Crypto Jargon – Explained!

Crypto Jargon – Explained!

Written by

Kyle

March 16, 2022

Are you sometimes confused by unfamiliar words used in DeFi? You don't have to be! Learn what they mean with this crypto glossary. It's a list of common words and phrases and their meanings to help you understand the conversations taking place in the cryptosphere.

“If you want to be a moon-whale, you have to DYOR, then WAGMI, dude!” 

Wait, what? 

Whether you’re new to it or a seasoned trader, the cryptosphere is full of buzzwords and jargon like “moon”, “whale” and “DYOR”. These terms and phrases are the shorthand of the blockchain. If you know them – and what they mean – you can join discussions and perhaps even buck trends to push profits. 

We’ve created a list of common crypto terms to help you walk the talk. By the end of it, you’ll definitely grok the cryptosphere better. 

Glossary of Terms

Everyday words used (and abused) in the cryptosphere. Know them and know what’s up. Or down. 😉

Airdrop

Financial rewards usually in the form of tokens added to your wallet for interacting with new services and protocols in the cryptosphere ecosystem. e.g. UNI tokens awarded to Pillar users for providing liquidity to the Uniswap protocol. This is a marketing tactic commonly used to engage a project’s audience and build community. #freemoney

APY – Annual Percentage Yield

Something of a savings account, this is the crypto version of an Annual Percentage Rate (APR). It provides crypto investments ​​a fixed rate of return over a specific period of time. 

APR – Annual Percentage Rate

The annual interest charged to borrowers or paid to investors, expressed as a percentage. Includes fees but not compounding. Compare with APY.

AML – Anti Money laundering

A set of rules, regulations, laws, and best practices that deter or deny criminals from converting illegally-obtained cryptocurrencies into fiat money. The Financial Action Task Force (FATF), a global organization, sets the standards.

Blockchain 

A decentralized digital ledger that lets a user create, move, or store cryptocurrency. A blockchain keeps digital information, like cryptocurrency tokens, electronically and offers secure and decentralized transaction records. It is transparent and its transactions are anonymous. It uses a consensus mechanism like proof of work to validate parts and processes.

BlockFi – Blockchain finance

A novel, digital, financial sector based on banks that are centralized and regulated. They perform Know Your Customer (KYC) functions to satisfy centralized regulators, offer basic retail and investment banking products, e.g. loans, and a trading platform. Leaders include Celsius, and the eponymously titled BlockFi. Compare with DeFi and TradFi.

CEX – Centralized Exchange

A common online platform that uses a third party to allow investors to transact (e.g. buy and sell cryptocurrencies). When coordinating cryptocurrency trading on a large scale, a CEX leans on a traditional business model of asset exchanges e.g.the stock exchange. CEXs are often the new users go to, and compared to DEXs charge higher fees. Compare with DEX.

Cryptocurrency (crypto)

A digital or virtual currency secured by cryptography, often on a decentralized network using blockchain tech. While still niche, Crypto is increasingly popular with more mainstream investors.

DAO – Decentralized Autonomous Organization

A group of people who have entered into a contract with one another to reach a coordinated goal. This group has no central leader(decentralized), is self-determining (autonomous), and has rules of interaction (organization). It generally uses cryptocurrency to pursue its shared mission.

While it’s pronounced the same way, please do not confuse it with the Dow Jones, an American CEX benchmark index for blue-chip stocks 😉

Smart contracts hold the code that defines the practices and power of each DAO. These can only be changed with member votes. Increasingly, NFT/ Metaverse projects create DAO treasuries to collect funds from their NFT sales. Members can decide how to use the treasury funds and set the future direction of the project.

dApp – Decentralized App

The word, dApp, refers to an application built on a decentralized network that combines a Smart Contract and a frontend user interface. It means any practical application of blockchain and/or cryptocurrency.  Mobile games, communications platforms, and social media sites can all be dApps.

DeFi – Decentralized Finance 

Evolving blockchain-based financial services. DeFi has no central regulatory body, and allows anonymous users. It offers financial products without prejudice or limitation and is mostly available on Ethereum.  Key players include Aave, Uniswap, Compound and MakerDao. Compare with BlockFi and TradFi.

DEX – Decentralized Exchange

An increasingly common peer-to-peer platform or marketplace where transactions occur directly between crypto traders. Transactions are not controlled by TradFi entities like brokers, banks, or any other third-party intermediary; the blockchain is the intermediary. Popular DEXs, e.g. Uniswap run on the Ethereum blockchain.

DYOR – Do Your Own Research

Synonymous with another cryptosphere adage, “don’t trust, verify,” DYOR is a useful acronym about the need to educate oneself before investing. If you’re a fan of decentralized finance, DYOR should be part of your fundamental analysis, and your life in general! To make informed investment decisions, follow reputable sources like posts on the Pillar blog you’re reading right now. Remember, you can #learntoearn from curated Pillar insights and tutorials.  Compare with FUD.

Fiat money 

From the latin term for “let it be done” referring to a formal authorization or decree, fiat money is government-issued currency, often expressed in paper money. It is not backed by a physical commodity of value, like gold, but relies on supply and demand and the government for its stability. 

FUD – Fear, Uncertainty, Doubt. 

The feeling of  – or a  tactic to encourage – negative ideas and thoughts around cryptocurrency. It’s often used to manipulate trade behaviors. This “wall of worry” is common in the volatile digital asset class of crypto, and can cause dips in its growth, but never seems to affect its value for very long. Compare with DYOR.

Gas fee 

The costs involved in transacting on the public ledger. It is priced in gwei (AKA nanoeth), which are tiny fractions of cryptocurrency Ether (ETH). Gas provides the resources that the Ethereum virtual machine needs so that, for example, smart contracts can self-execute. 

HODL

Once an incorrect spelling of “hold”, then a joke acronym for when you’re trying to hold (but failing), HODL now stands for Hold On for Dear Life. Crypto investors who are in it for the longterm do this a lot when the market goes vertical (rises or drops suddenly and extremely).

ICO – Initial Coin Offering

A type of cryptocurrency that raises capital for a business or venture. Investors are given unique cryptocurrency “tokens” in exchange for their investment of cash on an ICO trading platform. 

IDO – Initial DEX Offering

A crypto coin offering on a Decentralized Exchange (DEX). An IDO’s tokens are immediately listed on the DEX, unlike with an ICO’s. Projects can distribute their tokens affordably and easily with IDOs. 

Key

A key is randomly generated numbers and letters of code called a string that enables  cryptocurrency to be transacted with. 

Key-based wallet 

An older digital wallet type that is controlled by a public key  and private key. If you lose your private key, you cannot access the assets in your wallet. Compare with Smart Contract wallet.

KYC – Know your Customer

A regulatory process which requires that financial institutions identify their customers and know the nature of their business. It can restrict anonymity but also builds trust and confidence. On crypto exchanges and in custodian services, this AML legislation can deter/prevent money laundering.

Lambo – Lamborghini

A reference to the aspirational and expensive sports car by the same name. Using lambo refers to hopes for a cryptocurrency’s potential value or the success of getting rich quick through crypto investments and trading. 

LP – Liquidity Provider (tokens)

These tokens are rewarded to users for providing crypto assets, as liquidity, to a DeFi platform. In exchange liquidity providers earn rewards any time an exchange between the tokens they provided occurs . The tokens are your share of the pool and prove it. You can use them to remove your crypto tokens from the pool. They may have additional benefits if you’re staking or yield farming.

e.g.  if you contribute $100 USD worth of assets to a pool that has a total worth of $1000, you would receive 10% of that pool’s LP rewards.

Mint

Creating or producing something on the blockchain by validating information, creating a new block and recording that information into the blockchain. Mint the Pillar Genesis NFT here.

Moon

  1. A currency on a strong upward trend. Often used as an action e.g. mooning. Beware of social media users creating fake news about a currency “mooning” or going “to the moon”. They may be shilling
  2. Reddit’s own currency. It is used to reward user engagement on the social platform. E.g. “karma credits” for comments or commentary. 

NFT – Non-Fungible Tokens

A unique token on various blockchains. NFTs are one-of-a-kind and store information that distinguishes them from other tokens on the blockchain. Popular with collectors of digital art, and increasingly linkedin to intellectual property. 

Non-custodial wallets

A wallet that lets you retain full access to your funds because using it means you own and control the private keys to the cryptocurrency you hold in it. A non-custodial wallet does not require KYC, because its private key makes it more secure. By comparison, a third party holds the private key in a custodial wallet meaning it has full control over those funds and your permission is required only to send or receive payments.

PFP – Profile Picture 

An NFTs that is a  profile picture is called a PFPs

PoC – Proof of Capacity

This is a consensus mechanism algorithm that lets network miners use available hard drive space to decide mining rights and validate transactions. This compares with PoW, which relies on the strength, speed and capacity of the machine doing the mining. It also differs from PoS where access depends on the size of a stake. PoC can be much more equitable, inclusive and energy-efficient than the other algorithms governing mining.

PLR – Pillar tokens

Pillar (PLR) is a  ERC20 governance token on the Ethereum blockchain and sidechains which returns the power to its people and lets them control their personal data. Pillar users can access their PLR in a non-custodial, open-source, and community-run wallet that is a gateway to DeFi & NFTs and so much more! 

PoS – Proof of Stake

A way to process transactions and create new blocks in a blockchain using a consensus mechanism that validates entries and keeps the database secure. It requires users to stake their tokens to become a validator in the network. Validators are responsible for the same thing as miners are in proof-of-work: ordering transactions and creating new blocks so that all nodes can agree on the state of the network. In cryptocurrency, where the ledger is called a blockchain, the consensus mechanism secures it.

PoW – Proof of Work

This is a decentralized consensus mechanism that obliges members of a network to figure out a mathematical puzzle, protects the system and helps prevent its misuse. Proof of work is a way to confirm transactions without involving TradFi institutions and is done by a process called mining, where crytographic strings are decoded by multiple miners to validate transactions.

Public key

When you buy crypto on a trading platform, or exchange, you have the choice to leave your tokens ‘on exchange’ or move them to your own wallet, where you control the keys.

A public key is similar to an email address, in that you can share it with others, and they can send you information (or, digital currency). However, they cannot extract that information or send it under your name because they have no access. That’s what a private key can do.

Private key

When you buy crypto on a trading platform, or exchange, you have the choice to leave your tokens ‘on exchange’ or move them to your own wallet, where you control the keys.

A private key is similar to an email account password. Whoever has it can send an email as yourself. Unlike a public key, a private key in a key-based wallet gives whoever has it total control.

Rarity 

Qualities or attributes that define how rare an NFT in a particular collection is. NFTs have a different mix of qualities which makes each one unique. That said, a single trait can apply to many NFTs.This makes rarity an essential factor in determining the value of a NFT through its properties. Merge the rarity of each trait of an NFT to rank it against another.

Sidechain

A distinct blockchain connected to its parent blockchain by a two-way peg. A sidechain’s rules, functionalities and purposes are independent although it is connected in the ecosystem. Generally, EVM sidechains aim to reduce fees and scale the Ethereum Network. 

Shilling

Not a coin, but directly connected to crypto coins’ projects and NFTs. Promoting a crypto coin or NFT project through advertising, especially in the case of social media influencers endorsing the coins without disclosing that they’re being paid to do so.  A “shill” tries to raise a coin’s price by increasing its demand due to wider positive coverage. TradFi markets ban shilling.  To avoid being influenced by this in the DeFi sector, you should always DYOR( do your own research).

Smart Contract

Blockchain programs or digital agreements that execute transactions between parties once a predetermined condition is met. They improve speed, accuracy, trust and transparency in transactions and performance.

Swap

Exchange cryptocurrency for its equivalent value in another cryptocurrency. 

Smart contract wallet

A crypto wallet that interacts with a smart contract. Pillar V2 is the only community-run, multichain DeFi wallet with one address, low-to-no gas fees, and in-app curated insights to help you ‘learn to earn’.Compare with Key-based wallet.

Token

 A tradable digital asset or utility that resides on a blockchain and allows the holder to use it for investment or economic purposes. 

TradFi – Traditional Finance

Centralized finance regulated by a series of government regulators, with relatively strict Know Your Customer (KYC) controls as a component of large compliance programs, and wider AML. Compare with DeFi and BlockFi.

TVL – Total Value Locked

The total value of crypto assets deposited in a DeFi protocol. TVL is a primary metric for estimating interest in a specific crypto industry sector.

Volatility

How much an asset’s price changes over a period of time. Some currencies are very, very volatile. e.g. “I got my mom a birthday gift!” a trader tells her best friend. “I bought her crypto. I spent $50. $45,59 is a decent amount to spend on a birthday gift, right? I know she’ll appreciate that $52,05. I mean, I would like to be given $55 any day.” 

Whale

Individuals, institutions, and exchanges holding significant amounts of a specific cryptocurrency’s coins.Whales, being so big, can affect markets. 

WAGMI – We Are Going to Make It.

This acronym is commonly used to inspire confidence, and urge the community to remain hopeful.

HODL on, wwwhere to next? 

Ready to go, Moon, Lambo? Equipped with these phrases and fancy words, the crypto highway is all yours. Build your wealth with a wallet that promises a single, unified, multichain experience with high security and low fees.

Before then, remember that you are a welcome member of this growing, growth-oriented community. If you have a word you want translated, or a term you want interpreted, we want to help you. So, you can: 

  • Build your own list of buzzwords with us. Tweet it and tag us – @pillarwallet and we’ll add it to this blog, and include it in our monthly newsletter with honorable mention to you!

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