Reference

Glossary

45 crypto and DeFi terms, one or two lines each. Every term has its own link you can share, like /learn/glossary#apy.

Education, not financial advice. Rates change; DeFi carries smart-contract and depeg risk. Do your own research.

A

Aggregator: A service that checks many exchanges at once to find the best price for a swap, and may split the trade between them. Swap compare →
Airdrop: Free tokens sent to wallets, often to reward early users. Unrequested airdrops are a common scam route.
Approval (token allowance): Permission you sign that lets a smart contract move a token from your wallet. It lasts until you revoke it. Token approvals →
APR: Annual percentage rate: the simple yearly rate, with no compounding. APY vs APR →
APY: Annual percentage yield: the yearly rate including compounding (earning interest on interest). 10% APR compounded daily is about 10.52% APY. APY vs APR →
Audit: A review of a protocol’s code by a security firm. It lowers the chance of bugs but doesn’t guarantee safety.

B

Base fee: On Ethereum and similar chains, the minimum gas price for the next block. It rises and falls with demand and is burned.
Bridge: A service that moves tokens between blockchains. Bridges add smart-contract risk and have been targets of large hacks.

C

CEX: Centralized exchange: a company that holds customers’ funds and matches trades.
Collateral: Assets locked up to secure a loan. In DeFi, loans are usually overcollateralized, so borrowers lock more than they borrow.

D

DAO: Decentralized autonomous organization: a group that governs a protocol, often by token-holder votes.
DeFi: Decentralized finance: lending, trading and other financial services run by smart contracts instead of a company.
Depeg: When a stablecoin trades meaningfully away from its target price, usually $1. Why stablecoins depeg →
DEX: Decentralized exchange: trade directly from your wallet against token pools run by smart contracts.

G

Gas: The unit measuring the computing work a transaction needs. The gas fee is paid in the chain’s own coin. Gas fees guide →
Gwei: A billionth of an ETH (0.000000001 ETH). Gas prices on Ethereum are quoted in gwei. Unit converter →

H

Hardware wallet: A physical device that keeps your keys offline and asks you to confirm transactions on its own screen.

I

Impermanent loss: The shortfall a liquidity provider can see versus simply holding two tokens, when their prices move apart. It becomes permanent if you withdraw then.

L

Layer 1 (L1): A base blockchain such as Ethereum, Solana or Bitcoin.
Layer 2 (L2): A network that processes transactions cheaply and settles them on a layer 1, such as Base, Arbitrum and OP Mainnet on Ethereum. Why L2s are cheaper →
Liquidation: When a borrower’s collateral falls too far in value and is sold automatically to repay the loan.
Liquidity: How easily you can buy or sell something without moving its price much.
Liquidity provider (LP): Someone who deposits tokens into a trading pool so others can swap, in return for a share of trading fees.
LRT: Liquid restaking token: a receipt token for restaked ETH, adding extra rewards and extra layers of risk. Restaking →
LST: Liquid staking token: a receipt token for staked coins, such as stETH or JitoSOL, that you can trade instead of waiting to unstake. Liquid staking →

M

Market cap: A coin’s price multiplied by the number of coins in circulation.

N

Native staking: Staking directly on a blockchain’s own system, usually by delegating to a validator. Often has an unbonding period.

P

Peg: The fixed price a stablecoin aims to hold, usually $1. Peg monitor →
Phishing: Tricking you into revealing a seed phrase or signing a harmful transaction, usually through fake sites or messages.
Price impact: How much your own trade moves the price. Larger trades in smaller pools have more impact.
Priority fee (tip): An extra amount added to the gas fee to get a transaction processed sooner.

R

Receipt token: A token you receive when you deposit or stake, representing your claim on the original funds plus earnings.
Restaking: Reusing staked ETH to secure additional services for extra rewards, with extra slashing and contract risk.
RWA: Real-world asset: a traditional asset such as a government bill or loan, represented by a token on a blockchain.

S

Seed phrase: The 12 or 24 words that control a self-custody wallet. Anyone who has them controls the funds. Never share it. Seed phrase safety →
Self-custody: Holding your own keys in a wallet you control, instead of leaving coins with an exchange.
Slashing: A penalty that destroys part of a validator’s stake for serious faults. Delegators can share the loss. Slashing →
Slippage: The difference between the quoted price and the price you get. Slippage tolerance is the most you’ll accept before a swap cancels.
Smart contract: A program on a blockchain that runs automatically. DeFi protocols are made of them, and bugs in them can lose funds.
Stablecoin: A token designed to hold a steady value, usually $1. Stablecoin guide →
Staking: Locking a proof-of-stake coin to help secure its network in return for rewards in that coin. Staking guide →

T

TVL: Total value locked: the dollar value of everything deposited in a pool or protocol.

U

Unbonding period: The wait after you unstake before your coins can move. It is 21 days on Cosmos Hub, for example.

V

Validator: A computer that runs a proof-of-stake network, staking coins as a security deposit and earning rewards.

W

Wallet: An app or device that holds the keys to your crypto and signs transactions.

Want the bigger picture? Read the beginner guides →

Aggregator

A service that checks many exchanges at once to find the best price for a swap, and may split the trade between them. Swap compare →

Airdrop

Free tokens sent to wallets, often to reward early users. Unrequested airdrops are a common scam route.

Approval (token allowance)

Permission you sign that lets a smart contract move a token from your wallet. It lasts until you revoke it. Token approvals →

APR

Annual percentage rate: the simple yearly rate, with no compounding. APY vs APR →

APY

Annual percentage yield: the yearly rate including compounding (earning interest on interest). 10% APR compounded daily is about 10.52% APY. APY vs APR →

Audit

A review of a protocol’s code by a security firm. It lowers the chance of bugs but doesn’t guarantee safety.

DAO

Decentralized autonomous organization: a group that governs a protocol, often by token-holder votes.

DeFi

Decentralized finance: lending, trading and other financial services run by smart contracts instead of a company.

Depeg

When a stablecoin trades meaningfully away from its target price, usually $1. Why stablecoins depeg →

DEX

Decentralized exchange: trade directly from your wallet against token pools run by smart contracts.

Layer 1 (L1)

A base blockchain such as Ethereum, Solana or Bitcoin.

Layer 2 (L2)

A network that processes transactions cheaply and settles them on a layer 1, such as Base, Arbitrum and OP Mainnet on Ethereum. Why L2s are cheaper →

Liquidation

When a borrower’s collateral falls too far in value and is sold automatically to repay the loan.

Liquidity

How easily you can buy or sell something without moving its price much.

Liquidity provider (LP)

Someone who deposits tokens into a trading pool so others can swap, in return for a share of trading fees.

LRT

Liquid restaking token: a receipt token for restaked ETH, adding extra rewards and extra layers of risk. Restaking →

LST

Liquid staking token: a receipt token for staked coins, such as stETH or JitoSOL, that you can trade instead of waiting to unstake. Liquid staking →

Peg

The fixed price a stablecoin aims to hold, usually $1. Peg monitor →

Phishing

Tricking you into revealing a seed phrase or signing a harmful transaction, usually through fake sites or messages.

Price impact

How much your own trade moves the price. Larger trades in smaller pools have more impact.

Priority fee (tip)

An extra amount added to the gas fee to get a transaction processed sooner.

Receipt token

A token you receive when you deposit or stake, representing your claim on the original funds plus earnings.

Restaking

Reusing staked ETH to secure additional services for extra rewards, with extra slashing and contract risk.

RWA

Real-world asset: a traditional asset such as a government bill or loan, represented by a token on a blockchain.

Seed phrase

The 12 or 24 words that control a self-custody wallet. Anyone who has them controls the funds. Never share it. Seed phrase safety →

Self-custody

Holding your own keys in a wallet you control, instead of leaving coins with an exchange.

Slashing

A penalty that destroys part of a validator’s stake for serious faults. Delegators can share the loss. Slashing →

Slippage

The difference between the quoted price and the price you get. Slippage tolerance is the most you’ll accept before a swap cancels.

Smart contract

A program on a blockchain that runs automatically. DeFi protocols are made of them, and bugs in them can lose funds.

Stablecoin

A token designed to hold a steady value, usually $1. Stablecoin guide →

Staking

Locking a proof-of-stake coin to help secure its network in return for rewards in that coin. Staking guide →