Glossary
Runs offlinePlain-English definitions, no jargon.
57 terms
Basics
- Gas
- The work a transaction costs the network. You pay for the work done, not the value moved, which is why sending $5 and sending $5m cost the same.
- Gwei
- A billionth of an ether, and the unit gas prices are quoted in. When people say gas is at 12, they mean 12 gwei.
- Wei
- The smallest unit of ether. One ether is 10¹⁸ wei — every amount onchain is stored as a whole number of these.
- Nonce
- A counter on your account that goes up by one per transaction. It forces your transactions into order, which is why one stuck transaction blocks everything behind it.
- EOA
- Externally owned account — a normal wallet controlled by a private key, as opposed to a smart contract.
- Seed phrase
- Twelve or twenty-four words that regenerate every key in your wallet. Anyone who reads them owns everything. No legitimate service will ever ask for them.
- Private key
- The secret that authorises spending from an address. Not recoverable, not resettable, not shareable.
- Non-custodial
- You hold the keys and nobody else can move your funds — including the site you are using. The opposite is custodial, where a company holds them for you.
- Cold storage
- Keys kept on a device that never touches the internet. Slower to use, dramatically harder to steal from.
- Testnet
- A practice network using worthless tokens. Everything works the same, so it is the right place to make your first mistake.
- ENS
- Human-readable names for addresses — vitalik.eth instead of forty hex characters. Always confirm the address it resolves to.
Trading
- Slippage
- The gap between the price you were quoted and the price you got, because the market moved while your transaction waited. Slippage tolerance is the worst price you will accept.
- MEV
- Profit extracted by whoever decides the order of transactions in a block. Sometimes harmless, sometimes it is your trade being taxed.
- Sandwich attack
- A bot buys just before your trade and sells just after, pocketing the price move you caused. High slippage tolerance is what makes you worth sandwiching.
- Perpetual
- A futures contract with no expiry date. It tracks spot through funding payments rather than by settling.
- Funding rate
- A periodic payment between longs and shorts that keeps a perpetual near the spot price. Positive means longs pay shorts.
- Liquidation
- Your leveraged position being force-closed because losses ate the collateral. The position is sold whether or not the price comes back.
- Health factor
- How far a borrowing position is from liquidation. Below 1 means it can be liquidated right now.
- Market cap vs FDV
- Market cap counts circulating tokens; fully diluted valuation counts every token that will ever exist. A large gap means a lot of supply is still coming.
DeFi
- AMM
- Automated market maker — an exchange that prices trades with a formula against a pool of tokens instead of an order book.
- Liquidity pool
- A shared pot of two or more tokens that traders swap against. Depositors earn a cut of the fees.
- LP
- Liquidity provider, or the token representing your share of a pool.
- Impermanent loss
- The shortfall between providing liquidity and simply holding. It grows as the two assets diverge in price, and becomes permanent when you withdraw.
- TVL
- Total value locked — how much is deposited in a protocol. A popularity measure, not a safety one.
- APR vs APY
- APR ignores compounding, APY includes it. Protocols quote whichever flatters them, so convert before comparing.
- Staking
- Locking tokens to help secure a network, in return for rewards. Usually comes with a delay before you can withdraw.
- Liquid staking
- Staking that hands you a tradeable receipt token, so your capital stays usable while it earns.
- Slashing
- A penalty that destroys part of a validator's stake for misbehaving or going offline.
- Flash loan
- An uncollateralised loan that must be repaid within the same transaction. Legitimate for arbitrage, and the usual funding source for exploits.
- Stablecoin
- A token designed to hold a fixed value, usually one dollar. How it holds that peg — cash reserves, collateral, or an algorithm — is the part that matters.
- Depeg
- A stablecoin losing its peg. Small ones recover; large ones tend not to.
- Bridge
- Infrastructure for moving value between chains. Historically the single most exploited part of crypto.
- Airdrop
- Free tokens distributed to past users. Also the most common phishing pretext in existence.
- Vesting
- Tokens released gradually rather than all at once, usually to stop insiders selling immediately.
- Unlock
- The date vested tokens become transferable. New supply arrives without new demand.
Security
- Approval
- Permission for a contract to move a specific token from your wallet. It stays live until you revoke it, and unlimited approvals are the norm.
- Allowance
- How much a contract is still permitted to move under an approval you granted.
- Permit
- An approval granted by signature rather than transaction. Costs no gas, leaves no trace in your history, and is the favourite tool of drainers.
- EIP-712
- The standard for signing structured data so a wallet can display fields instead of a hash. Only useful if you actually read the fields.
- Blind signing
- Approving something your device can only show you as a hash. You are trusting the screen that asked, which is exactly the assumption attackers exploit.
- Drainer
- A contract or script that empties a wallet once you sign the right thing. Usually delivered through a fake airdrop, mint or support message.
- Rug pull
- The team behind a token removes the liquidity and disappears, leaving holders with something unsellable.
- Honeypot
- A token you can buy but cannot sell, by design. Always simulate a sell before buying anything unfamiliar.
- Reentrancy
- A contract bug where an external call re-enters the same function before it finished, letting a withdrawal happen twice. The original DAO hack.
- Multisig
- A wallet needing several signatures to act. Removes the single point of failure, and adds the risk that signers approve without checking.
- Safe
- The most widely used multisig contract, holding a large share of DAO and company treasuries.
Technical
- Calldata
- The payload of a contract call — four bytes naming the function, then the packed arguments.
- ABI
- The description of a contract's functions and events. Without it, calldata is unreadable hex.
- Selector
- The first four bytes of calldata, identifying which function is being called.
- Revert
- A transaction failing and undoing all its changes. You still pay for the gas it burned getting there.
- Proxy
- A contract that forwards calls to an implementation that can be swapped out. Convenient for upgrades, and a way for whoever controls it to change the rules.
- Rollup
- A chain that runs transactions off the main chain and posts results back to it, inheriting its security while costing far less.
- Sequencer
- The party that orders transactions on a rollup. Most are still a single operator today.
- Finality
- The point where a transaction can no longer be reversed. Bridges and exchanges wait for it before crediting you.
- Reorg
- The chain reorganising and discarding recently confirmed blocks. Rare on Ethereum mainnet, more common elsewhere.
- Account abstraction
- Letting accounts behave like programmable contracts — batching, gas paid in tokens, session keys, social recovery.
- EIP-7702
- The upgrade that lets a normal wallet temporarily act as a smart account, so an approve and a swap can happen in one signature.
About glossary
Crypto vocabulary explained without using more crypto vocabulary. Grouped by where you are likely to meet each term, and searchable, because the moment you need a definition is usually the moment something is already halfway through happening.