Web3 Glossary
Web3 represents the next evolution of the internet, emphasizing decentralization, blockchain technology, and user ownership. This glossary provides definitions for key Web3 terms, helping you navigate the decentralized world with ease.
A
Airdrop: The distribution of free tokens to users, often as a promotional strategy or reward for early adoption.
AMM (Automated Market Maker): A decentralized exchange mechanism that uses smart contracts to create liquidity pools.
Asset Tokenization: The process of converting real-world assets into blockchain-based tokens.
B
Blockchain: A decentralized and distributed ledger that records transactions across multiple computers.
Bridge: A protocol that enables the transfer of assets between different blockchains.
Burning: The process of permanently removing tokens from circulation to reduce supply.
C
Consensus Mechanism: The method used by blockchain networks to validate transactions (e.g., Proof of Work, Proof of Stake).
Crypto Wallet: A digital tool used to store and manage cryptocurrencies and NFTs.
Cross-chain: The ability of different blockchains to interact and transfer assets.
D
DAO (Decentralized Autonomous Organization): A community-driven organization governed by smart contracts and token holders.
DApp (Decentralized Application): An application that runs on a blockchain rather than centralized servers.
DeFi (Decentralized Finance): Financial services built on blockchain without traditional intermediaries.
E
Ethereum: A blockchain platform that enables smart contracts and DApps.
ERC-20: A widely used token standard on Ethereum for fungible tokens.
ERC-721: A standard for non-fungible tokens (NFTs) on Ethereum.
F
Fiat On-ramp/Off-ramp: Services that allow users to convert fiat currency into crypto and vice versa.
Fork: A split in a blockchain that results in two separate versions of the network.
Fractionalization: The division of a high-value NFT or asset into smaller tradable parts.
G
Gas Fee: The transaction fee required to process operations on a blockchain.
Genesis Block: The first block of a blockchain.
Governance Token: A token that grants holders the right to vote on protocol decisions.
H
Hashing: The process of converting data into a fixed-length string using cryptographic algorithms.
HODL: A crypto slang term meaning to hold assets long-term instead of selling.
Hard Fork: A major update that results in a new blockchain version.
I
ICO (Initial Coin Offering): A fundraising method where new crypto tokens are sold to investors.
Interoperability: The ability of different blockchains to communicate and work together.
IPFS (InterPlanetary File System): A decentralized file storage system used for Web3 applications.
J
- Jager: The smallest unit of Binance Coin (BNB), similar to Satoshi in Bitcoin.
K
KYC (Know Your Customer): A process used by crypto platforms to verify user identities.
Key Pair: A set of cryptographic keys (public and private) used in blockchain transactions.
L
Layer 1: A base blockchain like Ethereum or Bitcoin.
Layer 2: A scaling solution built on top of Layer 1 to improve speed and reduce costs (e.g., Polygon, Optimism).
Liquidity Pool: A pool of tokens locked in a smart contract to facilitate trading.
M
Metaverse: A virtual, immersive world powered by blockchain and decentralized assets.
Mining: The process of validating transactions and adding them to the blockchain.
Multi-signature (Multi-sig): A security feature requiring multiple private keys to authorize a transaction.
N
NFT (Non-Fungible Token): A unique digital asset that represents ownership of digital or physical items.
Node: A computer that participates in maintaining a blockchain network.
Nonce: A random number used in cryptographic functions and transactions.
O
Oracles: Services that provide real-world data to smart contracts.
Off-chain: Transactions or data processed outside the blockchain.
On-chain: Transactions or data recorded directly on the blockchain.
P
P2E (Play-to-Earn): Blockchain-based games that reward players with cryptocurrency or NFTs.
Private Key: A secret key used to sign transactions and access crypto assets.
Proof of Work (PoW): A consensus mechanism requiring computational effort to validate transactions.
Q
Quantum Computing Threat: The potential risk of quantum computers breaking blockchain cryptography.
Quorum: The minimum number of participants required for a DAO decision.
R
Rug Pull: A scam where developers abandon a project after raising funds.
Rollups: Layer 2 solutions that bundle multiple transactions to reduce gas fees.
RPC (Remote Procedure Call): A protocol allowing interaction with a blockchain network.
S
Smart Contract: A self-executing contract with predefined rules stored on a blockchain.
Staking: Locking crypto assets to support a network and earn rewards.
Stablecoin: A cryptocurrency pegged to a stable asset like USD.
T
Tokenomics: The economic model governing a cryptocurrency’s supply and demand.
Testnet: A blockchain network used for testing before deployment on the mainnet.
Tx Hash (Transaction Hash): A unique identifier for a blockchain transaction.
U
Utility Token: A token that provides access to a service within a blockchain ecosystem.
UXTO (Unspent Transaction Output): A blockchain accounting model used by Bitcoin.
V
Validator: A participant who verifies transactions in a blockchain network.
Vesting: A schedule that releases tokens gradually over time.
W
Web3: The decentralized version of the internet powered by blockchain and smart contracts.
Whitelist: A list of approved addresses for early access to NFTs, token sales, or exclusive features.
Wrapped Token: A tokenized version of another asset that can be used on a different blockchain.
X
- xDai: A stablecoin-based sidechain designed for fast and cheap transactions.
Y
- Yield Farming: The practice of earning rewards by providing liquidity to DeFi protocols.
Z
Zero-Knowledge Proof (ZKP): A cryptographic method allowing data verification without revealing the data itself.
ZK-Rollup: A scaling solution using zero-knowledge proofs to bundle transactions.