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GLOSSARY · 52 TERMS

The Web3 credibility vocabulary.

Plain definitions for the terms behind the ratings, written without the hype.

A
Airdrop
Free distribution of tokens to a targeted set of wallet addresses.
AMM (Automated Market Maker)
A trading protocol that uses a mathematical formula instead of an order book to price assets.
B
Bridge
A protocol that moves assets or messages between two blockchains.
Bug bounty
A program that pays security researchers for disclosing vulnerabilities responsibly.
Buyback and burn
Protocol revenue used to repurchase native tokens from the market and destroy them.
C
CEX (Centralized Exchange)
A trading venue operated by a single company that custodies user funds.
Circulating supply
The number of tokens currently in public circulation, excluding locked or unmined supply.
Cliff
An initial period during which no vested tokens are released.
Consensus
The mechanism by which a blockchain agrees on the canonical state across all nodes.
D
DAO (Decentralized Autonomous Organization)
An organization governed by token-holder voting on smart-contract-executed proposals.
Delegation
Assigning your token-voting rights to another address that votes on your behalf.
Depeg
When a stablecoin trades meaningfully away from its target value.
DEX (Decentralized Exchange)
A trading venue that runs on-chain, without a central operator holding user funds.
E
Emission
The rate at which new tokens enter circulation, typically as rewards to users.
ENS (Ethereum Name Service)
A decentralized naming system that maps human-readable names to Ethereum addresses.
EVM (Ethereum Virtual Machine)
The runtime environment for smart contracts on Ethereum and EVM-compatible chains.
Exploit
Unauthorized use of a smart contract vulnerability to drain funds or manipulate behavior.
F
FDV (Fully Diluted Valuation)
A project's market cap calculated as if every token were already in circulation.
Flash loan
An uncollateralized loan that must be borrowed and repaid in a single transaction.
Formal verification
Mathematical proof that a contract's behavior matches its specification.
G
Gas
The unit of computational work required to execute a transaction, paid for in the chain's native token.
Governance
The process by which decisions about a protocol get made and executed.
I
Impermanent loss
The opportunity cost an AMM liquidity provider incurs when pooled token prices diverge.
IPFS (InterPlanetary File System)
A peer-to-peer protocol for storing and retrieving files by content hash.
L
L1 (Layer 1)
The base blockchain — Ethereum, Bitcoin, Solana — that settles transactions independently.
L2 (Layer 2)
A blockchain that derives its security from an underlying L1 it commits transactions to.
Liquidity pool
A smart contract holding pairs of tokens that traders swap against.
LST (Liquid Staking Token)
A tradeable token representing a staked position, redeemable for the underlying asset.
M
Memecoin
A token whose value is driven by social narrative and speculation rather than utility.
Merkle proof
A cryptographic proof that a piece of data is part of a larger dataset, without revealing the rest.
MEV (Maximal Extractable Value)
Profit that can be captured by reordering, including, or excluding transactions in a block.
Multi-sig
A wallet or contract requiring multiple signatures to execute a transaction.
N
NFT (Non-Fungible Token)
A token representing ownership of a unique asset, typically art, collectibles, or membership.
O
Oracle
A service that brings off-chain data (prices, events) onto a blockchain for smart contracts to consume.
Q
Quorum
The minimum participation level required for a governance vote to be valid.
R
Restaking
Re-using staked ETH as security for additional services beyond the base chain.
Rollup
An L2 that bundles many transactions and commits their results to an L1.
Rug pull
When a project's team drains liquidity or funds and disappears, typically right after a token launch.
S
Slashing
Confiscation of staked tokens as penalty for validator misbehavior.
Smart contract
Code deployed on a blockchain that executes automatically when called.
Smart contract audit
A structured review of a deployed contract's code for vulnerabilities, by a third-party firm.
Stablecoin
A token designed to maintain a fixed value, typically pegged to the US dollar.
Staking
Locking tokens in a protocol to secure the network or earn yield.
T
Timelock
A delay mechanism that forces a waiting period between proposing and executing changes.
Tokenomics
The economic design of a token: supply, distribution, vesting, utility, and incentives.
Treasury
Funds held by a protocol or DAO for operations, grants, and reserves.
TVL (Total Value Locked)
The total dollar value of assets deposited in a protocol.
U
Upgradable contract
A smart contract whose logic can be changed after deployment via a proxy pattern.
V
Vesting
A schedule restricting when tokens can be sold or transferred, typically for team and investors.
W
Wallet
Software or hardware that manages your private keys and lets you sign transactions.
Y
Yield farming
The practice of moving capital across DeFi protocols to maximize token rewards.
Z
ZK proof (Zero-Knowledge Proof)
A cryptographic proof that a statement is true without revealing why it's true.