Crypto glossary – important terms to navigate web3

The glossary provides you with definitions for the most important terms to navigate the web3 landscape.

Navigating conversations and understanding key concepts in web3 sometimes requires its own terminology. In this regard, web3 is not just a technological shift, but also a cultural one.

This guide will provide you with the most essential terms to decode the language and become a web3 citizen. It is tailored to provide you with clear and concise definitions for the unique terms that define this industry.

Dive in, discover, and enhance your fluency in the unique lexicon of the web3 industry. (-:

If you want to contribute to the glossary, have a look on Github.

Glossary a-z

  • Airdrop
    Distribution of free tokens, usually to promote a product or incentivise early users

  • Altcoin
    Alternative coin, any cryptocurrency other than Bitcoin

  • AMM
    Automated Market Maker, popular mechanism among decentralized exchanges (DEXes) involving liquidity pools instead of an orderbook-based system

  • Anon
    Anonymous, entity that wishes to remain anonymous or pseudonymous

  • Beacon Chain
    Ethereum’s proof-of-stake (PoS) consensus layer

  • Bridge
    Service that transfers tokens between multiple blockchains (cross-chain)

    Term to describe the web3 building ethos, even despite a bear market, inspired by HODL

  • CeFi
    Centralized finance, the “traditional” finance sector, in contrast to DeFi (decentralized finance)

  • CEX
    Centralized Exchange, app for swapping tokens run by a company, often used for fiat exchange; in contrast to DEX (Decentralized Exchange)

  • Cypherpunks
    Cypher + punks, movement originating in the early 90s, emphasizing the need for privacy in the digital age, enforced by cryptography

  • DAO
    Decentralized Autonomous Organization, blockchain-based organizations that are owned and governed by their members via tokens

  • DApp
    Decentralized Application, blockchain-based services that use smart contracts in their backend and thus have a distributed nature, without the need for intermediaries

  • DeFi
    Decentralized Finance, general term for decentralized services in the financial sector, that are permissionless and globally available, e.g., DEXes (decentralized exchanges) or lending protocols

  • Degen
    Degenerate, term for a person that is deeply involved in crypto or a specific sector, e.g., DeFi Degens

  • DEX
    Decentralized Exchange, blockchain-based app for swapping tokens that use smart contracts to be permissionless

  • Diamond Hands
    Holding a digital asset through very volatile times

  • DYOR
    Do Your Own Research, principle of self-verification instead of trusting others

  • EIP
    Ethereum Improvement Proposal, a process to describe standards for the Ethereum platform

  • ERC
    Ethereum Request for Comments, form of EIP to specify application layer standards; the most popular ones are ERC20 for fungible tokens and ERC721 for non-fungible tokens

  • EVM
    Ethereum Virtual Machine, the environment in which all Ethereum accounts and smart contracts live, the EVM defines the rules for computing a new valid state from block to block

  • Exchange
    An application that allows users to buy and sell crypto assets

  • Exit Scam
    Scenario in which a project or a part of a team steals the investors’ money and leaves

  • Explorer
    Webpage that displays information about the transaction history of a blockchain

  • Faucet
    Service that dispenses free tokens, usually for test networks

  • Flippening
    Term to describe a pivotal change in price or perception, e.g., when the market cap of a token exceeds the one of another token

  • FOMO
    Fear Of Missing Out, term to describe the feeling of not being included in something, e.g., a crypto investment or news

  • Fork
    Split of a blockchain or project due to technical issues or a dispute

  • FUD
    Fear, Uncertainty and Doubt, the opposite of FOMO

  • Gas
    Term for the fee that Ethereum transactions cost; it is used to reward validators and prevents malicious use of the blockchain

  • Genesis Block
    The first block recorded in a blockchain

  • Gm
    Good morning, form of greetings in crypto communities; due to the global nature of web3 it can be used at any time of the day

  • Hash
    Function that can be used to map data of arbitrary size to fixed-size values, e.g., for encryption, cryptographic hash functions are used in many parts of the web3 industry

  • HODL
    A frequent term referring to a strict buy-and-hold strategy, became famous after a misspelling in the bitcointalk forum in 2013

  • ICO
    Initial coin offering, the process of selling tokens when launching a new crypto project, inspired by the initial public offering (IPO) for stocks.

  • JOMO
    Joy Of Missing Out, converting FOMO into a positive feeling

  • KYC
    Know Your Customer, a process to verify the identity of customers; often used by centralized exchanges or entities

  • Layer 1
    Base blockchain architecture that serves as the foundation for other layers, also called mainnet, e.g., Ethereum

  • Layer 2
    Built on top of layer 1, usually for scaling purposes, e.g., Optimism

  • Minting
    Process of creating new token(s)

  • Mixer
    Decentralized Application that “mixes” tokens to cover their transaction history, used for private transactions

  • NFT
    Non-Fungible Token, a type of token that is not interchangeable or divisible, in contrast to fungible tokens; often used for digital collectibles

  • Node
    An instance holding a copy of the blockchain, it is connected to other nodes, synchronizing the blockchain and thus forming the network

  • OG
    Original Gangster, a person who was very early involved in crypto or a specific project

  • Oracle
    Data bridge to bring real-world information onto the blockchain

  • P2P
    Peer-to-peer, referring to a transaction between two people without other (central) parties involved

  • Rollups
    Popular type of layer 2, scaling solution that uses transaction bundling (“rolling up”) transactions before publishing them to the main chain

  • Rug Pull
    Scenario in which a team abandons a project and/or removes its liquidity, similar to exit scams

  • SBTs
    Soul-Bound-token, type of NFT that is non-transferrable

  • Smart contract
    Programs that run on the blockchain that follow the "if this then that" logic, they execute themselves when certain conditions are met

  • Snapshot
    Record of a blockchain at a particular block height, also the name of a popular DAO voting tool

  • Solidity
    Smart Contract Programming Language, created for the Ethereum blockchain but popular for other chains as well

  • Stablecoin
    A cryptocurrency that is pegged to another asset, mostly USD

  • Staking
    Process of locking tokens to contribute to validation in a proof of stake blockchain

  • Token
    Representation of a digital asset on a blockchain

  • TVL
    Total Value Locked, equivalent of USD locked in a blockchain or protocol, often used as an indicator in DeFi, e.g. in lending protocols

  • Validator
    Virtual entity participating in the consensus of a proof of stake blockchain, they participate in producing blocks and validating transactions

    Acronym for “We're All Gonna Make It”, expression used to show an optimistic attitude about the future of web3

  • Whale
    An entity holding a large amount of cryptocurrency, sometimes even a significant part of a project

  • Whitepaper
    Document that is released with new crypto projects to explain the details of the project.

  • ZKP
    Zero-Knowledge-Proof, cryptographic mechanism to verify an information without revealing it, often used for scaling solutions of privacy applications