Crypto & Trading Glossary

Crypto & Blockchain Basics

Blockchain

A shared, public record of transactions maintained by thousands of independent computers instead of one company. See the full explainer.

Wallet

Software or hardware that holds the cryptographic keys proving you own certain coins, and lets you sign transactions. See Crypto Wallets Explained.

Private key

A secret number that proves ownership of a wallet and lets you move its funds. Anyone who has it controls the wallet. See Private Keys and Seed Phrases.

Seed phrase

A 12 or 24-word backup that can regenerate every private key in a wallet. Losing it or exposing it is equivalent to losing or exposing the wallet itself.

Public address

The account identifier you share with others so they can send you crypto. Safe to share publicly, unlike a private key.

Gas / gas fee

The fee paid to the network to process a transaction or smart contract call. Named after Ethereum's fee mechanism, now used generically across chains.

Node

A computer running the blockchain's software, storing a copy of the ledger and helping verify new transactions.

Consensus

The process by which a decentralized network agrees on which transactions are valid before adding them to the chain.

Proof of Work / Proof of Stake

The two main consensus methods. Proof of Work has miners compete using computing power (Bitcoin's method). Proof of Stake has validators lock up coins as collateral instead (Ethereum's method since 2022).

Layer 1 (L1)

A base, independent blockchain with its own validators and security, such as Bitcoin, Ethereum or Solana. See Layer 1 vs Layer 2.

Layer 2 (L2)

A network built on top of an L1 that processes transactions faster and cheaper, then settles back to the L1 for security. Arbitrum, Base and Optimism are examples.

Smart contract

Self-executing code that runs on a blockchain, automatically enforcing an agreement without a middleman. The foundation of DeFi and NFTs.

Mainnet / testnet

Mainnet is the live, real-money network. A testnet is a separate practice network using worthless test tokens, used to try things without financial risk.

Fork

A change to a blockchain's underlying rules. A "soft fork" is backward-compatible; a "hard fork" splits the chain into two separate versions if not everyone upgrades together.

Altcoin

Any cryptocurrency that isn't Bitcoin. A very broad category covering everything from Ethereum to small, speculative tokens.

Stablecoin

A cryptocurrency designed to hold a steady value, usually pegged 1:1 to the US dollar, backed by reserves or an algorithmic mechanism.

NFT (non-fungible token)

A token representing ownership of a unique item, digital or otherwise, as opposed to interchangeable tokens like Bitcoin where every unit is identical.

DAO (decentralized autonomous organization)

A group coordinated through token-based voting and smart contracts instead of a traditional corporate management structure.

Bridge

A tool that moves assets or data from one blockchain to another. Bridges have historically been a common target for major hacks, so they carry real risk.

Trading Terms

Spot trading

Buying or selling an asset for immediate ownership and settlement, as opposed to trading a derivative contract on its price.

Perpetual futures (perps)

A derivative contract that lets you speculate on an asset's price with leverage and no expiry date. See What Are Perpetual Futures?.

Long / short

Going long means betting the price rises. Going short means betting it falls, typically by borrowing and selling an asset you don't own, planning to buy it back cheaper later.

Leverage

Borrowed exposure that lets you control a larger position with less of your own capital, magnifying both gains and losses.

Margin

The collateral you put up to open and maintain a leveraged position.

Liquidation

The forced closing of a leveraged position when losses eat through your margin, done automatically by the exchange to prevent your account going negative.

Funding rate

A periodic payment between long and short traders on a perpetual futures market, used to keep the contract's price anchored to the spot price. Check live rates on the LabelYX Funding Scanner.

Open interest (OI)

The total value of all open derivative positions on a market right now. Rising OI alongside a price move suggests new money is entering the trend, not just existing positions closing.

Order book

The live list of buy and sell orders waiting to be filled on an exchange, showing where liquidity actually sits at each price.

Limit order / market order

A limit order sets a specific price you're willing to trade at and waits to be filled. A market order fills immediately at the best available current price.

Slippage

The difference between the price you expected and the price you actually got, usually because your order was large relative to available liquidity.

Spread

The gap between the highest price buyers are offering and the lowest price sellers will accept. A tighter spread generally means a more liquid market.

Volume

The total amount of an asset traded over a given period, typically 24 hours. High volume generally means it's easier to enter and exit positions without moving the price much.

Market cap

Current price multiplied by circulating supply. Represents the total value of coins actually in circulation right now.

Fully diluted valuation (FDV)

Current price multiplied by the maximum total supply that will ever exist, including coins not yet released. A large gap between market cap and FDV can signal future sell pressure as more supply unlocks.

ATH / ATL

All-time high and all-time low, the highest or lowest price an asset has ever reached.

Bull market / bear market

A bull market is a sustained period of rising prices and optimism. A bear market is the opposite: sustained falling prices and pessimism.

Correction

A short-term price drop, typically 10% to 20%, within a broader uptrend, as opposed to a full trend reversal.

HODL

Crypto slang for holding an asset long term rather than trading it, originally a misspelling of "hold" that stuck.

DYOR

"Do your own research." A standard reminder that nothing in crypto content, including this glossary, should be treated as financial advice.

Whale

A wallet or trader holding a large enough position to potentially move the market with their own buying or selling.

DeFi & On-Chain Terms

DeFi (decentralized finance)

Financial services, lending, borrowing, trading, earning yield, built with smart contracts instead of a bank or broker as the middleman.

DEX (decentralized exchange)

An exchange that runs on smart contracts and lets you trade directly from your own wallet, without a company custodying your funds.

CEX (centralized exchange)

A traditional exchange run by a company, such as Coinbase or Binance, that holds custody of user funds unless withdrawn.

AMM (automated market maker)

The pricing mechanism most DEXs use, where trades execute against a pool of funds rather than being matched with another trader directly.

Liquidity pool

A pot of two or more tokens locked in a smart contract that traders swap against, with liquidity providers earning a share of trading fees in return.

Impermanent loss

The reduction in value a liquidity provider experiences when the prices of pooled tokens diverge from each other, compared to simply holding them.

Yield farming

Moving capital between DeFi protocols to chase the highest available returns, often by providing liquidity or lending assets.

Staking

Locking up coins to help secure a Proof of Stake network, in exchange for rewards.

Liquid staking

Staking that issues you a tradeable token representing your staked position, so your capital isn't fully locked and illiquid while it earns rewards.

Restaking

Reusing already-staked assets (or their liquid staking tokens) to secure additional protocols and earn extra rewards, at the cost of extra risk layered on top of the original stake.

TVL (total value locked)

The total value of assets deposited in a DeFi protocol, commonly used as a rough measure of its size and adoption.

RWA (real-world asset)

A traditional asset, such as a US Treasury bond, brought on-chain as a tokenized representation, letting it be held and traded like other crypto assets.

MEV (maximal extractable value)

Profit that can be extracted by controlling the order in which transactions are processed within a block, a subtle but real cost baked into how public blockchains work.

Vault

A pooled strategy that automatically manages funds on depositors' behalf, often used for automated trading or yield strategies.

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