The world of cryptocurrency is constantly changing, and staying up to date with the latest crypto terms and definitions can be difficult. FTT DAO is here to help with our comprehensive crypto glossary. From altcoins to collateralization ratio, we have you covered.
Altcoins are “alternative coins.” It’s a broad term used to characterize all cryptocurrencies other than Bitcoin.
Automated market maker (AMM)
A decentralized crypto exchange that effectively removes the need for intermediaries in transactions. Rather than using traditional order matching systems, automated market makers use autonomous protocols.
A distributed database that is upheld by a network of computers, known as nodes. A blockchain ensures accuracy and security of transaction data without the need for a trusted third party.
BUIDL is a play on the word “Build,” similar to how HODL is a play on the word “Hold.” While HODL refers to “holding on for dear life” to investments in which HODLers have strong conviction in, BUIDL is a call for developers to build and contribute to the growth and success of cryptocurrency.
Centralized exchange (CEX)
A centralized platform which facilitates cryptocurrency transactions between fiat currencies or digital assets. Like traditional brokerages, centralized exchanges serve as trusted intermediaries for crypto trades and custodians for storing and protecting user funds.
A cold wallet is an offline device used to store cryptocurrency. Since cold wallets are not connected to the internet, they are more secure but less user-friendly, making them ideal for long term crypto storage.
In crypto lending, collateral is the cryptocurrency that the borrower pledged to lenders as a guarantee that they will repay the loan.
When a borrower cannot repay their crypto loan, the collateral they pledged to the lender gets liquidated to enforce the payment.
The collateralization ratio measures the ratio between how much collateral a borrower pledges and the value of the loan they received.
A digital collectible is a unique copy of a virtual item that’s bought and sold by collectors. There’s usually a visual element attached to it, such as digital art or a video clip. Collectibles can carry varying traits which affect their rarity and value.
A crypto derivative is an instrument used to speculate on the future price of an asset. It’s not the underlying asset itself, but rather a derivative of the asset which buyers and sellers agree to buy or sell for a pre-determined future price.
Futures are a very popular type of crypto derivative. It’s a commitment between a buyer and a seller to buy and sell a cryptocurrency for a set price at a pre-determined future date
A node is a computer that connects to a cryptocurrency’s blockchain network. Nodes secure and support the network by serving as the validation and relaying points for transactions. Nodes hold a full copy of the blockchain’s transaction history to ensure accuracy and prevent manipulation of the network.
Options are another type of crypto derivative contract that lets buyers and sellers transact a cryptocurrency at a set price on a future date. However, unlike futures contracts, buyers have the option to not buy the cryptocurrency if they choose.
Similar to any investment portfolio, a crypto portfolio is a way to manage a collection of cryptocurrency investments.
Staking is a way to earn passive income in crypto. A user locks up their funds in a cryptocurrency wallet to validate transactions taking place on a proof-of-stake blockchain. Stakers earn rewards paid out in new tokens for contributing their assets to the network.
An online platform that facilitates the conversion from fiat currencies to digital assets. Cryptocurrency exchanges collect fees for providing their services.
Decentralized application (dApp)
A digital platform that lives on a blockchain network, placing them outside the control of any central authority. DApps are developed for a variety of decentralized services, including blockchain gaming, finance, social media, and more.
Decentralized autonomous organizations
A decentralized autonomous organization (DAO) is a self-governing organization that operates according to its community of members instead of a central decision maker. DAO members vote on proposals and decisions through blockchain technology by using tokens to represent their voice.
Decentralized cross-chain exchange
A peer-to-peer marketplace that facilitates cryptocurrency exchange between two distinct blockchains. Unlike a traditional centralized exchange, traders can make direct transactions without granting control of their crypto to an intermediary or custodian.
Decentralized exchange (DEX)
A peer-to-peer cryptocurrency exchange that allows users to transact with others directly without the need for an intermediary. Fees are collected by the DEX and distributed to users who choose to lock up their assets in the DEX for liquidity, rather than having the fees distributed to a singular company, as is the case with traditional centralized exchanges.
DeFi stands for decentralized finance. DeFi is an ecosystem of financial services that operate on public blockchain technology.
A decentralized platform that collects liquidity by sourcing it from multiple different DEXs. Using complex algorithms, the aggregator calculates and determines the best trade for users.
A virtual asset that is issued using blockchain technology and can be bought or sold by investors and traders.
A digital ledger is a record of financial transactions, also known as a “blockchain.” The ledger constantly grows longer as new blocks containing batches of transaction records are added to it.
Fiat is a form of money that’s issued by the government and contains no backing to real assets. With no backing, central banks can control how much money is printed. The majority of modern currencies, such as the US Dollar, Euro, or Yuan, are fiat currencies.
The cheapest price at which a non-fungible token (NFT) can be purchased for.
A social platform for token creators to engage and communicate with their communities.
A program that stores private and public keys for users, allowing them to transfer and receive cryptocurrencies as well as monitor their crypto balances.
Users pay “gas fees” for blockchain transactions to compensate for the computation energy needed to process those transactions.
Tokens that are used to vote on decisions for a given blockchain protocol. In many cases, decentralized autonomous organizations (DAOs) utilize governance tokens to give control of the project’s direction to their members.
An online wallet that stores cryptocurrency, typically within a software program or built-in to internet browsers. While they are convenient and easy to access, hot wallets offer less security since they are connected to the internet and could be vulnerable to online attacks.
The ease at which cryptocurrencies can be swapped for other digital assets or fiat currencies. The lower the liquidity there is in a market, the more the price can be manipulated by transactions. On the other hand, higher liquidity means more stable price action.
A liquidity pool serves as the backend of a decentralized exchange (DEX). Just as centralized exchanges supply their own liquidity for their platforms, a liquidity pool uses smart contracts to allow users to lock up their assets or let traders on a DEX use for token swapping.
The trading fees that are charged to those who add liquidity to an exchange’s order book through limit orders. Since these traders are adding liquidity, they are “market makers.”
Margin refers to borrowed capital from other traders or the exchange itself which traders use to increase their exposure to a cryptocurrency in a trade. This form of trading is called “margin trading.”
Market capitalization, or market cap, represents the total value of all the circulating coins or tokens of a cryptocurrency’s supply. You can calculate a project’s market cap by multiplying the coins or tokens in circulation by the current market price of one coin or token.
A cryptocurrency that’s inspired by memes on the internet.
The metaverse is a concept of a virtual universe that runs in parallel to the real world. It emulates reality through a digital landscape, enabling greater possibilities for online interactivity and connectivity.
The act of creating or producing a crypto coin or token. For example, people can mint non-fungible tokens (NFTs) or mint new cryptocurrencies through mining or staking.
Non-fungible token (NFT)
A unique digital asset on a blockchain that holds distinct metadata to distinguish it from other tokens. Whereas any single bitcoin is fungible, as it can be replaced by another and retain the same value, non-fungible tokens cannot be replaced and retain the same value.
The event in which a non-fungible token (NFT) project goes live to its community.
Off-chain order book
A database of exchange orders overseen by a centralized entity outside of a blockchain. An off-chain order book connects two parties together to make offers on the asset and can restrict access to view or submit to the order book.
On-chain order book
A database of exchange orders that are hosted and confirmed directly on a blockchain network. Since the order book is on-chain, anyone has access to a copy of the order book and can submit their own orders, assuming it’s a public blockchain.
Proof of History
A new type of consensus mechanism that uses timestamps to validate transactions. The timestamps help validators determine the length of time between two events taking place on a blockchain, which enables much faster settlement time. Solana is a popular blockchain that utilizes Proof of History.
Proof of Stake
A popular consensus mechanism that uses validators to stake cryptocurrency in order to validate transactions on the network. Ethereum and Cardano are popular blockchains that implement Proof of Stake.
Proof of Work
The original consensus mechanism pioneered by Bitcoin. With Proof of Work, crypto miners compete to solve complex algorithms in order to add new blocks to the chain, while a network of computer nodes validate transactions in each block.
Security tokens are blockchain-based tokens that represent ownership of company. They enable greater flexibility for a company by serving as a different form of investment vehicle. Since they represent traditional company shares, they share the same regulation treatment as well.
A smart contract is a set of code that enforces the negotiation of an agreement between two parties, thus eliminating the need for a third party to facilitate the contract.
A form of cryptocurrency that’s designed to stay steady in price, typically pegged to the value of a fiat currency.
Trading fees that are charged to those who remove liquidity from a crypto exchange’s order book through market orders. Since these traders are removing, or taking away, liquidity, they are “market takers.”
A token is denomination of a cryptocurrency. Tokens are tradable assets that live within a blockchain’s ecosystem, and provide their own utility, allowing their users to hold them as an investment or for interacting with decentralized finance (DeFi) protocols.
Tokenomics refers to the monetary policy of a cryptocurrency. Tokenomics cover the cryptocurrency’s economics, such as incentives or burning mechanisms, as well as its distribution and value.
Total Value Locked (TVL)
Total value locked (TVL) measures the sum of the value of all assets living within a decentralized finance (DeFi) protocol. Each DeFi protocol has its own TVL, and the total sum of each DeFi protocol’s TVL makes up the TVL of their overlying blockchain.
Utility tokens are a type of cryptocurrency that carry their own unique function, such as granting holders access to future product or service launches, fueling blockchain game ecosystems, and more. Unlike security tokens, utility tokens don’t represent ownership of company shares. However, they share similar economic dynamics, allowing them to grow in value if sufficient demand is there for the utility token.
Volatility measures the price swings up and down of a cryptocurrency or any financial asset. The smaller a project is, the more subject it is to volatility, as it requires less money to affect the overall value of the project.
A decentralized finance (DeFi) strategy in which users lend or stake cryptocurrency in liquidity pools to earn rewards through transaction fees that are collected and distributed by a decentralized exchange (DEX).
Learning Crypto Terminology with FTT DAO
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