Glossary

Term	Definition
API	Application programming interface. An API is typically hosted on some server (computer), and its sole purpose is to act as a messenger. For example, a frontend application can request specific data from an API, which will then query the database that stores that data and return it to the frontend as a response.
Asset	A "thing" that holds value and can be owned by an individual or organization. Examples of assets are: land, patents, industrial machines, stocks, cash, and crypto.
Backend	The part of software application that is not visible to users. Backends typically handle data processing and storage.
Blockchain	An immutable chain of data blocks that runs on a network of interconnected, distributed computers to create a decentralized system.
Canonical Chain	The longest and most widely accepted series of blocks in a blockchain network. For example, if at some point there are multiple series of blocks, the network will trust the longest one because there is a higher probability that it is the correct version, while the rest may be a result of collusion.
Capital	Capital refers to resources, often in the form of money, that are used for investment or business activities. It can be used to buy assets, fund operations, or generate more wealth. A software company's proprietary algorithm is an example of intellectual capital.
CBDC	A Central Bank Digital Currency (CBDC) is a digital form of a country's fiat currency, issued by the central bank. The issuance of a CBDC gives a central government increased oversight over transactions, and can further reduce the privacy of consumer transactions.
Client	A software program that requests services or resources from a backend server (computer).
Collateral	An asset that you offer as a guarantee when you take out a loan. If you fail to repay the loan, the lender can take the collateral as a form of compensation.
Cross-Chain	Relating to the ability of multiple different blockchains to interact with each other.
Cryptography	The practice of securing communication and data through mathematical techniques.
Database	An organized collection of data that can be accessed, managed, and updated electronically.
Decentralized	A system that no single entity has control over, and decision-making is distributed across multiple participants.
DeFi	Financial services, like lending or trading, that operate on a blockchain without intermediaries. These protocols are typically enforced by smart contracts.
Delta Neutral	A delta neutral strategy involves setting up a financial position where gains in one investment are offset by losses in another. This aims to make the impact of price fluctuations in the underlying asset negligible. An example is buying 100 shares of stock A while simultaneously purchasing 100 put options of stock A.
Distributed System	A network of computers that work together to achieve a common goal. Each computer operates independently but coordinates with others in the system. An example is BitTorrent, which allows multiple users to download pieces of a file simultaneously from different sources.
Economic Freedom	Refers to the ability of individuals to make their own choices about producing, consuming, and exchanging goods and services. It implies minimal interference from the government.
EVM	The Ethereum Virtual Machine (EVM) is a decentralized virtual computing environment, distributed across multiple physical computers, enabling the execution of smart contracts on the Ethereum network.
ERC20	ERC20 is a standard for creating and managing tokens on the Ethereum blockchain. It defines a set of rules that tokens must follow to be easily exchangeable. For example, USDC, WBTC, and CRV are ERC20 tokens.
ERC721	ERC721 is a standard for creating non-fungible tokens (NFTs) on the Ethereum blockchain. Unlike ERC20 tokens which are identical to each other, each ERC721 token is unique. For example, an NFT representing ownership of a unique physical asset can use the ERC721 standard.
Faucet	A website or application that gives away small amounts of cryptocurrency for free. The cryptocurrencies that faucets give out typically have no real-world value, and their primary use case is for testing blockchain applications.
Fiat	Refers to currency that is issued by a government and is not backed by a physical commodity like gold. An example is the U.S. dollar after it came off the gold standard in 1971.
Fork	A general software fork is when the codebase of an existing project is copied to create a new, independent project. For example, Linux distributions are often forks of the original Linux project. In the context of blockchain, a hard fork is a permanent divergence that creates two incompatible chains. A soft fork is a change that allows new rules to be introduced without requiring all users to upgrade their software. For example, Bitcoin Cash is a hard fork of Bitcoin, while SegWit was implemented into Bitcoin as a soft fork.
Frontend	The part of a software application that users interact with An application's website is an example of a frontend.
Gas	A fee required to perform transactions or execute smart contracts on a blockchain. For example, sending Ether on Ethereum requires paying gas fees.
Initial Coin Offering (ICO)	A fundraising mechanism where a new cryptocurrency is sold to the public to raise capital for development.
Layer 1 (L1)	The foundational layer of a blockchain where all transactions are processed and recorded. The Bitcoin blockchain and main Ethereum blockchain are examples of a Layer 1 networks.
Layer 2 (L2)	A secondary network or protocol built on top of a Layer 1 blockchain to improve scalability and speed. The Lightning Network is a Layer 2 solution for Bitcoin. Optimism and Arbitrum One are Layer 2 networks built on top of Ethereum.
Layer 3 (L3)	Refers to the application-level functions and services built upon Layer 2 and Layer 1 technologies. Decentralized applications (dApps) can be considered Layer 3 solutions.
LIFO	Last In, First Out (LIFO) is a method of data storage and retrieval where the most recently added item is the first to be removed, similar to a stack of plates in a cafeteria where the last plate placed on top is the first one taken for use.
Liquidity	How much of an asset is present in a market. For example, higher amounts of liquidity for a particular asset means that trading activity is less likely to significantly affect its market price.
Mempool	A temporary storage area for transactions waiting to be confirmed on a blockchain. For example, when a lot of people are submitting transactions to the Bitcoin network, Bitcoin's mempool can become congested, slowing transaction execution down significantly.
Mutually Exclusive	When two (or more) events cannot occur at the same time. For example, flipping a coin to be both heads and tails at the same time is mutually exclusive.
Native (Token)	The primary cryptocurrency of a specific blockchain platform. For example, Ether is the native token of the Ethereum blockchain.
Network (Ethereum)
Node	An individual computer within a network that participates in the network's functioning. For example, in a blockchain network, a node stores a copy of the ledger.
Non-Custodial	Also known as self-custodial, refers to a system where individuals have full control over their own assets, without relying on a third party (i.e., a bank) for storage. For example, a hardware wallet is a non-custodial storage option for cryptocurrencies.
Opcode	A low-level, machine-readable instruction used for executing commands in a computer. For example, in the EVM, opcodes perform specific tasks like arithmetic calculations or data storage, with each smart contract call translating high-level code into a series of opcodes for execution.
Oracle	An external, off-chain, data source used to provide information to smart contracts. An example is a computer that tracks weather data, performs computation on that data, and updates a smart contract's state periodically with weather information.
Prosperity	Refers to a state of wealth, well-being, and economic success for individuals or communities. A rising GDP often indicates increasing prosperity.
Protocol	A set of rules or standards that define how data is transmitted and processed in a network. For example, HTTP is a protocol for transmitting data on the web.
Render	To process and display a visual output from data or code. For example, the code for a frontend application renders the website on an internet browser.
Server	A server is a computer or system that provides resources, data, or services to other computers, known as clients.
Smart Contract	A smart contract is a self-executing agreement with the terms directly written into computer code. It automatically performs actions between parties when predefined conditions are met. For example, a smart contract could automatically transfer ownership of a digital asset to a buyer once the agreed-upon price is received.
Stablecoin	A type of cryptocurrency whose value is pegged to a more stable asset, like a fiat currency. Examples include USDC, USDT, and DAI.
Stack	A stack is a data structure that operates on a LIFO principle, allowing data to be stored and accessed through two primary operations: push, which adds an element to the top of the stack, and pop, which removes the most recently added element. For example, in the EVM, a stack is essential for executing opcodes in smart contracts, where each operation like adding two numbers involves pushing operands onto the stack, performing the operation, and then pushing the result back onto the stack.
Tokenomics	The study of the economic model surrounding a cryptocurrency or token.
Transaction	The act of transferring assets or data between parties.
Trustless	In a "trustless" system, the integrity is guaranteed by code and mathematics, eliminating the need for trust between parties.
Web3	A buzz word used to encapsulate a new paradigm for applications on the internet that incorporate blockchain, decentralized protocols, and smart contracts.