GlossaryGlossary
In this glossary you will find all the important terms relating to Web 3.0.
A
Account-Based Model
A model that is used by Ethereum to process transactions within the network. The balance of each user is stored in a similar way to a bank account.
Airdrop
A method in which tokens are distributed free of charge to specific wallet addresses.
Alchemy
An infrastructure platform that offers developers tools and services to create DApps.
Altcoin
All cryptocurrencies that were created after Bitcoin (the first cryptocurrency).
Automated Market Maker
A decentralized exchange protocol from the field of decentralized finance that relies on a mathematical formula to determine an assets value. It enables automatic and permissionless trading of digital assets with the help of liquidity pools.
B
Beacon Chain
An interim solution developed in parallel to the Ethereum main blockchain for the transition from the Proof of Work to the Proof of Stake mechanism.
Bigchain DB
A database system that combines blockchain properties and can serve as a database as well as a blockchain.
Block
A set of data containing transactions and other blockchain-dependent information. The content of a valid block is determined by the consensus mechanism of a blockchain and added to the network as a part of the blockchain.
Block height
The position of a block in the blockchain
Block Reward
The reward that miners receive for adding a new block, which usually consists of a combination of new coins and transaction fees.
Block size
The maximum amount of data that can be stored in a block of a blockchain and refers to the number of transactions that are processed in a block. Although a larger block size allows more transactions per block, it is also linked to a greater demand on storage space and therefore affects the performance for creating new blocks.
Blockchain
A decentralized database that is replicated on many computers in the network and stores information in consecutive blocks that are cryptographically linked to each other.
Blockchain Governance
The way in which decisions are made in a blockchain network. This can be enabled either by code or by social consensus building.
Blockchain Trilemma
A concept that describes the difficulty of maximizing the three main objectives of a blockchain, consisting of security, decentralization and scalability.
Borrowing
Refers to the lending of a cryptocurrency or cryptotoken with the help of a DeFI platform.
Bridges
Protocols that make it possible to transfer assets or information between two different blockchains.
Burn
The procedure of permanently removing tokens from the existing supply by (usually) sending the token to a wallet that cannot be accessed.
Byzantine fault tolerance
A property of distributed systems that ensures that the system functions even if one or more nodes fail.
C
Canonical block
The newest officially recognized block in a blockchain, relevant when there are several valid blocks at the same time (Fork).
CBCD (Central Bank Digital Currency)
A digital currency that is intended to be issued by a central bank and is also known as blockchain-based, digital central bank money.
Censorship Resistant
A central blockchain feature that prevents information from being changed once they have been accepted as part of a ledger.
Chainstack
A platform that provides tools and infrastructure to facilitate the launch of blockchain projects.
Coinbase transaction
A transaction that rewards miners for their work in validating and adding new blocks to the chain.
CoinJoins
An approach of coin mixing in which several users combine their transactions into a single transaction. This makes it difficult to determine the origin and destination of each individual transaction.
CoinMixing
A procedure in which the transactions of several users are combined in order to increase the privacy and anonymity of the transactions.
Consensus Protocol
Describes a procedure in which all participants in a blockchain network reach an agreement on the true state of the network. The consensus refers to the data and transaction history of the network and is intended to ensure the integrity of a blockchain.
Cross Chain Interoperability
The capability to interact between different blockchain protocols and exchange information and assets.
Custodial
A service that stores cryptocurrencies and therefore the private key for the user.
D
DAO
The term for a Decentralized Autonomous Organization which is built on the blockchain and finds decisions through a democratic decision-making process.
DAO Treasury
The funds held and managed by a decentralized autonomous organization.
Data Storage
The way in which data is stored in the blockchain. The data is first split, replicated, encrypted, and finally distributed to the various nodes recorded in the blockchain ledger.
Data Structure
Refers to organized and systematic ways of storing and organizing data in the blockchain so that it can be retrieved and modified efficiently. Often used are Structures such as hash trees and linked lists.
Decentralized
A system without a central control instance in which the data is distributed across many nodes that act independently of each other.
Decentralized Applications (DApps)
Smart contract-based applications that run on a blockchain and can be accessed via a web based front end.
Decentralized Exchanges (DEX)
An exchange based on blockchain and smart contracts for buying and exchanging cryptocurrencies.
Decentralized Finance (DeFi)
A collective term for financial applications and products based on blockchain technology.
Decentralized Message Communication Protocols
Protocols that enable decentralized communication between nodes or users.
Decentralized Storage
A decentralized storage system in which data is distributed to many computers or nodes in the network.
Delegation
A process in the proof-of-stake mechanism in which your own coins are “lent” to a pool in order to receive rewards later.
Deterministic
Something that always produces the same result when executed with the same inputs.
DEX Aggregator
A service that links to various decentralized exchanges and thus helps to obtain the best price for the exchange of tokens.
Digital Signature
A method to verify and prove the authenticity of digital messages or documents.
Distributed
The distribution of data and processes to different nodes.
Double Spending Problem
The multiple issuances of one and the same Coins, which is solved by using the blockchain and its consensus mechanism.
E
EIP (Ethereum Improvement Proposal)
A formal proposal to improve or expand the Ethereum platform.
Elliptic Curve Libraries
Software libraries that implements cryptographic functions based on elliptic curves and is used to create private and public keys.
Epoch
Describes a period of time in the blockchain world that specifies when a new block will be added to the blockchain, rewards will be distributed or when updates will be carried out.
ERC (Ethereum Request for Comment)
A type of EIP that proposes certain standards in the Ethereum ecosystem.
Ethereum clients
Software applications that make it possible to interact with the Ethereum network. Ethereum clients can send transactions, execute smart contracts or act as nodes in the network themselves.
Ethereum enterprise Alliance
An organization that develops standards for companies to use Ethereum technology.
Ethereum Gas Station Network (GSN)
A network that allows DApp users to transact without paying Ether for gas by having a third party (relayer) and the DApp developer covering the costs.
Ethereum Geth Consoles
A console application provided by Go-Ethereum (Geth) that allows you to interact with the Ethereum blockchain.
Ethereum Name Service
A decentralized Ethereum service that converts public Ethereum addresses into human-readable names and is similar to the Domain Name System (DNS) of the Internet.
Ethereum Virtual Machine (EVM)
The environment in which all smart contracts can be executed on Ethereum.
Etherscan
A website and interface to check and search Ethereum transactions, nodes and smart contracts.
External Owned Accounts
Represent the individual users in the Ethereum blockchain.
F
Farming
Describes receiving rewards by providing personal crypto assets for Yield Farming.
Fee
Refers to the transaction fee that has to be paid to execute a transaction on the blockchain network.
Fiat
The currency issued by the national states, such as the US Dollar or Euro.
Flash Loans
Loans that are taken out and repaid within a single blockchain transaction and are therefore also referred to as Flash Loans. Users can take out loans without having to provide collateral. The loan must, however, be repaid within a blog creation in the blockchain network.
Forging
Refers to the process of creating new blocks in a blockchain.
Fork
Refers to the fork of a blockchain from the main blockchain. A distinction can be made between a hard fork (fork of the blockchain from the previous main blockchain) and a soft fork (the nodes of the mainchain receive an update).
Fractionalized
Refers to the division of a single asset into several small individual parts.
Full Node
A network node with a complete copy of the blockchain database that validates transactions in the network. It helps to decentralize the network and keep it secure.
Fungible token
A digital value existing on the blockchain that is equivalent and therefore interchangeable through individual units. Each fungible token is therefore equal to another fungible token from the same project collection.
G
Gas
The unit within the Ethereum ecosystem that measures the amount of computational work required to execute transactions or smart contracts.
Genesis block
The first block in each blockchain that is created manually and thus initiates the blockchain.
Gwei
A unit used to represent gas prices in the Ethereum network. 1 Gwei = 109 Wie.
H
Hardhat
An Ethereum development tool that makes it easier for developers to write, test and debug smart contracts.
Hash Algorithm
A procedure that converts any input into a defined output value (hash).
Hash Collision
An event in which two different input data produce the same hash output value. Which is basically impossible.
Hash Tree
A Data structure that allows the volumes of data within a blockchain to be aggregated and validated.
Hashing Power / Hash Rate
A measure of the computing power provided by miners in a proof-of-work blockchain system.
HD Wallet
A wallet that generates a tree structure of keys from a single seed and thus enables an infinite number of addresses from a single private key.
Hybrid Blockchain
A blockchain that contains elements of a private as well as a public blockchain.
I
ICO (Initial Coin Offering)
In the crypto world, a way of raising capital by selling created cryptocoins or crypto tokens.
Immutable
Characteristic that describes that once certain data has been added, it cannot be changed again.
Indexers
Entities or services that organize blockchain data and provide it upon request.
Infura
A blockchain development environment that offers various tools and services to establish a connection between the Ethereum protocol and IPFS.
Interoperability
The abiability of blockchain networks to communicate with each other.
Interplanetrat File System (IPFS)
A distributed file system that enables the storage and retrieval of files via a peer-to-peer network.
L
Latency
The time until a transaction is confirmed in the blockchain network.
Launchpad
Platform for launching crypto projects, such as an Initial Coin Offering (ICO).
Layer 1
The basis of the blockchain infrastructure. Popular layer 1 blockchains are Bitcoin or Ethereum.
Layer 2
Protocols that are based on layer 1 to improve scalability by taking parts of the transaction processing from the main blockchain.
Ledger
The accounting system of the blockchain, which is administered in a decentralized database and by several participants.
Lending Pools
Smart contracts that enable users to borrow Values by depositing certain collateral and then paying interest on it. Lending pools are a concept from the field of decentralized finance.
Light Node
A node that downloads parts of the blockchain rather than the entire one.
Linkable Ring Signature
A cryptographic method that enables a user to sign a message without revealing his or her identity.
Liquidity Pool
A collection of funds that are locked in a smart contract. They serve to facilitate trading by providing liquidity.
Local blockchain simulation
A local environment that mimics the behavior of a real blockchain and is used for development and testing purposes.
M
Market Cap
The total value of a cryptocurrency network, which is calculated by multiplying the price of a single unit by the total number of tokens or crypto coins in circulation.
Market Maker
An entity that provides offers to buy and sell an asset at a certain price, thereby creating liquidity for buyers and sellers.
Maximal Extractable Value (MEV)
The maximum profit that a miner or network validator can achieve by prioritizing transactions with higher fees. While this can lead to higher returns, it also raises questions about the fairness and security of blockchain networks.
Mempool
A pool of transactions that have not yet been confirmed by a blockchain network.
Merkle Proof
A method of proof that can verify the connection of a transaction to a block in a blockchain without requiring the entire block.
Merkle Tree
A data structure used in blockchains to verify data integrity and ownership.
MiCA (Markets in Crypto – Assets Regulation)
A proposal for a regulation of the European Union to regulate crypto-assets and related services.
Mining
Calculating, Validating and adding new blocks in a proof-of-work blockchain.
Moralis
A third-party service that provides DApp developers with a fully managed backend infrastructure for Decentralized Apps.
Multi Ledger System
A system that enables interaction between different blockchains
Multichain
A software for companies that makes it possible to create and manage private blockchains.
Multisignature Wallet
A wallet that requires more than one private key to execute transactions. Multisignature wallets make it possible to distribute control of the Crypto Values in a Wallet among several actors and are used particularly for DAOs.
N
Nakamoto coefficient
A measure of the decentralization of a network. The coefficient indicates how many entities must be controlled in order to obtain the majority of the hash power within a network. The higher the Nakamoto coefficient, the higher the decentralization of the network.
Non Custodial
Usually wallets where users have full control over their keys and thus also over their cryptocurrencies.
Non Fungible Token
A digital value that exists on the blockchain and is unique. Each NFT has a unique identification number that in combination with its address distinguishes it from other tokens.
Nonce (Number only once used)
A unique value or a random number that is used in cryptographic processes and especially in mining. In the proof of work process, the miners work to find the nonce and attach it to the hash value of the respective block.
O
On-chain data
Data that is stored on the blockchain and makes it possible to analyze network activities.
Optimistic rollups
A possible variation of rollups in which transactions are initially assumed to be valid and only confirmed after a specified period of time. Certain fraud detection mechanisms are used to prove the validity of the transactions.
Oracle
A third party or service that integrates off-chain data into a smart contract, allowing external data to be accessed.
Orphan Block
A block that is not added to the chain of the main blockchain. It is created when two miners find a block at the same time but only one of these two is added to the blockchain.
Over-Collateralization
Describes a process in which the borrower needs to deposit a higher value of assets as a collateral deposit compared to the value of the borrowed loan. This process is intended to minimize the credit risk in the DeFI sector in order to counteract the strong price fluctuations of cryptocurrencies.
P
Peer – to – peer network (P2P)
A decentralized network in which individual participants (peers) communicate directly with each other and share data without having to rely on a central authority.
PFP
Represents the term “Profile Picture” and is used to characterize NFT art used as a profile picture.
Pinata
A service that allows users to upload and manage files in IPFS.
Plasma
A scaling solution for the blockchain that aims to create hierarchical blockchains in the form of “child chains” connected to the main chain, contributing to faster transaction speeds and lower fees.
Private Key
A secret, cryptographic key that enables the owner to access the crypto assets associated with it. Anyone who has access to the private key also has control over the associated assets. The private key corresponds to a public key.
Proof of Liquidity
A consensus mechanism in which the existence of a certain amount of liquidity or resources is verified.
Proof of ownership
The ability to prove that a user actually owns a digital good or asset.
Proof of Stake
A consensus algorithm in which the respective network participants add new blocks to the blockchain. In this process, transactions are confirmed by validators that have been selected by other network participants and delegated to the cryptocurrencies.
Proof of Work
A consensus algorithm in which participants have to solve complex mathematical tasks in order to add a new block to a blockchain.
Public Key
A cryptographic key that is derived from a private key and serves as an address for receiving crypto assets. It can be shared without security concerns and is used to verify crypto transactions in the blockchain network.
R
Real Wold Assets (RWA)
Real physical assets (e.g. real estate or commodities) that are represented on a blockchain using tokens.
Relay Node
A node that forwards information within a blockchain network without owning the full copy of the blockchain. Relay nodes do not validate transactions but are instead responsible for scaling the network.
Rollups
Rollups are a possible Blockchain scaling solution in which transactions are bundled on the layer 2 and then written to the main chain. Rollups are intended to process transactions faster and more cost-effectively while benefiting from the security of the main chain.
Royalties
Automated payments to creators when their digital token is sold.
S
Security Token
A digital token that is seen as a real financial asset and therefore requires the supervision of a financial authority.
Seed-Phrase
A series of words generated by a Crypto Wallet that grants the user access to the contained crypto assets.
Sequencer
A component that is responsible for organizing and compressing transactions before they are recorded in the block and written to the (layer 1) blockchain. Sequencers play a crucial role in the area of layer 2 scaling.
Sharding
Refers to a possible Blockchain scaling solution in which the structure of the network is divided into smaller parts (shards). Each shard then receives its own transaction history and processes the transactions via its own validators. As a result, the blockchain will have a higher throughput, making the network more scalable.
Sidechain
A separate blockchain linked to a layer 1, which enables the exchange of assets and functions according to its own protocols and rules.
Signature
A cryptographic tool that can be used to prove that a change has been made.
Smart Contract Accounts
Represent smart contracts that have their own Ether balance and can send and receive Ether themselves.
Smart contracts
Self-executing contracts that have the contractual terms written directly in the code. They exist on the blockchain and are executed when certain conditions are met.
Software Development Kit (SDK)
Software packages that provide tools and libraries for the development of blockchain applications.
Solidity
The most used programming language for the development of Ethereum smart contracts, developed specifically for the Ethereum Virtual Machine.
Stablecoins
Crypto token that represent a stable asset, such as the US-Dollar, gold or other assets.
Stakepool (operator)
A pool in proof-of-stake systems to which users delegate funds so that they can secure the blockchain and receive block rewards in return.
Staking
Delegating coins to a stake pool to ensure the network security of a Proof of Stake blockchain network and receiving rewards for it.
State Channels
A concept for scaling a blockchain. This refers to a two-party communication channel that is opened with an initial transaction, enables an infinite number of transactions between the two parties off-chain and is closed again with a final transaction. State channels can be used particularly in the area of micropayments between two parties.
State machine
An abstract machine that moves to a new state based on a current state and the input data.
Stealth address
An address that is generated uniquely for each transaction to increase the recipient’s privacy.
Swarm
A decentralized storage system from Ethereum that enables the distributed storage of data and content.
T
Testnet
An alternative blockchain used by developers to test the functionality of their smart contracts.
Timestamp
Refers to the timestamp at which a transaction or block was added to the blockchain.
Token
A digital asset created within a blockchain.
Token-ID
An unique token identifier that distinguishes it from other tokens in the blockchain system.
Total Value Locker (TVL)
Describes a key indicator (typically in US dollars) that reflects the total value of all digital assets stored in a blockchain or DeFI protocol.
Trace Vulnerability
A security problem in which an attacker can influence the execution of a smart contract.
Transaction Fees
The fee for sending and processing a transaction in a blockchain network.
Transaction per Second
A measure of the performance of a network that indicates how fast transactions can be processed by a blockchain.
Transaction Pool
An area in which unconfirmed transactions are stored in a blockchain before they are included in a block.
Transaction Time
The amount of time it takes for a transaction on a blockchain to be completed.
Transactions
Transactions represent the transfer of crypto values within a blockchain. Each transaction within a blockchain is checked and stored in a block.
Turing Complete
A system or a programming language is Turing complete if it is capable of executing every possible algorithmic operation or every calculable function.
U
Utility Token
A crypto token that has no direct financial value but fulfills a specific purpose within a particular project or system.
UTXO
The UTXO model (unspent transaction output) is used to process transactions within the network. The output of a transaction always represents the input of the next transaction. This is to ensure that only crypto Values that are actually owned are transfered.
V
Validator
The chosen network participant in Proof of Stake blockchains to whom crypto values are delegated in order to validate transactions and create a new block.
Validium
A scaling solution that similar to zk Rollups uses proof of validity to prove the legitimacy of transactions. In contrast to zk Rollups, the transaction data is not stored on the main chain but off-chain.
Vyper
A programming language for the development of Ethereum smart contracts. It‘s an alternative to Solidity.
W
Wallet
Usually a software or hardware solution that stores private keys and enables users to send and receive cryptocurrencies.
Wallet Connect (WC)
An open protocol that enables wallets to connect to DApps.
Wallet Infrastructure Aggregator
A service that combines multiple wallet solutions to manage various crypto assets from different blockchains.
Wei
The smallest Ether unit in the Ethereum network. 1 Wei = 10^-18 Eth
Wrapped Token
A token that is intended to reflect the value of a cryptocurrency that exists on another blockchain in order to simplify cross-chain transactions.
Y
Yellow Paper
A technical document that describes the specifications of the blockchain protocol.
Yield Aggregator
A Platform that aims to automate the yield farming process and therefore maximize potential returns.
Yield Farming
A term from the field of decetralized finance in which owners of cryptocurrencies deposit their assets in a decentralized protocol and thus grant loans to other users and receive interest on them in the form of cryptocurrencies or crypto token.
Z
Zero Knowledge Rollups (zK – Rollups)
A zero knowledge rollup (zK rollup) is a possible variation of rollups that uses proof of validity to verify transactions made outside the main chain and then write them to the main chain in compressed form.
ZK – SNARKs
A concept that allows it to provide evidence of a transaction without revealing the specific information about the sender. Zk Snarks are often used with privacy coins.