Crypto glossary
Plain-language meanings of common crypto terms.
- Airdrop
- Free tokens distributed to wallets, often as a reward or promotion.
- Altcoin
- Any cryptocurrency other than Bitcoin.
- AMM
- Automated market maker: a smart contract that lets you swap tokens against a liquidity pool instead of an order book.
- APR
- Annual percentage rate: yearly return without compounding.
- APY
- Annual percentage yield: yearly return including compounding.
- ATH
- All-time high: the highest price an asset has reached.
- Bear market
- A period of falling prices and pessimism.
- Blockchain
- A shared, tamper-resistant record of transactions kept by many computers.
- Bridge
- A tool for moving assets from one blockchain to another.
- Bull market
- A period of rising prices and optimism.
- CEX
- Centralized exchange: a company-run platform for buying and selling crypto.
- Cold wallet
- A wallet whose keys are kept offline, such as a hardware wallet.
- DCA
- Dollar-cost averaging: buying a fixed amount at regular intervals.
- DeFi
- Decentralized finance: financial apps like lending and trading that run on blockchains.
- DEX
- Decentralized exchange: trade directly from your wallet using smart contracts.
- DYOR
- Do your own research.
- ERC-20
- A common standard for tokens on Ethereum.
- FOMO
- Fear of missing out; buying because of hype.
- FUD
- Fear, uncertainty and doubt; negative news or rumours.
- Funding rate
- A periodic payment between long and short traders in perpetual futures that keeps the price close to the spot price.
- Gas fee
- The fee paid to the network to process a transaction.
- Halving
- A scheduled event that cuts Bitcoin's mining reward roughly every four years.
- Hot wallet
- A wallet connected to the internet, such as a mobile or browser wallet.
- KYC
- Know your customer: identity verification required by many exchanges.
- Layer 2 (L2)
- A network built on top of another blockchain to make it cheaper and faster.
- Leverage
- Borrowing to trade a larger position than your own money allows. It magnifies both gains and losses.
- Liquidation
- When a leveraged position is closed automatically because losses have used up its margin.
- Liquidity
- How easily an asset can be bought or sold without moving its price much.
- Market cap
- Price multiplied by circulating supply: a measure of size.
- Memecoin
- A token driven mostly by internet culture and hype rather than utility.
- Mining
- Using computing power to validate transactions and earn rewards on proof-of-work blockchains such as Bitcoin.
- NFT
- Non-fungible token: a unique digital item recorded on a blockchain.
- Perpetual futures
- A derivative contract with no expiry date that tracks an asset's price, often with leverage.
- Private key
- A secret that proves ownership of a wallet. Never share it.
- Rug pull
- A scam where creators drain the funds and abandon a project.
- Seed phrase
- A list of words that can restore a wallet. Anyone who has it can take your funds.
- Slippage
- The difference between the price you expected and the price you got.
- Smart contract
- A program on a blockchain that runs automatically when its conditions are met.
- Stablecoin
- A token designed to hold a steady value, such as $1.
- Staking
- Locking coins to help secure a proof-of-stake network in exchange for rewards.
- TDS
- Tax deducted at source: tax withheld at the time of a payment. In India, 1% TDS applies to many crypto transfers.
- Testnet
- A practice version of a blockchain that uses tokens with no real value.
- TVL
- Total value locked: the amount of assets deposited in a DeFi protocol.
- Whale
- A person or entity holding a very large amount of a cryptocurrency.
- Yield farming
- Moving crypto between DeFi protocols to earn rewards. It carries smart-contract and price risk.