Glossary · 75 terms
Cryptocurrency
All cryptocurrency terms in the EquitiesAmerica.com glossary — plain-English definitions for American investors.
Account Abstraction(AA)
Account abstraction is a blockchain design principle that allows smart contract code to define the validation logic for user accounts, removing the hard requirement that transactions must originate from private-key-controlled externally owned accounts and enabling programmable features such as social recovery, multi-signature authorization, session keys, and gas sponsorship.
Airdrop (Crypto)
A Crypto Airdrop is the distribution of free tokens or cryptocurrency to wallet addresses that meet certain eligibility criteria — such as prior protocol usage, holding a specific token, or participating in a testnet — used by blockchain projects to bootstrap communities and reward early adopters.
Appchain(application-specific blockchain)
An appchain (application-specific blockchain) is a sovereign or semi-sovereign blockchain network purpose-built to run a single decentralized application or protocol, allowing that application to customize its execution environment, tokenomics, fee structure, and governance rules independently from general-purpose chains.
Automated Market Maker (AMM)(AMM)
An automated market maker is a type of decentralized exchange protocol that uses algorithmic pricing formulas and pooled liquidity to enable asset swaps without an order book or counterparty, setting prices continuously based on the ratio of assets held in a liquidity pool.
Base Fee(EIP-1559 base fee)
The base fee is the algorithmically determined minimum price per unit of gas that every transaction in an Ethereum block must pay, set by the protocol based on prior block usage relative to the target block size, and burned entirely rather than paid to validators.
Bitcoin(BTC)
Bitcoin (BTC) is the first and largest cryptocurrency by market capitalization, a decentralized digital currency that operates on a peer-to-peer network without a central bank or single administrator.
Bitcoin ETF(spot Bitcoin ETF)
A Bitcoin ETF is an exchange-traded fund that provides investors exposure to Bitcoin's price movements through a regulated brokerage account without requiring them to hold, custody, or manage the underlying cryptocurrency directly.
Blob Transaction (EIP-4844)(EIP-4844)
A blob transaction, introduced by EIP-4844 (Proto-Danksharding) and activated on Ethereum in March 2024, is a new transaction type that carries large binary data attachments called blobs alongside regular transaction data, providing a cheap temporary data posting mechanism that dramatically reduces the cost for rollups to publish their transaction data to Ethereum.
Block Time(slot time)
Block time is the average interval between successive blocks being added to a blockchain, determining the baseline latency between transaction submission and initial on-chain confirmation and reflecting the throughput and design priorities of the underlying consensus mechanism.
Blockchain(distributed ledger)
A blockchain is a distributed, immutable digital ledger that records transactions in chronologically ordered blocks, each cryptographically linked to the previous one, creating a tamper-resistant record shared across a decentralized network of computers.
Byzantine Fault Tolerance(BFT)
Byzantine fault tolerance (BFT) is the property of a distributed computer system that allows it to continue operating correctly and reaching consensus even when some fraction of its participants behave arbitrarily — including sending conflicting, malicious, or nonsensical messages — named after the Byzantine Generals Problem in distributed computing theory.
Chainlink(LINK)
Chainlink is a decentralized oracle network that connects smart contracts on any blockchain to real-world data, APIs, and payment systems, using a distributed network of independent node operators and a native token (LINK) to incentivize accurate data delivery and penalize dishonest reporting.
Cold Storage (Crypto)(hardware wallet)
Cold Storage in cryptocurrency refers to keeping private keys completely offline — on hardware devices, paper, or air-gapped computers — so they are inaccessible to internet-based attacks, providing the highest level of security for holding digital assets.
Consensus Mechanism(consensus algorithm)
A consensus mechanism is the set of rules and procedures by which the nodes of a decentralized blockchain network agree on a single canonical version of the transaction ledger, ensuring that all participants converge on the same state without requiring a trusted central authority.
Cross-Chain Bridge(blockchain bridge)
A cross-chain bridge is a protocol that enables the transfer of tokens, data, or arbitrary messages between two separate blockchain networks that do not natively share consensus, allowing assets originating on one chain to be represented and used on another chain.
Crypto Custody
Crypto Custody refers to the safekeeping and management of private keys that control access to cryptocurrency holdings, encompassing institutional-grade solutions provided by licensed custodians as well as self-custody approaches managed directly by individual holders.
Crypto Wallet(digital wallet)
A crypto wallet is a tool — software, hardware, or even a piece of paper — that stores the cryptographic keys allowing a user to access, send, and receive cryptocurrency on a blockchain.
Cryptocurrency Exchange(crypto exchange)
A cryptocurrency exchange is a platform that facilitates the buying, selling, and trading of cryptocurrencies, functioning similarly to a traditional stock exchange but operating with varying levels of regulatory oversight depending on jurisdiction.
Danksharding(full sharding)
Danksharding is the full sharding roadmap for Ethereum data availability, designed to scale the network to millions of transactions per second by partitioning block data across shards and using data availability sampling so that every node verifies data availability without downloading every byte, ultimately enabling Ethereum to serve as a high-throughput data availability layer for thousands of rollups.
Data Availability Layer(DA layer)
A data availability layer (DA layer) is a specialized blockchain or network component whose sole purpose is to guarantee that the raw data underlying a set of transactions has been published and can be downloaded by any network participant, without executing those transactions or maintaining the resulting state.
Decentralized Autonomous Organization(DAO)
A decentralized autonomous organization (DAO) is an entity governed by rules encoded in smart contracts on a blockchain, where decision-making authority is distributed among token holders who vote on proposals rather than concentrated in a traditional corporate board or management structure.
Decentralized Exchange(DEX)
A decentralized exchange (DEX) is a peer-to-peer trading platform that facilitates the exchange of cryptocurrencies and tokens directly between users through smart contracts on a blockchain, without a centralized intermediary holding user funds.
DeFi(Decentralized Finance)
DeFi, or Decentralized Finance, refers to a broad ecosystem of financial applications built on blockchain networks that replicate traditional financial services — lending, borrowing, trading, and earning yield — without centralized intermediaries.
Delegated Proof of Stake(DPoS)
Delegated proof of stake (DPoS) is a consensus mechanism in which token holders vote to elect a limited set of delegates (sometimes called witnesses or block producers) who are responsible for validating transactions and producing blocks on behalf of the broader network, combining economic staking incentives with a representative governance model.
Dollar-Cost Averaging into Crypto(DCA)
Dollar-cost averaging (DCA) into crypto is the practice of investing a fixed dollar amount into one or more cryptocurrencies at regular intervals, regardless of the current price, to reduce the impact of volatility on the average purchase cost.
EigenLayer(EigenDA)
EigenLayer is an Ethereum-based smart contract protocol that enables restaking, allowing Ethereum validators and liquid staking token holders to extend their staked collateral to secure additional decentralized services called Actively Validated Services, earning additional rewards in exchange for accepting additional slashing conditions.
EIP-1559(London hard fork fee reform)
EIP-1559 is an Ethereum Improvement Proposal implemented in August 2021 that reformed Ethereum's transaction fee market by replacing the legacy first-price auction with a protocol-defined base fee that automatically adjusts each block and is burned rather than paid to validators, alongside an optional priority fee that users pay directly to validators for faster inclusion.
Ethereum(ETH)
Ethereum is a decentralized, open-source blockchain platform that supports smart contracts and decentralized applications (dApps), with Ether (ETH) serving as its native cryptocurrency.
Ethereum ETF(spot Ethereum ETF)
An Ethereum ETF is an exchange-traded fund providing regulated brokerage exposure to Ether (ETH), the native cryptocurrency of the Ethereum blockchain, without investors needing to directly manage wallets, private keys, or staking operations.
Finality (Blockchain)(transaction finality)
Finality in a blockchain context refers to the property by which a confirmed transaction or block becomes irreversible — unable to be reverted, altered, or excluded from the canonical chain — providing participants with certainty that a completed transaction will not be undone.
Flash Loan(flash swap)
A flash loan is an uncollateralized cryptocurrency loan that is borrowed and fully repaid within a single blockchain transaction, enabling users to access large amounts of liquidity without capital provided they return the funds — plus a small fee — before the transaction concludes.
Gas Fee (Ethereum)(Ethereum gas)
A Gas Fee is the transaction cost paid to Ethereum network validators to process and confirm an on-chain operation, denominated in ETH (measured in units called 'gwei'), with the fee level determined by network demand and the computational complexity of the operation being executed.
Gas Limit(block gas limit)
The gas limit in Ethereum and EVM-compatible networks is the maximum amount of computational work — measured in gas units — that a single transaction or an entire block may consume, serving as a cap that prevents computationally unbounded operations from halting the network and regulating throughput at the block level.
Governance Token(voting token)
A governance token is a cryptocurrency that grants its holder the right to vote on protocol-level decisions — such as parameter changes, treasury allocations, and protocol upgrades — for a decentralized protocol or organization, theoretically distributing control over the protocol's future development to its user community.
Halving (Bitcoin)(Bitcoin halving)
The Bitcoin halving is a programmed event that occurs approximately every four years (every 210,000 blocks) at which the reward paid to miners for adding a new block to the blockchain is cut in half, reducing the rate at which new Bitcoin enters circulation.
Hot Wallet(software wallet)
A Hot Wallet is a cryptocurrency wallet that is connected to the internet, enabling fast and convenient transactions but exposing the private keys to potential online security threats, making it suitable for operational balances but not for storing large amounts of digital assets long-term.
Impermanent Loss(IL)
Impermanent loss is the temporary reduction in value that a liquidity provider experiences when the price ratio of two assets in an automated market maker pool diverges from the ratio at the time of deposit, resulting in a portfolio worth less than if the provider had simply held the assets outside the pool.
Initial Coin Offering(ICO)
An initial coin offering (ICO) is a fundraising mechanism used by blockchain projects to sell newly created tokens directly to the public in exchange for established cryptocurrencies or fiat money, often before the project's product is built, used extensively from 2016 to 2018 and subject to significant regulatory scrutiny in the United States.
Initial DEX Offering(IDO)
An initial DEX offering (IDO) is a token launch method where a project lists its newly created token directly on a decentralized exchange — typically by seeding an AMM liquidity pool — enabling immediate public trading without the centralized gatekeeper role played by an exchange in an IEO or the legal structure of an ICO.
Intent-Based Trading(intent architecture)
Intent-based trading is a transaction paradigm in decentralized finance where users specify the desired outcome of a trade — such as receiving at least a certain amount of a target token by a deadline — rather than prescribing the exact execution path, and delegate finding the optimal route to competitive third-party solvers who compete to fill the order.
Interoperability Protocol(cross-chain messaging)
An interoperability protocol is a standardized communication framework that enables independent blockchain networks to exchange data, verify each other's state, and execute cross-chain logic in a trustless or trust-minimized manner, serving as the foundational infrastructure layer beneath cross-chain bridges and multi-chain decentralized applications.
Layer 2 Solution(L2)
A Layer 2 solution is a secondary protocol or framework built on top of an existing blockchain (Layer 1) to increase transaction throughput, reduce fees, and improve scalability without altering the underlying base layer's security model.
Liquid Restaking Token(LRT)
A liquid restaking token (LRT) is a receipt token issued by a restaking protocol that represents a user's restaked position — typically Ether or a liquid staking token deposited into EigenLayer or a similar restaking platform — granting the holder liquidity while the underlying collateral continues to earn both base staking rewards and additional restaking yield.
Liquid Staking Token(LST)
A liquid staking token (LST) is a tokenized receipt issued by a staking protocol that represents a user's staked cryptocurrency position, allowing the underlying staked asset to remain locked in a validator while the holder can freely trade, transfer, or use the receipt token in decentralized finance applications.
Liquidity Pool(LP pool)
A liquidity pool is a smart contract that holds reserves of two or more tokens contributed by liquidity providers, enabling automated market makers and other decentralized finance protocols to facilitate token swaps, lending, and other financial transactions without relying on a centralized counterparty.
Liquidity Provider(LP)
A liquidity provider is any individual or entity that deposits crypto assets into a decentralized finance liquidity pool in exchange for a share of trading fees and, often, additional token incentives, enabling others to swap or borrow those assets through the pool's underlying protocol.
MEV (Maximal Extractable Value)(miner extractable value)
Maximal Extractable Value (MEV) refers to the profit that blockchain validators or miners can capture by selectively including, excluding, or reordering transactions within a block beyond the standard block reward and transaction fees, exploiting their privileged position in the transaction ordering process.
Modular Blockchain(modular blockchain stack)
A modular blockchain is a blockchain architecture that separates the four core functions of a blockchain — execution, consensus, settlement, and data availability — into distinct, specialized layers or chains that can be mixed and matched, as opposed to a monolithic architecture in which a single chain performs all functions.
Multi-Signature Wallet(multisig)
A multi-signature wallet (multisig) is a cryptocurrency wallet that requires approval from multiple private keys before a transaction can be executed, distributing control over funds across multiple parties or devices and eliminating the single-point-of-failure risk associated with standard single-key wallets.
NFT(Non-Fungible Token)
An NFT (Non-Fungible Token) is a unique digital asset recorded on a blockchain whose ownership and transaction history are verifiable and cannot be duplicated, distinguishing it from interchangeable (fungible) tokens like Bitcoin or Ethereum.
Non-Fungible Token (detailed)(NFT)
A non-fungible token (NFT) is a unique, indivisible cryptographic token recorded on a blockchain that proves provenance and ownership of a specific digital or physical item, with each token distinguished by a unique identifier that makes it non-interchangeable with any other token, even those in the same collection.
Oracle (Blockchain)(crypto oracle)
A blockchain oracle is a service or protocol that retrieves verified data from outside the blockchain — such as asset prices, weather data, or sports outcomes — and delivers it on-chain in a form that smart contracts can consume, bridging the inherent gap between deterministic blockchain execution and the variable real world.
Priority Fee (Tip)(miner tip)
The priority fee, also called the tip, is an optional additional payment per unit of gas that a transaction sender includes above the base fee in an Ethereum transaction, paid directly to the block validator as an incentive to prioritize and include the transaction ahead of others offering only the base fee.
Proof of Authority(PoA)
Proof of authority (PoA) is a consensus mechanism in which a pre-approved set of known, identified validators are authorized to produce and validate blocks, with the validators' real-world reputation and legal identity serving as the primary security guarantee rather than computational work or economic stake.
Proof of History(PoH)
Proof of history (PoH) is a cryptographic clock mechanism developed for the Solana blockchain that creates a verifiable, high-frequency timestamp record by computing a sequential chain of SHA-256 hash function outputs, allowing network participants to prove that events occurred in a specific order without relying on synchronized external time sources.
Proof of Stake(PoS)
Proof of Stake (PoS) is a blockchain consensus mechanism in which validators are selected to create new blocks in proportion to the amount of cryptocurrency they have locked up (staked) as collateral, rather than competing through computational work.
Proof of Work(PoW)
Proof of Work (PoW) is a blockchain consensus mechanism in which network participants (miners) compete to solve computationally intensive cryptographic puzzles to validate transactions and add new blocks to the chain, earning cryptocurrency rewards for doing so.
Proto-Danksharding(EIP-4844)
Proto-Danksharding is the first phase of Ethereum's sharding roadmap, implemented via EIP-4844 and activated in the Dencun upgrade in March 2024, which introduces blob-carrying transactions and the KZG commitment infrastructure needed for full Danksharding, while initially limiting throughput to a small number of blobs per block without yet implementing data availability sampling.
Restaking(native restaking)
Restaking is a mechanism that allows validators who have already staked cryptocurrency — typically Ether — to extend that same collateral to simultaneously secure additional blockchain networks, middleware protocols, or decentralized services, earning additional yield in exchange for taking on additional slashing risk.
Rollup (Blockchain)(L2 rollup)
A blockchain rollup is a layer 2 scaling solution that executes transactions off the main chain, batches them together, and posts compressed transaction data or validity proofs back to the base chain, inheriting the security of the base layer while achieving significantly higher throughput and lower transaction costs.
Rug Pull(exit scam)
A rug pull is a fraudulent exit scheme in cryptocurrency where developers or insiders of a project abruptly withdraw all liquidity, dump their token allocations, or exploit a hidden backdoor in a smart contract — leaving investors holding worthless tokens and recovering little to no value.
Sandwich Attack(front-run attack)
A sandwich attack is a form of front-running in decentralized finance where a bot or validator inserts a buy order immediately before a large pending transaction and a sell order immediately after it, profiting from the artificial price movement the victim's trade creates in an AMM liquidity pool.
Security Token Offering(STO)
A security token offering (STO) is a regulated fundraising method in which a blockchain token that explicitly represents a financial security — such as equity, debt, or a revenue share — is sold to investors under applicable securities laws, combining blockchain-based settlement with formal legal compliance.
Seed Phrase(recovery phrase)
A Seed Phrase (also called a recovery phrase or mnemonic phrase) is a sequence of 12 to 24 randomly generated words that encodes the master private key for a cryptocurrency wallet, allowing the entire wallet and all its associated accounts to be recovered on any compatible device.
Slippage (DeFi)(price impact)
In decentralized finance, slippage is the difference between the expected price of a token swap and the actual executed price, caused by price movement between when a transaction is submitted and when it is confirmed, or by the price impact of the trade itself on a liquidity pool.
Smart Contract
A smart contract is a self-executing program stored on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met, eliminating the need for a trusted third-party intermediary.
Soulbound Token(SBT)
A soulbound token (SBT) is a non-transferable blockchain token permanently bound to a specific wallet address, designed to represent verifiable credentials, reputation, achievements, or affiliations that should not be sold or transferred — functioning as a form of on-chain identity rather than a tradeable asset.
Stablecoin(USD stablecoin)
A stablecoin is a type of cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency such as the U.S. dollar, by holding reserves or through algorithmic mechanisms to prevent the extreme price volatility characteristic of other cryptocurrencies.
Synthetic Asset (Crypto)(synths)
A synthetic asset in the cryptocurrency context is a tokenized derivative whose value tracks an external reference — such as a fiat currency, commodity, stock index, or other cryptocurrency — through a combination of collateral and on-chain price feeds rather than direct ownership of the underlying.
Token Vesting(token lock)
Token vesting is a schedule that restricts when founders, team members, investors, or advisors of a blockchain project can sell or transfer their token allocations, designed to align long-term incentives and prevent immediate post-launch sell pressure from insiders.
Tokenomics(token economics)
Tokenomics refers to the economic design of a cryptocurrency or blockchain token, encompassing its total supply, distribution schedule, emission rate, utility, demand drivers, and the incentive structures that govern participant behavior within the protocol.
Utility Token(access token)
A utility token is a cryptocurrency that grants holders access to a specific product, service, or functionality within a blockchain-based ecosystem, theoretically deriving its value from the demand for that utility rather than from any expectation of profit from the efforts of a third party.
Wrapped Token(WBTC)
A wrapped token is a blockchain-based asset that represents another cryptocurrency or real-world asset at a fixed one-to-one peg, allowing the underlying asset to be used on a different blockchain network than the one on which it originally exists.
Yield Farming(liquidity mining)
Yield farming is the practice of deploying cryptocurrency assets across DeFi protocols to earn returns through trading fees, lending interest, and governance token rewards, often involving complex multi-protocol strategies to maximize yield.
Zero-Knowledge Proof(ZKP)
A zero-knowledge proof (ZKP) is a cryptographic protocol by which one party (the prover) can demonstrate to another party (the verifier) that a statement is true without revealing any information beyond the truth of the statement itself, enabling privacy-preserving verification of data on public blockchains.