. In a PoS system, participants lock or stake their tokens in order to become eligible to generate the next block in the blockchain. In exchange for their services, these participants can receive staking rewards, which are tokens native to the protocol. Participants are disincentivized to behave maliciously because they risk getting slashed, or losing funds.

Proof-of-Work

Proof-of-Work (PoW) is a consensus mechanism by which participants help to validate transactions and to secure blockchain networks through converting energy into value. In a PoW system, participants compete against one another to create the next block by using specialized computers to solve complex puzzles. These participants are called miners. The first miner to solve the complex puzzle or, "mines the next block", receives a block reward in the form of coins native to the protocol (e.g., bitcoin). Miners are incentivized to behave honestly in order to be in competition to receive the next block reward.

Provenance

Provenance is a public blockchain network designed and developed to support financial services industry needs by providing a ledger, registry, and exchange across multiple financial assets and markets. HASH is Provenance's native token.

Public Key

A public key is one of two keys required to send and receive crypto assets in a cryptographically secure way. Public keys are used in tandem with private keys. The public key is used to store cryptocurrencies on the blockchain in a pseudoanonymous fashion. Public keys are known publicly and can be shared, while private keys should be known only to their owner and should not be shared.

R

Real APY

Real APY is equal to Nominal APY minus Inflation Rate. For example, a protocol with a 10% Nominal APY and a 5% Inflation Rate has a Real APY of 5%

Ren

Ren is an open protocol that enables cross-chain liquidity while preserving privacy. REN is Ren's native token.

Rewards

See Staking Rewards

S

Self-custody

Self-custody is a type of custody in which users store their private keys, hence maintaining full control of funds stored in their cryptocurrency wallets. This is in contrast to using a custodian.

Sidechain

A sidechain is a secondary blockchain that is connected to and runs in parallel with a primary blockchain, often a layer 1. Sidechains are generally designed to challenges primary blockchains face, such as scalability and the ability to communicate with other primary blockchains.

Sharding

Sharding is the process of braking down data into smaller chunks that are then distributed across multiple databases or networks. Within the context of crypto, sharding is used to split the blockchain into smaller pieces that are distributed across multiple nodes in order to decrease the workload (e.g., computational power or storage) required from any single node.

Slashing

Used in Proof-of-Stake blockchains, slashing is a mechanism used to disincentivize maliciously activity through the threat of losing funds. In PoS systems, validators must meet requirements such as maintaining certain performance requirements and behave honestly (e.g., include only valid transactions in blocks).

Smart Contract

A smart contract is self-executing code that carries out a set of instructions on blockchains. Smart contracts maintain certain qualities, such as trustlessness, verifiability, decentralization, and transparency.

Solana

Solana is a layer 1 protocol that aims to support high throughput and low transaction time. SOL is Solana's native token.

Stablecoin

Stablecoins are a type of cryptocurrencies designed to maintain a stable value. For example, stablecoins such as Tether (USDT) and USD Coin (USDC) are tied to the value of the US dollar at a 1:1 ratio.

Stake

Stake refers to the tokens validators and/or delegators lock up in order to validate transactions and receive staking rewards on Proof-of-Stake networks.

Staked %

Staked % refers to the percent of the protocol's tokens are actively staking

Staking

Staking is the process of locking up funds on Proof-of-Stake networks in order to validate transactions and receive staking rewards.

Staking Rewards

Staking rewards refers to the tokens validators and/or delegators receive in return for staking their funds. Staking rewards are paid in the protocol's native token and the reward amount is typically determined by a protocol's inflation schedule and transactions fees.

State

The state of a blockchain refers to the data that the blockchain maintains. For example, values stored in memory addresses and balances of coins that addresses possess are part of the state. A blockchain's state is constantly changing as transactions are executed on the blockchain.

T

Terra

Terra enables programmable money for the internet. It’s foundational infrastructure empowers the creation of cryptocurrencies and financial applications. LUNA is Terra's native token.

Tezos

Tezos is an open-source platform for assets and applications that can evolve by upgrading itself. XTZ is Tezo's native token.

The Graph

The Graph is an indexing protocol for querying networks like Ethereum and IPFS. Anyone can build and publish open APIs, called subgraphs, making data easily accessible. GRT is The Graph's native token.

Tokenomics

Tokenomics, or token economics, refers to a token-based incentive system that blockchain projects employ in order to attract users to the project ecosystem and to promote token adoption.

U

Unbonding

See Lock-up

V

Validator

A validator is a node, or computer connected to a blockchain network, that helps to validate transactions and bolster security for Proof-of-Stake blockchains.

Validator Keys

Validator keys are public/private pairs that validators use to perform certain actions, such as signing transactions, on Proof-of-Stake networks.