Blockchain glossary
Understand blockchain, tokenization and regulation concepts: their meaning, mechanics and limitations, with references for further reading.
All terms
Blockchain fundamentals
The base concepts for understanding how a blockchain works and what you build on it, from what a block or a transaction is to the gas and smart contracts that run the logic. See the blockchain development service
- AirdropAn airdrop is the free distribution of fungible tokens or NFTs to a set of addresses, where the recipient pays nothing for the asset, at most the claim gas. It serves as a token-distribution and user-acquisition mechanism, often rewarding prior use of a protocol retroactively.
- Block timeBlock time is the average interval between the production of two consecutive blocks on a blockchain. It is a consensus parameter: a statistical target under Proof of Work, like Bitcoin's ten minutes, or a near-deterministic value under Proof of Stake.
- BlockchainA blockchain network maintains a shared record of hash-linked blocks agreed by nodes under consensus rules. Changing history requires overcoming protocol guarantees. Access, transparency and distribution of control vary across public, private and permissioned networks.
- Distributed ledger technology (DLT)Distributed ledger technology (DLT) maintains replicated records coordinated across participants. Blockchain is a DLT family organizing data into cryptographically linked blocks. DLT does not necessarily imply blocks, public access, permissionless participation or a native cryptocurrency.
- EVMThe EVM (Ethereum Virtual Machine) is the stack-based virtual machine that executes smart contract bytecode on Ethereum and all EVM-compatible blockchains, defining the operation set, gas costs and state model that every node replicates.
- ForkA fork is a change to a blockchain's consensus rules classified by compatibility: a soft fork is backward-compatible and non-upgraded nodes keep accepting new blocks, whereas a hard fork is not and can split the chain into two networks with a shared history.
- GasGas is the unit measuring transaction execution work on Ethereum and compatible networks. It is neither a currency nor the final fee. Fees combine gas used with its price and, depending on the network and transaction type, may include additional data costs.
- Genesis blockThe genesis block is the first block of a blockchain, at height zero and referencing no prior block, hardcoded into the node software, acting as the chain's root of trust and defining the identity of the network the whole chain hangs from.
- GweiGwei (gigawei) is a denomination of ether (ETH) and the practical unit for expressing the gas price on Ethereum, with the scale 1 ETH equal to 10^9 gwei equal to 10^18 wei, so 1 gwei equals one billion wei, the network's smallest indivisible unit.
- HashA cryptographic hash is the result of applying a hash function to data. Its length is fixed for the chosen algorithm and it supports integrity comparisons without retaining the full content. Identical inputs produce identical outputs; collisions are possible, but a secure algorithm makes them difficult to find in practice.
- MempoolThe mempool is the memory area of each node where valid transactions already broadcast to the network but not yet included in a block are stored; it is not a single global structure, because each node keeps its own mempool and so they can differ from one another.
- Smart contractA smart contract is a program deployed on a blockchain network that executes rules when it receives a transaction or call. It can manage balances, permissions and transfers. Its behavior depends on its code and authorizations; some implementations allow upgrades, pauses or parameter changes.
- TokenA token is a unit recorded on a blockchain network and managed under protocol or contract rules. It may represent value, access or rights. Its technical function does not itself determine legal classification or ownership of an external asset.
- Transaction fee (fee rate)A transaction fee is the cost a sender pays to have an operation included in a block. In Bitcoin it equals the transaction size in vBytes times the rate in satoshis per vByte (sat/vB), and the miner receives the difference between the transaction inputs and outputs.
Consensus & network security
How a decentralized network agrees on the chain state and defends against attacks, covering consensus mechanisms, transaction finality and the vectors they prevent. See fundamentals guides on the blog
- 51% attackA 51% attack primarily describes majority hash-power control in proof-of-work networks, enabling censorship and reorganizations involving double spending. It does not allow spending another holder’s funds without authorization. Proof-of-stake attack thresholds and capabilities depend on the protocol.
- Block rewardThe block reward is the set of new tokens and fees received by whoever produces a valid block. It has two components: the issuance subsidy, which is new tokens created by the protocol, and the transaction fees paid by the users included in that block.
- Byzantine Fault Tolerance (BFT)Byzantine fault tolerance (BFT) is a distributed system’s ability to maintain specified guarantees despite participants sending conflicting information or behaving maliciously. Thresholds depend on the model. In many BFT protocols, safety requires Byzantine voting power below one third.
- Byzantine Generals ProblemThe Byzantine Generals Problem is the foundational theoretical framing of distributed consensus: several separated generals must agree on a common plan by messengers knowing some may be traitors, and it is the origin of Byzantine fault tolerance (BFT).
- Censorship resistanceCensorship resistance is the property whereby no single actor, be it a government, company or validator, can reliably prevent a valid transaction from being included in the ledger or block a user's access, measured by the cost of excluding transactions rather than as a binary absolute.
- ConfirmationsConfirmations count a transaction’s inclusion in the current chain and the blocks added afterward. On Bitcoin, inclusion typically counts as one confirmation. Confirmations increase confidence against reorganizations, while their relationship to finality depends on the network and consensus.
- Consensus mechanismA consensus mechanism is the set of rules through which participants in a distributed system agree on a state and an order of operations. It defines how changes are proposed and validated and how disagreements are resolved. Its guarantees depend on the fault model and security assumptions.
- Delegated Proof of Stake (DPoS)Delegated Proof of Stake (DPoS) is a consensus mechanism in which token holders vote, weighted by their stake, to elect a small fixed set of validators that produce blocks in turns, prioritizing throughput and governance over maximal decentralization.
- Economic finalityEconomic finality describes a consensus guarantee backed by the cost of producing conflicting finalized histories. In Ethereum’s Casper FFG, such a conflict implies that at least one third of stake has violated slashable conditions. Economic cost deters the attack without making reversal physically impossible.
- Fork choice ruleThe fork choice rule is the deterministic algorithm by which each node, facing several simultaneous valid branches, decides which is the canonical chain to build on and treat as true, resolving temporary discrepancies and underpinning reorganizations and finality.
- HashrateHashrate is the aggregate speed at which mining hardware on a Proof-of-Work network runs cryptographic hash operations, measured in hashes per second (H/s). On Bitcoin it counts the double SHA-256 operations the whole network performs while searching for a valid block.
- Leader electionLeader election is the mechanism by which a consensus protocol designates which participant has the right to propose the next block or lead a round, needed in BFT and proof of stake to avoid collisions between proposers and resist targeted attacks against the leader.
- Long-range attackA long-range attack is a proof of stake specific vector in which someone who controlled validator keys in the past builds an alternative chain from a very old block that looks valid, mitigated by weak subjectivity and checkpoints that invalidate any fork predating the checkpoint.
- MEVMEV (Maximal Extractable Value) is the maximum value an actor can extract by reordering, including or excluding transactions within a block, beyond the standard reward and fees, because whoever builds the block holds discretionary power over transaction order.
- MiningMining is the process by which, in Proof of Work networks, nodes compete to produce the next block by solving a costly cryptographic problem, finding a nonce that makes the block header hash fall below a difficulty target, and the first to succeed earns the block reward.
- Nakamoto consensusNakamoto consensus is the set of rules that lets a permissionless network agree on a single transaction history without a central authority, combining proof of work, the heaviest-chain rule, economic incentives and block propagation, with probabilistic finality.
- Nothing-at-stake problemThe nothing-at-stake problem is the classic critique of proof of stake: because validating has near-zero marginal cost, a rational validator would have an incentive to sign on every competing fork at once, preventing consensus from converging, which slashing resolves.
- Proof of Authority (PoA)Proof of Authority (PoA) is an identity and reputation based consensus mechanism in which a closed set of authorized validators with known identities produces blocks in turns, without competing for computing power or staked capital, which makes it typical of permissioned and private networks.
- Proof of History (PoH)Proof of History (PoH) is a cryptographic mechanism that creates a verifiable record of the passage of time and the ordering of events before consensus, acting as a cryptographic clock that complements Solana's consensus, where security and finality come from proof of stake.
- Proof of Stake (PoS)Proof of Stake (PoS) is the consensus mechanism in which the right to propose and validate blocks is allocated in proportion to the capital a validator locks as collateral, where security comes from the fact that malicious behavior can destroy part of that deposited capital through slashing.
- Proof of Work (PoW)Proof of Work (PoW) is the consensus mechanism in which a participant must solve a computationally expensive problem to propose a valid block, where the right to add blocks is allocated in proportion to the computing power contributed, not to capital or identity.
- Sybil attackA Sybil attack is one in which a single entity creates and operates multiple fake identities or nodes to gain a disproportionate share of influence in a distributed network, subverting redundancy and voting schemes built on the idea of one identity equals one vote.
- Sybil resistanceSybil resistance is a system's ability to prevent a single actor from gaining disproportionate influence by creating many fake identities or nodes, by anchoring each unit of voting power to a scarce, verifiable resource such as computation, staked capital or an authorized identity.
- The MergeThe Merge was the upgrade that fused Ethereum's execution chain with the Beacon Chain, completing on 15 September 2022 the transition from proof of work to proof of stake. It changed neither fees nor capacity, only the network's consensus mechanism.
- Transaction finalityFinality is the degree of certainty with which a transaction or block is considered irreversible under a consensus protocol. It may be probabilistic or based on validator votes and penalties. Guarantees depend on security assumptions; block inclusion, confirmation and finality are different concepts.
- Weak subjectivityWeak subjectivity is the proof of stake security property whereby a node syncing from scratch cannot determine the canonical chain from the genesis block and protocol rules alone, but needs a recent, trusted reference point as an additional social input.
Infrastructure & scaling
The technical layers that make blockchain scale and become usable in production, such as rollups and L2s, oracles, cross-chain bridges and a network's performance metrics. See the technologies in our stack
- Blockchain oracleA blockchain oracle supplies smart contracts with information unavailable directly in their execution environment, such as prices or event outcomes. It may use one or several sources and operators. Contracts verify received information under technical rules, while accuracy depends on external sources and assumptions.
- Blockchain trilemmaThe blockchain trilemma is the design principle that a network can rarely optimize its three key properties at once, scalability, security and decentralization, so improving one tends to sacrifice another. It is a design heuristic popularized by Vitalik Buterin, not a formal theorem.
- Cross-chain bridgeA cross-chain bridge is a protocol of smart contracts and validators that transfers assets or messages between two blockchains that share no consensus or state, proving on the destination chain that something happened on the origin chain.
- Cross-chain native token (CCT/OFT)A cross-chain native token is one that exists with a single total-supply identity across several blockchains at once, rather than being wrapped, keeping one global supply by burning on the source chain and minting on the destination chain.
- Data availabilityData availability is the ability to obtain information needed to reconstruct and verify a state or transaction batch. It is an important scaling condition. A cryptographic commitment checks integrity against data but does not itself guarantee the data can be downloaded.
- EIP-4844 (proto-danksharding)EIP-4844 is the final Ethereum improvement that introduced blob-carrying transactions, a temporary data space with its own fee market that rollups use to publish data at lower cost.
- ERC-7683ERC-7683 is a draft standard for intent-based cross-chain systems that lets a resolver translate opaque orders from different protocols into a common representation solvers can discover, price and execute.
- L2 (Layer 2)A layer 2 (L2) processes operations while relying on a base network for specified security and settlement guarantees. Rollups are one L2 family. Effective guarantees depend on proofs, data availability, permissions and exit mechanisms; a sidechain is not automatically an L2.
- Layer 1 (L1)A layer 1 (L1) is a base blockchain network with its own consensus and validation rules, supporting other systems. Ethereum and Bitcoin are examples. An L1 may record and settle additional-layer operations, whose guarantees depend on their architecture.
- Modular blockchainA modular blockchain splits into specialized layers the functions a monolithic chain performs at once (execution, consensus, data availability and settlement), so that different chains specialize in each function and combine instead of a single chain doing everything.
- Off-chain dataOff-chain data is information that lives outside the blockchain, in APIs, databases, legacy systems, other chains or the real world, that a smart contract cannot read natively because the virtual machine is a deterministic, isolated environment, so it is brought on-chain via oracles.
- Optimistic rollupAn optimistic rollup provisionally accepts state transitions and allows them to be challenged through fraud proofs during a defined period. The duration, authorized participants and exit mechanisms depend on the implementation. A sequencer confirmation is not equivalent to final settlement on the base layer.
- RollupA rollup is a layer 2 scaling solution that executes transactions off the main Ethereum chain while posting their data on it to inherit its security, separating off-chain execution from on-chain data availability and settlement.
- Rollup transaction feeA rollup transaction fee is the cost of processing a transaction on a layer-2 network that batches operations and publishes data or results on a base layer. It typically combines L2 execution with L1 data publication. The formula, additional charges and effective price depend on the network.
- RPC nodeAn RPC (Remote Procedure Call) node is a blockchain network server that exposes a standard interface for external applications to read chain state, query contracts and broadcast transactions, acting as the gateway between a dApp or backend and the network itself.
- SequencerA sequencer orders transactions before execution or batch inclusion in a rollup. It may be one operator or a coordinated set. Ordering operations does not establish base-layer finality; proofs and publication provide additional guarantees.
- ShardingSharding divides a network’s data or tasks into partitions to distribute work among participants. It can apply to execution, storage or data availability. Danksharding is an Ethereum data-scaling design, not a synonym for every form of sharding.
- The oracle problemThe oracle problem is the foundational challenge of bringing external data onto a blockchain so it stays reliable and verifiable, without reintroducing a single point of trust or failure that would undo the decentralization guarantees of the contract consuming it.
- TPS (transactions per second)TPS (transactions per second) measures how many transactions a network processes over a time interval. It may refer to execution, inclusion or finality and must specify what is counted. Voting transactions, user operations and laboratory benchmarks are not directly comparable.
- ZK rollupA ZK rollup proves state transitions using cryptographic validity proofs verified on a base layer. It avoids relying on a challenge window for those transitions. The term does not imply private transactions or instantaneous settlement and withdrawals.
Cryptography & ZK proofs
The cryptographic primitives and zero-knowledge proofs that give networks security and privacy, from keys and signatures to the SNARKs and STARKs that verify without revealing the data. See the technologies in our stack
- Arithmetic circuitAn arithmetic circuit is the representation of a computation as a set of additions and multiplications over a finite field, expressed as gates and wires and translated into a constraint system, which is how a statement is encoded so a zero-knowledge proof can be generated about it.
- Commitment schemeA commitment scheme is a two-phase cryptographic primitive that lets a party commit to a value while keeping it hidden in the commit phase and reveal it afterward in a verifiable way in the open phase, so it cannot be changed later, like a sealed envelope.
- Cryptographic hash functionA cryptographic hash function maps an input of arbitrary length to a fixed-length output (the digest, e.g. 256 bits) deterministically and with three properties: preimage resistance, second-preimage resistance and collision resistance, making it the basis of data integrity, addresses and proof of work.
- Digital signatureA digital signature verifies that a message was authorized using a private key and was not altered after signing. Verification uses the corresponding public key. It identifies a key, not necessarily a person; legal attribution depends on identity, custody and legislation.
- ECDSAECDSA (Elliptic Curve Digital Signature Algorithm) is the elliptic-curve variant of the digital signature algorithm, producing signatures, a pair (r, s), whose security rests on the hardness of the elliptic-curve discrete logarithm, and with which Bitcoin and Ethereum authorize their transactions.
- Elliptic Curve Cryptography (ECC)Elliptic Curve Cryptography (ECC) is a public-key system based on the algebraic structure of elliptic curves over finite fields; its security rests on the hardness of the discrete logarithm problem, and it underpins the keys, signatures and addresses used across blockchain.
- Groth16Groth16 is a succinct non-interactive argument-of-knowledge system based on elliptic-curve pairings. Its proofs contain three group elements and support efficient verification. It requires circuit-specific trusted parameters; byte size and cost depend on the curve and implementation.
- Keccak-256Keccak-256 is the 256-bit cryptographic hash function the Ethereum Virtual Machine uses to derive addresses, function selectors and storage slots; it shares its permutation with SHA-3 but uses a different padding byte, so the two never produce the same output.
- KZG commitmentA KZG commitment (Kate-Zaverucha-Goldberg) is a polynomial commitment scheme that lets you commit to a polynomial with a single elliptic-curve group element and later prove its evaluation at any point with a proof that is also constant-size, verifiable through a bilinear pairing.
- Merkle proofA Merkle proof is the minimal set of hashes, called the authentication path, that demonstrates a specific piece of data belongs to a Merkle tree whose root is known, without revealing or processing the rest of the tree, at logarithmic cost.
- Merkle rootA Merkle root is the single hash at the top of a Merkle tree that cryptographically summarizes the entire set of leaf data, so that one value, typically 32 bytes, commits to an arbitrary number of elements and acts as the integrity fingerprint of the set.
- Merkle treeA Merkle tree is a tree data structure where each leaf is the hash of a data block and each internal node is the hash of its children, so the top node (the Merkle root) is a compact commitment to the entire set: any change to a single piece of data alters the root.
- NullifierA nullifier is a unique, deterministic public marker published when a private note or commitment is spent, used to prevent double-spending without revealing which specific commitment is being consumed or the identity of the user spending it.
- On-chain attestationAn on-chain attestation is a statement recorded on a blockchain network and associated with an issuer, subject and data schema. Its origin and status can be verified under the protocol. A signature or record establishes who made a claim, not whether it is true.
- Pedersen commitmentA Pedersen commitment is a cryptographic scheme for committing to a value so that the commitment reveals nothing about it (perfectly hiding) and cannot be altered afterward (computationally binding), with the key property of being additively homomorphic, the basis of confidential transactions.
- PLONKPLONK is a zk-SNARK with a universal and updatable trusted setup: a single initial ceremony serves any circuit up to a given size, making it flexible for zk-rollups where circuits change, at the cost of proofs somewhat larger than those of Groth16.
- Polynomial commitmentA polynomial commitment is a cryptographic primitive that lets a prover commit to a polynomial with a short string and later prove the value the polynomial takes at a chosen point, without revealing the whole polynomial and with a compact proof.
- Post-quantum cryptographyPost-quantum cryptography (PQC) is the set of public-key algorithms that run on classical computers yet resist a quantum computer, relying on mathematical problems such as lattices believed hard even for quantum algorithms like Shor's.
- Private keyA private key is a secret value used to create cryptographic signatures and authorize operations under an account’s rules. It may control spending in a simple account, while multisignature and programmable accounts can require other approvals. Recovery depends on backups and account mechanisms.
- Proof of knowledgeA proof of knowledge is a cryptographic protocol demonstrating knowledge of a witness satisfying a relation, such as the key corresponding to an identifier. Knowledge soundness does not itself provide privacy. Hiding information about the witness requires the additional zero-knowledge property.
- Public keyA public key is the shareable component of a cryptographic key pair. It can verify signatures or be used in an encryption scheme, depending on the algorithm. In networks such as Bitcoin and Ethereum it participates in deriving addresses, but an address is not necessarily the complete public key.
- Public-key cryptographyPublic-key cryptography uses related key pairs: a private key kept secret and a public key that can be shared. It includes signature, encryption and key-exchange schemes with different functions. Under their security assumptions, knowing the public key does not make deriving the private key practical.
- Range proofA range proof is a zero-knowledge proof that shows a committed value falls within a given interval, for example that it is positive and below a maximum, without revealing the value itself, ensuring correct accounting without exposing concrete figures.
- Recursive proofsRecursive proofs are zero-knowledge proofs in which one proof verifies the validity of another, letting an arbitrarily long chain of computation be compressed into a single constant-size final proof, the basis of massive scaling and rollup aggregation.
- SNARKA SNARK (Succinct Non-interactive ARgument of Knowledge) is a cryptographic proof letting a prover convince a verifier it knows a witness satisfying a computation, with a tiny proof and fast verification; when it also hides that witness it becomes a zk-SNARK.
- Trusted setupA trusted setup is the initial procedure that generates the public parameters (the SRS, Structured Reference String) certain zk-SNARKs need to produce and verify proofs; during its generation a random secret (toxic waste) exists that must be destroyed, since anyone keeping it could forge proofs.
- ZK proof (Zero-Knowledge proof)A zero-knowledge proof demonstrates that a statement satisfies a relation without revealing its secret witness. The verifier learns what is needed to check the statement under the chosen security model. Not every validity proof or application called ZK conceals transactions or their data.
- zk-SNARKA zk-SNARK (Zero-Knowledge Succinct Non-interactive ARgument of Knowledge) is a cryptographic proof that convinces a verifier someone knows a witness satisfying a statement, without revealing it, with two key properties: succinct (small proof, millisecond verification) and non-interactive (a single message).
- zk-STARKA zk-STARK (Zero-Knowledge Scalable Transparent ARgument of Knowledge) is a computational-integrity proof system that is transparent (no trusted setup) and quantum-resistant, with security resting only on hash functions, in exchange for producing notably larger proofs than a zk-SNARK.
Token standards
The ERC and EIP standards that define how tokens are created, transferred and governed on Ethereum, the shared base that lets wallets, exchanges and contracts speak the same language. See the tokenization service
- Account AbstractionAccount Abstraction is an Ethereum paradigm that lets accounts behave as programmable smart contracts, defining their own logic for authentication, recovery, gas payment or authorizations, without the limitations of externally-owned accounts (EOA) governed solely by a private key.
- BIP-39 (mnemonic phrase)BIP-39 is the standard that turns random entropy into a readable list of words, the 12 or 24 word mnemonic phrase, which deterministically regenerates all keys of a hierarchical wallet; it originated in Bitcoin and is now used across almost the entire crypto ecosystem.
- EIP / ERCAn EIP (Ethereum Improvement Proposal) is the formal, versioned document used to propose and document changes and standards on Ethereum, and an ERC (Ethereum Request for Comments) is its Standards Track subcategory that defines application standards, such as token interfaces.
- EIP-1559EIP-1559 is Ethereum's fee market reform, activated in the London hard fork in August 2021, which replaces the first-price auction with an algorithmic per-block base fee that is burned, plus an optional priority fee paid to the validator.
- EIP-191 (Signed Data Standard)EIP-191 is the Ethereum standard that defines a common format for signing arbitrary data outside a transaction, prepending the 0x19 prefix so a signed message can never be mistaken for a valid transaction, and it underpins personal_sign and EIP-712.
- EIP-1967 (Proxy Storage Slots)EIP-1967 is the standard that fixes deterministic storage slots where an upgradeable proxy keeps critical metadata, such as the implementation address and the admin, so they never collide with the logic contract's storage and so block explorers can detect the proxy automatically.
- EIP-3074 (AUTH and AUTHCALL)EIP-3074 was an Ethereum proposal, now withdrawn, introducing the AUTH and AUTHCALL opcodes so an EOA could delegate control to an invoker contract via a signature. It is regarded as a precursor of EIP-7702 in the evolution of account abstraction.
- EIP-712EIP-712 defines hashing and signing of typed structured data on Ethereum. It supports meaningful field presentation and signature-domain separation between applications. It does not provide complete replay protection: each implementation must manage nonces, expiry and other authorization conditions.
- EIP-7702EIP-7702 is an Ethereum protocol improvement allowing an externally owned account (EOA) to delegate execution to contract code while retaining its address. Delegation persists until changed or revoked. It can enable smart-account features, with security dependent on the authorized code and its controls.
- ERC-1155ERC-1155 is the Ethereum multi-token standard: a single contract manages fungible, non-fungible and semi-fungible token types at once, each with its own ID, and supports batch transfers that cut gas cost compared with individual operations.
- ERC-1167 (Minimal Proxy Contract)ERC-1167 is the standard for a minimal proxy contract, also called a clone, that delegates all its calls via DELEGATECALL to a single fixed implementation address, drastically cheapening the deployment of many identical instances of the same contract.
- ERC-1271ERC-1271 is the standard that defines how a smart contract declares whether a signature is valid for it, giving contract accounts such as multisigs and smart accounts a common way to validate messages, something an externally owned account does natively but a contract cannot.
- ERC-1363ERC-1363 is an ERC-20 extension that adds payable behavior to a token, so transferring or approving tokens triggers logic in the receiving contract within the same transaction, removing the classic two-step approve then transferFrom pattern that was historically costly.
- ERC-1400ERC-1400 is an umbrella family of interoperable Ethereum standards for representing tokenized securities, adding pre-transfer validation, partitioned balances, on-chain document management and issuer controller powers on top of the ERC-20 base interface.
- ERC-1404ERC-1404 (Simple Restricted Token Standard) is a minimal ERC-20 extension that adds on-chain checkable transfer restrictions through two functions: one that detects whether a transfer is blocked and another that returns the human-readable message explaining why.
- ERC-165ERC-165 (Standard Interface Detection) is a Final Ethereum standard that lets a contract declare, and others query, which interfaces it implements, identifying each one with a 4-byte interface ID checked through the supportsInterface function.
- ERC-1822 (UUPS)ERC-1822 defines the Universal Upgradeable Proxy Standard (UUPS), an upgradeable proxy pattern where the upgrade logic lives in the implementation contract rather than the proxy, yielding a smaller, cheaper-to-deploy and reusable proxy.
- ERC-20ERC-20 is the interface standard for fungible tokens on Ethereum that defines the minimum set of functions and events a smart contract must expose so its token is handled uniformly by wallets, exchanges and other contracts, with each unit identical and interchangeable.
- ERC-2535 (Diamond Standard)ERC-2535, known as the Diamond Standard, is a standard for building modular, upgradeable smart contracts in which a single proxy contract (the Diamond) delegates each function to multiple external logic contracts called facets, working around Ethereum's 24 KB contract size limit.
- ERC-2612ERC-2612 is an ERC-20 extension that lets a holder grant a spending allowance through an EIP-712 message signed off-chain, instead of an on-chain approve transaction, adding the permit function as the basis of the signature-based approval pattern with no gas paid to approve.
- ERC-2981ERC-2981 is the NFT royalty standard on Ethereum that defines a uniform way to signal how much and to whom to pay on a secondary sale, acting as a query interface rather than a payment mechanism, so its observance depends on each marketplace honoring it.
- ERC-3009 (Transfer With Authorization)ERC-3009 is an ERC-20 extension that allows authorized transfers via an off-chain EIP-712 signature, where the holder signs the authorization off-chain and a third party executes it and pays the gas, making it the technical basis for gasless token payments.
- ERC-3156 (Flash Loans)ERC-3156 is the Ethereum interface standard for flash loans, uncollateralized loans that must be borrowed and repaid, plus their fee, within a single atomic transaction; if repayment does not happen before the transaction ends, the entire operation reverts.
- ERC-3525ERC-3525 is the Ethereum semi-fungible token standard: each token has a unique tokenId like ERC-721, but it also holds a fractional numeric value and belongs to a slot, so tokens sharing a slot are fungible with each other by value, combining identity and quantity.
- ERC-3643ERC-3643 is a permissioned token standard compatible with ERC-20 that combines an identity registry with transfer rules. It supports assets subject to eligibility restrictions and administrative controls. On-chain checks enforce configured conditions but do not replace legal assessment or identity-verification processes.
- ERC-404ERC-404 is an experimental, unofficial implementation that combines an ERC-20-like fungible balance with linked NFTs, so transferring fractions can automatically mint or burn NFTs.
- ERC-4337ERC-4337 is the Ethereum standard that implements account abstraction without changing the protocol, using an alternative mempool of objects called UserOperation that a bundler batches and submits to the EntryPoint contract, enabling programmable wallets that are themselves smart contracts.
- ERC-4626ERC-4626 is the interface standard for tokenized yield-bearing vaults that defines a single API for any contract that custodies a productive ERC-20 asset and issues shares, also as ERC-20 tokens, representing a proportional claim on the vault's underlying assets.
- ERC-5192 (Soulbound Tokens)ERC-5192 is a minimal ERC-721 extension that makes an NFT non-transferable and binds it permanently or conditionally to an address, adding only the bare minimum to signal and enforce that non-transferability as the technical basis for on-chain credentials and identity.
- ERC-5267ERC-5267 is a Final Ethereum standard that defines a single view function so any application can discover at runtime the exact EIP-712 domain parameters of a contract and build typed-data signatures the contract will accept without failing verification.
- ERC-5805 (Voting with Delegation)ERC-5805 is the Ethereum standard that normalizes how an account delegates its voting power to another and how current and historical votes are recorded and queried through checkpoints, allowing voting power to be measured at a fixed point in time for on-chain governance.
- ERC-6492 (Signature Validation for Predeploy Contracts)ERC-6492 is the standard that allows verifying the signature of a smart contract account that is not yet deployed, extending ERC-1271 to the case where the account address is already known and predictable via CREATE2 but its code is not yet on chain.
- ERC-6551ERC-6551 is the Ethereum standard that gives each ERC-721 NFT its own smart contract account (a token bound account), so the NFT can own other assets and interact with applications, without modifying ERC-721 because it adds a registry and account layer over existing NFTs.
- ERC-6900 (Modular Smart Contract Accounts)ERC-6900 is the Ethereum standard for modular smart contract accounts within the account abstraction framework (ERC-4337), defining how to install and uninstall validation, execution and hook modules in a single wallet in a reusable way and without having to redeploy the account contract.
- ERC-6909ERC-6909 is a minimal multi-token interface that manages multiple token types, fungible and non-fungible identified by an id, within a single contract, with lower gas cost and smaller contract size than ERC-1155, its more widely adopted predecessor.
- ERC-7201 (Namespaced Storage Layout)ERC-7201 is a convention for organizing a contract's storage into namespaces, independent storage regions anchored at a deterministic slot, which avoids slot collisions in upgradeable and modular contracts and eases upgrades and modular design.
- ERC-721ERC-721 is the Ethereum standard for non-fungible tokens (NFTs): each token carries a unique, indivisible tokenId that distinguishes it from every other token in its collection, so it is not interchangeable one-to-one with another, unlike fungible ERC-20 tokens.
- ERC-721AERC-721A is a drop-in implementation of the ERC-721 NFT standard, created by Chiru Labs, optimized to make batch minting of several NFTs in a single transaction far cheaper while keeping full ERC-721 compatibility, distributed as a reference library rather than as a Final EIP from the official repository.
- ERC-7484 (Module Registry)ERC-7484 is a standard defining Module Registries, contracts that store on-chain attestations about module security so that modular ERC-7579 smart accounts can verify and score a module before installing or running it, adding a trust layer to modular account security.
- ERC-7575 (Multi-Asset Vaults)ERC-7575 is an extension of the ERC-4626 standard enabling tokenized vaults with several input assets sharing a single share token, possibly external to the vault. It supports complex DeFi structures, such as LP tokens, under a surface compatible with existing 4626 tooling.
- ERC-7579 (Modular Smart Accounts)ERC-7579 is an interoperability standard that defines a common interface for modular smart accounts, setting how modules that extend an account are installed, uninstalled and queried, so a module written once works on any compatible account.
- ERC-7631 (DN404)ERC-7631 is the final standard for dual-nature tokens, synchronizing a base ERC-20 contract with an ERC-721 mirror contract so the same asset can have fungible units and whole NFTs.
- ERC-7710 (Smart Contract Delegation)ERC-7710 is a standard interface for a smart account to delegate scoped capabilities to other contracts or accounts, and for that delegation to be redeemed and enforced on-chain through a Delegation Manager. It acts as the contract layer beneath ERC-7715.
- ERC-777ERC-777 is a fungible token standard backward-compatible with ERC-20 that adds two mechanisms, operators (addresses authorized to send tokens on a holder's behalf) and hooks (callback functions that let a contract react when tokens are sent or received within the same transaction).
- ERC-7943 (uRWA)ERC-7943, known as uRWA (Universal Real World Asset interface), is an Ethereum standard defining a minimal, common interface for real-world-asset tokens, adding transfer validation, freezing and forced transfer on top of existing token models (ERC-20, ERC-721, ERC-1155 and ERC-6909) without imposing any identity provider.
- ERC-8004 (Trustless Agents)ERC-8004 is a standard that creates a decentralized trust layer for autonomous on-chain AI agents, giving them verifiable identity, reputation and validation through lightweight registries, so agents from different operators can discover, assess and verify each other's actions.
- ERC20Votes (Token with Voting)ERC20Votes is the extension of an ERC-20 token that adds balance snapshots through checkpoints and vote delegation, turning balance into historically queryable voting power; it is the concrete implementation of ERC-5805 on an ERC-20 and the basis of almost every governance token.
- Fungible tokenA fungible token has interchangeable units within one issuance: one unit is technically equivalent to another of the same type. ERC-20 is a common Ethereum interface. Fungibility does not imply stable price, guaranteed liquidity or identical rights across different issuances.
- ONCHAINIDONCHAINID is a decentralized identity framework by Tokeny that deploys a per-user identity smart contract to store keys and verifiable claims, such as completed KYC or investor eligibility; it is the identity piece of the ERC-3643 (T-REX) standard.
- Permit2Permit2 is a canonical Uniswap contract that acts as a universal signature-based approval layer for any ERC-20 token, letting users authorize spending with off-chain signatures instead of repeated approve transactions, with allowances that carry amount and time limits.
- Rebase tokenA rebase token, or elastic token, is an ERC-20 token whose total supply adjusts algorithmically and periodically, so each holder's balance changes automatically and proportionally while their share of the total supply stays unchanged.
- T-REX ProtocolT-REX (Token for Regulated EXchanges) is the reference contract suite for ERC-3643, developed by Tokeny. It combines permissioned tokens, an identity registry and transfer rules for restricted assets. Technical controls do not replace external identification or legal assessment of an issuance.
- Token Bound Account (TBA)A token bound account (TBA) is the ERC-6551 standard that gives each ERC-721 NFT its own smart contract account, so the NFT can hold tokens and other NFTs and operate like a wallet, controlled by whoever owns the NFT.
- Token vestingToken vesting is a schedule for acquiring or releasing token rights. It may include an initial period without releases (cliff) and later tranches. It differs from a transfer lock: recorded holdings, spendability and vested rights are separate conditions.
- tokenURItokenURI is the function in the ERC-721 metadata extension that returns a URI pointing to the JSON file with an NFT's metadata, such as name, description, image and attributes; in ERC-1155 the equivalent function is uri.
- Transfer RestrictionsTransfer restrictions are rules coded into a token's smart contract that limit who can receive it, when and under what conditions, usually for regulatory compliance in security tokens; the reference standard is ERC-1404, backward compatible with ERC-20.
DeFi & on-chain finance
The protocols that reproduce and extend financial services on blockchain without central intermediaries, such as lending, markets, liquidity and yield governed by open contracts. See the blockchain development service
- Algorithmic interest rateAn algorithmic interest rate is the rate of a DeFi lending market set automatically by a formula based on the pool's utilization, that is the share of borrowed capital over total deposits, recalculated each block with no negotiation or committee.
- AMM (Automated Market Maker)An AMM (Automated Market Maker) is a pricing and liquidity-provision mechanism in which a smart contract quotes prices algorithmically from the reserves deposited in a pool, instead of matching buy and sell orders against a traditional order book.
- Bad debtBad debt is the outstanding debt in a lending protocol that is no longer backed by enough collateral: after a failed liquidation, the collateral value falls below the loan and an uncovered debit balance remains, a direct measure of the protocol's solvency.
- Bonding curveA bonding curve is an algorithmic pricing mechanism in which a token's price is a deterministic mathematical function of its circulating supply, so the smart contract itself buys and sells against the curve without needing a counterparty or an order book.
- Collateralization ratioA collateralization ratio is the relationship between the value of the collateral deposited and the value of the debt issued against it, expressed as a percentage, determining how much can be borrowed and the level at which the position becomes liquidatable.
- Collateralized Debt Position (CDP)A collateralized debt position (CDP) is one where a user locks crypto collateral in a smart contract and, against that guarantee, mints or borrows a debt, usually a decentralized stablecoin, forming the structural basis of overcollateralized lending.
- Composability (money legos)Composability is the property by which DeFi protocols, being open and interoperable smart contracts, can be combined and nested like building blocks, so that one protocol's output serves as another's input without permission or prior bilateral integration.
- Concentrated liquidityConcentrated liquidity is an automated market maker model where a liquidity provider allocates capital to a bounded price range instead of spreading it across the whole curve, multiplying capital efficiency and available depth within that chosen range.
- Counterparty riskCounterparty risk is the risk that the other party to a transaction fails to meet its obligations before settlement completes, arising in the settlement window, the gap between closing the trade and completing delivery and payment.
- DeFAIDeFAI (DeFi plus AI) is the convergence of decentralized finance and artificial intelligence, where AI agents interpret a natural-language instruction and interact autonomously with DeFi protocols to execute strategies, manage portfolios or automate on-chain operations within defined limits.
- DeFiDeFi (Decentralized Finance) comprises financial applications using smart contracts to manage exchanges, loans, collateral and other operations on blockchain networks. Openness and distributed control vary across protocols. Oracles, administrators, interfaces and custodians can still introduce dependencies and risks.
- DeFi lendingDeFi lending comprises credit operations managed through smart contracts. Many protocols support deposits and borrowing against collateral exceeding the debt; flash loans and other credit models also exist. Valuation, interest and liquidations depend on market rules.
- DeFi money marketA DeFi money market is a pool-based lending and deposit protocol where suppliers deposit assets into a shared pool and earn interest, while borrowers draw from that pool by posting collateral, with interest rates set algorithmically based on utilization.
- DeFi vaultA DeFi vault is a smart contract that custodies multiple users' deposits and runs an automated yield strategy over them, issuing each depositor a share token that represents their proportional claim on the vault's assets.
- DEX (Decentralized Exchange)A DEX (Decentralized Exchange) is a crypto-asset trading venue that executes trading and settlement through on-chain smart contracts, with no central operator holding the funds, since the user trades from their own wallet under a non-custodial model.
- Flash loanA flash loan is an uncollateralized loan that must be borrowed and repaid, principal plus fee, within a single atomic transaction; if repayment is not completed by the end of the transaction, the whole transaction reverts as if the loan never existed.
- Flash mintA flash mint is a variant of the flash loan where the protocol mints new tokens within a single transaction and burns them by the end of it: if the transaction does not return and burn the minted amount plus the fee, everything reverts and the token's net supply does not change.
- Funding rateA funding rate is the periodic payment exchanged directly between the long and short positions of a perpetual future, which has no expiry, designed to keep the perpetual's price anchored to the underlying spot price through arbitrage incentives.
- Gauge votingGauge voting is the governance mechanism by which veToken holders vote on the weight that determines how incentive-token emissions are split across pools: each gauge maps to a pool and the votes set what fraction of the inflation each one receives.
- Governance bribesVote incentives, known as bribes in DeFi, are payments offered to participants or delegates to influence governance decisions, especially emission allocation across pools. They create a market for influence and potential conflicts of interest. The name does not establish their legality.
- Health factorA health factor is a numeric indicator that measures how close a lending position is to liquidation; when it is above one the position is safe and when it falls below one it becomes eligible for liquidation, popularized by the Aave protocol.
- Impermanent lossImpermanent loss is the relative loss of value a liquidity provider takes in a constant-product AMM compared with simply holding the same assets outside the pool when the relative price of the two assets in the pair diverges, becoming permanent when liquidity is withdrawn at diverged prices.
- Liquid Restaking Token (LRT)A liquid restaking token (LRT) is a fungible token that represents a restaking position: the user deposits ETH or an LST, the protocol restakes it via EigenLayer toward validated services (AVS) and issues the LRT, which keeps circulating and can be used in DeFi while the underlying secures those services.
- Liquid stakingLiquid staking is a staking model in which the protocol issues a liquid derivative token (LST) representing the staked position plus accrued rewards, transferable and usable across DeFi applications while the underlying asset stays staked and keeps earning protocol rewards.
- Liquid Staking Token (LST)A liquid staking token (LST) is a transferable token representing a stake of ETH or another proof-of-stake asset locked in staking, plus its accrued rewards, letting holders keep exposure to the asset while still using it across DeFi protocols.
- LiquidationLiquidation is the forced closing, full or partial, of a debt position whose collateral has fallen below the required threshold; it executes by selling or transferring part of the collateral to cover the debt and protect the solvency of the lender or protocol.
- Liquidity miningLiquidity mining is a program through which a protocol distributes its native token, usually a governance token, among those who provide liquidity or use the protocol, as an extra reward on top of organic yield and a way to bootstrap liquidity and spread token ownership.
- Liquidity poolA liquidity pool is a smart contract that holds reserves of two or more assets so that an AMM can quote and trade against them, and liquidity providers receive in return a position token representing their share of the pool and their right to the fees.
- On-chain optionsOn-chain options are option contracts, calls or puts, that grant the right but not the obligation to buy or sell an asset at a strike price before an expiry date, issued, traded and settled through smart contracts for hedging and speculation.
- OvercollateralizationOvercollateralization means maintaining collateral worth more than the debt or tokens it backs. The buffer can absorb price falls but does not guarantee solvency: valuation, liquidity, liquidation processes and market speed matter.
- Perpetual futures (perps)A perpetual, or perp, is a futures contract with no expiry date that replicates leveraged exposure to an underlying asset, so the position can be held indefinitely as long as there is enough margin and funding payments are met.
- Prediction marketA prediction market trades contracts whose payout depends on a verifiable event outcome. In a binary market, price can be interpreted as an implied probability under stated assumptions. Payout units, resolution and access depend on the market; not all operate on-chain.
- Price impactPrice impact is the change in an asset's execution price caused by your own trade as it interacts with a pool's liquidity. In an AMM it is the shift of price along the pool's curve driven by the size of your order.
- Protocol-Owned Liquidity (POL)Protocol-Owned Liquidity (POL) is DEX pool liquidity owned by the protocol's own treasury, instead of supplied by third parties in exchange for incentives: the central contrast is owning liquidity versus renting it through liquidity mining.
- Real yieldReal yield is the return a DeFi protocol distributes from genuine economic income, such as trading fees or loan interest, rather than from inflationary emission of its own governance token, and is often paid out in ETH or stablecoins.
- RehypothecationRehypothecation is the reuse by an intermediary or protocol of collateral a user has deposited for its own purposes, such as re-lending or re-collateralizing it, a practice inherited from traditional finance that raises capital efficiency at the cost of added risk.
- RestakingRestaking is the reuse of ETH already in staking, or of liquid staking tokens, as economic collateral to secure additional protocols beyond Ethereum L1, in exchange for extra yield and subject to the slashing risk of those external services.
- Risk curatorA risk curator is the team or entity that configures the risk parameters and capital allocation of a vault in a modular money market like Morpho, deciding which isolated markets user deposits get exposed to and under what limits.
- SlippageSlippage is the difference between the expected price of a trade when it is submitted and the actual price at which it executes, and on an AMM it combines the impact the order itself causes on the reserves with the state change that occurs before the transaction is mined.
- StakingStaking is the mechanism in Proof-of-Stake networks by which a participant locks native tokens as slashable collateral to propose and attest blocks, receiving protocol rewards in return that align validator incentives toward honest behavior and network security.
- TVL (Total Value Locked)TVL (Total Value Locked) is the metric that quantifies the total value of assets deposited in the smart contracts of a DeFi protocol, a chain or the whole ecosystem, usually expressed in dollars, and it measures a protocol's adoption and scale, not its revenue or profit.
- Undercollateralized lendingUndercollateralized lending is on-chain credit where the collateral posted falls below the principal borrowed, or is absent altogether, replaced by reputation, verified identity or due diligence, unlike DeFi's usual over-collateralization, where the collateral exceeds the loan.
- veTokenomicsveTokenomics is a tokenomics model in which holders lock the governance token for a period to receive a non-transferable voting token, called vote-escrowed, whose power is proportional to the amount locked and the time remaining in the lock.
- Yield aggregatorA yield aggregator is a protocol that automatically routes deposited capital across different DeFi strategies and platforms to optimize yield: the user deposits into a vault and receives a share token that appreciates with accrued yield, without managing the strategies by hand.
- Yield farmingYield farming is a strategy of deploying capital across DeFi protocols to maximize returns, combining liquidity provision or lending with the capture of incentives in the form of governance tokens that a protocol issues to attract liquidity, a practice known as liquidity mining.
Tokenization & RWA
How financial and real-world assets are represented on a blockchain, including the custody, compliance and safeguards that make a tokenized asset investable. See the tokenization service
- Asset LiquidityAsset liquidity is the ease and speed with which an asset can be converted into cash or exchanged without significantly moving its price, measured by market depth, the tightness of the bid-ask spread, trading volume and settlement time.
- CollateralizationCollateralization is the provision of assets as security for a debt, position or issuance. Collateral can reduce losses if an obligation is not met. Its effectiveness depends on value, liquidity, custody and the technical and legal ability to enforce it.
- Compliance ModuleA compliance module is the configurable, pluggable component of a security token that automatically enforces transfer rules before each movement, restricting by country, holder limit or lock-up period, and is one of the four pieces of the ERC-3643 / T-REX architecture.
- Compliance-by-DesignCompliance by design incorporates technical controls and compliance processes into a product’s architecture from the outset. Permissioned tokens can include identity checks and transfer restrictions. Code enforces configured rules; it does not itself certify that every activity complies with legislation.
- Crypto custodyCrypto-asset custody involves safeguarding or controlling assets or access mechanisms on behalf of clients. It may involve private-key management and signing policies. Applicable rules depend on the asset, activity and jurisdiction; tokenized-securities custody does not automatically fall under MiCA.
- Delivery versus payment (DvP)Delivery versus payment (DvP) links asset delivery to payment so that delivery completes only if the corresponding payment occurs. It reduces settlement principal risk. A tokenized system may implement it but must address both legs, permissions and the legal scope of settlement.
- ERC-3475 (Abstract Storage Bonds)ERC-3475 (Abstract Storage Bonds) is a token standard proposed in the Ethereum EIP repository to represent debt obligations on-chain with metadata stored in the contract itself, organizing bonds by classes and nonces to model structured fixed income with distinct redemption conditions.
- Forced TransferA forced transfer is a permissioned-token function that lets an authorized issuer address move tokens from one wallet to another without the source holder's signature, a deliberate departure from the standard-token model designed to satisfy legal mandates.
- Fractional ownershipFractionalization divides an asset or associated rights into smaller units. In tokenization, tokens represent those units. A holder may have a claim against an issuer or a stake in a vehicle, without automatically acquiring a share of legal ownership of the asset.
- Illiquid assetsIlliquid assets are those that cannot be sold or converted to cash quickly without a significant loss of value, due to the lack of a deep secondary market, their indivisibility or high transaction and valuation costs, such as real estate, art or private equity.
- Issuer Counterparty RiskIssuer counterparty risk is the risk that whoever issues a backed token, such as a stablecoin or an RWA, fails to honor its redemption or payment obligation and does not return the promised value, due to insolvency, poor reserve management or lack of liquidity.
- Net Asset Value (NAV)Net asset value (NAV) is a fund's value per share, calculated as total assets minus liabilities divided by the number of shares outstanding, and is the reference price at which shares are subscribed and redeemed, including in tokenized funds.
- On-chain Proof of OwnershipOn-chain ownership evidence verifies token control or assignment within a blockchain network. It may show a holder address and history. For external assets, proving token control does not by itself establish legal ownership, asset authenticity or enforceability of a right.
- Real estate tokenizationReal-estate tokenization uses tokens to represent rights connected to a property or a structure owning or financing it. These may be equity interests, debt or income rights. Property ownership and investor rights depend on documentation, registers and applicable law rather than the token alone.
- RWA (Real-World Assets)RWA (Real-World Assets) refers, in tokenization, to assets and rights whose economic origin is outside a blockchain network, such as property, bonds, funds or commodities. A token may represent a related right, but its legal connection, custody and valuation depend on the structure of each issuance.
- Security tokenA security token is the digital representation, recorded on a blockchain, of a tradable security or financial instrument (shares, bonds, fund units, debt) that keeps its legal nature as a security and remains under securities law rather than under crypto-asset regulation.
- Special purpose vehicle (SPV)A special purpose vehicle (SPV) is an entity created for a limited purpose, such as holding an asset or structuring financing. In tokenization it may connect an issuance with assets and obligations. Legal form and risk separation depend on documentation and jurisdiction; creating an SPV does not eliminate insolvency risk.
- Token Freeze and RecoveryToken freeze and recovery are two administrative capabilities of permissioned tokens that let the issuer block a wallet's transferability and reassign an investor's balance to a new wallet when access is lost, keeping regulatory control of the asset.
- TokenizationTokenization is the process of representing an asset or right through tokens recorded on a blockchain network. The record supports units and transfer rules. For assets outside the network, holder rights depend on documentation and legislation; holding the token does not automatically transfer ownership of the underlying asset.
- Tokenized depositA tokenized deposit is the digital representation, on a blockchain, of a deposit at a commercial bank, that is, the issuing bank's deposit liability to the client taken on-chain (tokenized commercial bank money), distinct from a native crypto-asset and from a third party's e-money.
- Tokenized moneyTokenized money is any digital representation of money issued on a distributed, programmable ledger and used as a means of payment and unit of settlement, covering three families with distinct legal nature: stablecoins, tokenized deposits and central bank digital currency (CBDC).
- Underlying AssetThe underlying asset is the real asset or economic right that backs and gives value to a token: the property, bond, share, commodity or fund holding that exists in the real world, while the token is merely its on-chain representation.
- Utility tokenA utility token is a token whose function is to grant access to a product, service or feature within a network or platform (paying fees, consuming a service, unlocking functions), without conferring the economic rights typical of a security such as dividends, profits or corporate voting.
Stablecoins & payments
Stable on-chain money and the payment rails that connect it to the real economy, from the different backings of a stablecoin to remittances, micropayments and cross-border payments. See the tokenization service
- Algorithmic stablecoinAn algorithmic stablecoin attempts to hold its peg without full collateral, or with partial collateral, relying on an algorithm that adjusts circulating supply and usually a volatility-absorbing token to create arbitrage incentives that return the price to its target.
- ART (Asset-Referenced Token)An ART (asset-referenced token) is a MiCA-defined crypto-asset that is not an e-money token and seeks stable value by referencing another value or right or a combination of them, including one or more official currencies. It need not reference several different assets.
- CBDCA CBDC (Central Bank Digital Currency) is digital money issued by a central bank and denominated in the national unit of account. It is a direct liability of that bank, unlike a commercial-bank deposit or private stablecoin. Access may be retail or wholesale, and blockchain is not required.
- Cross-border paymentsCross-border payments are value transfers where payer and beneficiary sit in different jurisdictions, usually involving currency exchange. It is the umbrella term covering remittances, B2B payments, corporate treasury and international trade, and the main market stablecoins contest against the correspondent banking model.
- Crypto-backed stablecoinA crypto-backed stablecoin uses crypto-assets as collateral to maintain a reference value. Many designs require overcollateralization and liquidate positions when collateral falls below a threshold. Volatility, liquidations and oracles can cause price deviations or uncovered debt.
- DepegA depeg is the event in which a stablecoin's market price deviates significantly or persistently from its target value, for example falling to 0.95 or rising to 1.05, and is the central risk metric watched by investors, treasuries and compliance teams.
- EMT (E-Money Token)An EMT (e-money token) is the MiCA crypto-asset category defined in Art. 3(1)(7) of Regulation (EU) 2023/1114 that keeps a stable value by referencing a single official currency and grants the holder a right to redemption at par value at any time.
- Fiat-backed stablecoinA fiat-backed stablecoin is one collateralized 1:1 by off-chain reserves made up of cash and highly liquid assets such as short-term government debt, and it is today the dominant model by market capitalization within the whole stablecoin category.
- MicropaymentsMicropayments are small-value payments for which processing costs are especially relevant. They can use payment networks, channels or low-cost transfers. Viability depends on fees, aggregation, currency conversion and operations; blockchain is not necessarily required.
- Multi-currency stablecoinsA multi-currency stablecoin is a token designed to maintain a reference value linked to a basket of currencies. Its target depends on the basket’s composition and weights. It differs from a euro- or sterling-denominated stablecoin referencing one currency, a distinction relevant to MiCA classification in the EU.
- PegA peg is the reference value a stablecoin aims to maintain against a currency, asset or basket. A one-to-one target does not guarantee the market price. Stability depends on backing, adjustment mechanisms and redemption conditions.
- Programmable moneyProgrammable money is tokenized money whose transfer and use can be governed by logic coded in smart contracts, so payments execute conditions automatically, such as escrow, milestone release, recurring payments or limits, without an intermediary executing them by hand.
- Redemption mechanismA redemption mechanism is the right and process by which a stablecoin holder can exchange one token for one unit of the reference asset, for example one dollar, with the issuer, and it is the anchor that connects the on-chain price to real value and sustains the peg.
- SeigniorageSeigniorage is the profit a money issuer earns from the difference between the value of money issued and its production cost. Applied to stablecoins it has two senses: the income an issuer earns by investing its reserves, and an algorithmic design that adjusts supply to hold the peg.
- StablecoinA stablecoin is a crypto-asset designed to maintain a reference value, usually one unit of a currency such as the euro or US dollar. It may rely on reserves, collateral or algorithmic mechanisms. Its market price can diverge from that target, and redemption rights depend on the issuer, product and legislation.
- Stablecoin remittancesStablecoin remittances are cross-border money transfers, usually from a worker to family back home, that move value on-chain through a stablecoin instead of correspondent banking, converting to local currency at each end via on-ramp and off-ramp providers.
- Yield-bearing stablecoinA yield-bearing stablecoin is one designed to pass the return generated by its reserves or underlying strategies to the holder, rather than keeping it at the issuer. Unlike a classic USDC or USDT, where the yield is issuer seigniorage, here the holder earns while holding the token.
Wallets, keys & security
How keys and on-chain assets are custodied and how users are protected from fraud and vulnerabilities, covering wallet types, approval management and the most common scams. See the technologies in our stack
- Address poisoningAddress poisoning is a scam where the attacker contaminates the victim's transaction history with a fake address that visually resembles a known one, hoping that in a future transfer the victim copies and pastes the wrong address and sends the funds to them.
- Approval phishingApproval phishing is a social-engineering attack that tricks a user into signing a malicious spending authorization, an approve, a setApprovalForAll or a permit signature, granting the attacker's address permission to move and drain the victim's tokens or NFTs.
- Approval revocationApproval revocation is the act of withdrawing a spending allowance previously granted to a smart contract over a wallet's tokens, setting the authorized amount back to zero so that contract can no longer move the funds via transferFrom.
- Blind signingBlind signing is the act of signing data the device does not show in readable form, usually raw hexadecimal calldata or an undecoded EIP-712 message, so the user approves an operation without verifying what it actually does; it is a central risk in hardware wallets and DeFi.
- Cold walletA cold wallet is the storage of private keys in an offline environment with no internet connection, so the key is never exposed to a network and signing happens offline or on an air-gapped device, where cold storage is the general concept and the cold wallet its concrete form.
- Custodial walletA custodial wallet is one in which a third party, such as an exchange, bank or provider, controls the private keys on the user's behalf, so the user operates a balance through credentials against the custodian's database instead of signing on-chain transactions directly.
- Dusting attackA dusting attack sends tiny amounts of cryptocurrency (dust) to many addresses so that, through on-chain analysis, they can be linked together and their owners deanonymized; it does not steal funds, it attacks privacy to enable later scams.
- ERC-7715ERC-7715 is a Draft Ethereum standard defining a JSON-RPC method through which an application requests scoped, expiring permissions (session keys) from the user's wallet to execute transactions on its behalf, without a signature for every operation.
- Externally owned account (EOA)An EOA (Externally Owned Account) is an Ethereum account whose authority is based on a private key. It can initiate transactions and has a nonce and balance. EIP-7702 allows delegated contract-code execution, so distinguishing EOAs from programmable accounts requires considering that delegation.
- Hardware walletA hardware wallet is a dedicated physical device that generates and stores private keys in an isolated environment and signs transactions internally, so the key never leaves the device or gets exposed to the connected computer or phone, which could be compromised.
- Hot walletA hot wallet is a wallet whose private keys reside in an internet-connected environment, such as a phone, a browser or a server, so it can sign transactions immediately and online, with high availability and low operational friction.
- Infinite approvalAn infinite approval is an ERC-20 spending allowance granted for the maximum possible amount, so a spender contract can move an unlimited quantity of a token from the user's wallet until it is revoked; it amplifies the damage if the contract is or becomes malicious.
- Multiparty computation (MPC)Multiparty computation (MPC) lets participants jointly compute a result without necessarily revealing their private inputs. Threshold signing can produce a signature using secret shares. It is a cryptographic technique rather than a custody category: control depends on who holds shares and authorizes operations.
- MultisigA multisignature scheme requires several approvals to execute an operation, for example three of five signers. It may use scripts or smart contracts. It reduces dependence on one key, with security determined by threshold, signer independence and recovery or upgrade permissions.
- Non-custodial walletA non-custodial wallet lets a user authorize operations without delegating key custody to a provider. It may use one key, multiple signatures or smart-account logic. Effective control also depends on permissions, recovery, modules and restrictions on the managed assets.
- Permit signature attackA permit-signature attack tricks a holder into signing an off-chain token-spending authorization. An attacker can submit the signature to obtain permission and transfer assets within its limits. The attack exploits granted authorization without necessarily obtaining the private key.
- Private key compromiseA compromised key is a private key exposed to or controlled by an unauthorized person. It enables valid signatures using that key. Impact depends on account permissions; revoking token approvals alone does not remove access provided by a stolen key.
- Rug pullA rug pull is an exit scam where a crypto project's team or insiders withdraw the value contributed by investors and abandon the project, leaving the token without liquidity or support, usually by draining the pool on a decentralized exchange.
- Seed phraseA seed phrase is a sequence of 12 to 24 words from a fixed dictionary, defined by the BIP-39 standard, that encodes the root entropy from which all of a hierarchical wallet's private keys are deterministically derived and acts as a master backup to restore the entire wallet.
- Self-custodySelf-custody is the principle whereby the user or entity keeps exclusive control of the private keys to their assets, without delegating custody to third parties, an idea summarized in the phrase not your keys, not your coins and central to on-chain treasury management.
- SIM swappingSIM swapping is an attack in which the criminal convinces or bribes a mobile carrier to transfer the victim's phone number to a SIM under the attacker's control, intercepting calls and SMS to capture OTP codes and password-reset links.
- Smart contract auditA smart-contract audit reviews a specific code version and security scope to identify vulnerabilities and logic errors. It combines expert analysis and tools. The report records findings and limitations; it does not guarantee defect-free code or automatically cover later changes, keys, interfaces or external dependencies.
- Smart contract riskSmart contract risk is the possibility that the code of a smart contract custodying or managing funds contains bugs, vulnerabilities or exploitable logic that allow loss or theft of assets, whether through a programming error, malicious design or unexpected interaction between protocols.
- Token approvalA token approval is the ERC-20 permission by which a token holder authorizes a third-party address, usually a smart contract, to spend up to a set amount of their tokens on their behalf, granting a right without moving any funds yet.
- Wallet (crypto)A wallet is an application, device or service for viewing assets and interacting with a blockchain network. It may manage keys and signatures or provide access to a custodian. Assets are recorded on the network; the account and custody model determine who can authorize operations.
- Wallet addressA blockchain address is a public identifier referencing accounts, contracts or asset-receiving conditions according to the network. It does not always derive directly from a public key. Sharing it does not expose a private key, but may link identity, balances and history and requires checking network and format.
- Wallet drainerA wallet drainer is malicious software attempting to steal assets through deceptive signatures, approvals or transactions. Its scope depends on the acquired permission: an ERC-20 approval typically affects one token, while other permissions enable wider actions. Signing a malicious message does not necessarily expose the private key.
- Watch-only walletA watch-only wallet stores only public data such as addresses or an extended public key (xpub) to monitor balances and history without holding private keys; by design it cannot sign transactions or messages, only read on-chain state.
NFTs & digital ownership
Non-fungible tokens and the representation of unique ownership and rights on a blockchain, beyond digital art: metadata, royalties, dynamic tokens and non-transferable credentials. See the tokenization service
- AllowlistAn allowlist is a list of wallet addresses pre-approved by an NFT project's team that gain priority access to mint in an early window, ahead of the public mint and often on preferential terms, validated on-chain through a Merkle tree.
- Digital ownershipDigital ownership describes rights to control, use or dispose of a digital asset. On blockchain networks, a token records verifiable assignments and transfers. Technical account control differs from legal rights in associated content or assets, which require defined rules and documentation.
- Dynamic NFT (dNFT)A dynamic NFT is an NFT whose metadata, such as image, attributes or state, can change after minting in response to on-chain events or external data, without altering the tokenId or ownership. It lets a token represent an asset with an evolving, real-time state rather than a fixed one.
- ERC-2309 (Consecutive Transfer Extension)ERC-2309 is an ERC-721 extension that defines a single event, ConsecutiveTransfer, to represent the creation or transfer of a consecutive range of token IDs in one emission, instead of emitting a separate Transfer event per token, making large-collection launches far cheaper.
- ERC-4907 (Rental NFTs)ERC-4907 is an Ethereum standard that extends ERC-721 by adding a temporary user role with an expiry date, separate from the owner role, so an NFT can be rented or lent without transferring ownership, with the right revoked automatically when the term ends.
- ERC-7401 (Parent-Governed Nestable NFTs)ERC-7401 is an Ethereum standard that extends ERC-721 so an NFT can be owned by another NFT, forming asset hierarchies where the parent token governs which child tokens it accepts through an on-chain propose-and-accept mechanism.
- ERC-7656 (Generalized Token-Linked Services)ERC-7656 is an Ethereum standard that defines a registry to deterministically deploy any contract or service linked to an NFT or another contract, generalizing the token-bound account concept of ERC-6551 beyond smart accounts.
- Floor priceThe floor price is the lowest price at which an item from an NFT collection is currently listed for sale on a given marketplace, that is, not a price paid but the lowest open ask, marking the minimum cost of entry to own any piece of the collection.
- GameFiGameFi (Game plus Finance) is the category that merges video games with DeFi financial primitives (NFT-based asset ownership, token rewards, staking, asset lending and token governance) and acts as the umbrella for web3 gaming, within which play-to-earn is one monetization model.
- Mint / MintingMinting is the on-chain operation that creates a token unit, fungible or non-fungible, for the first time and assigns it to an address through a Transfer event originating from the zero address, so it effectively transfers a brand-new asset from nothing.
- NFT (Non-Fungible Token)An NFT (Non-Fungible Token) has a distinct identity within a contract and network, so its units are not interchangeable like fungible tokens. It may be associated with content or rights. Holding it does not automatically transfer copyright or ownership of an external asset.
- NFT metadataNFT metadata is the document, usually in JSON format, that describes the asset linked to the token: name, description, image and attributes. The on-chain token guarantees uniqueness and ownership through a pointer, and the metadata supplies the recognizable content for the user.
- NFT metadata storageNFT metadata storage determines where information associated with a token, such as its name, image and attributes, is kept. It can reside in a contract or outside the network through a URI. Availability, integrity and mutability depend on architecture and permissions.
- NFT royaltiesNFT royalties are the fee a creator or issuer earns on each resale of an NFT in the secondary market, expressed as a percentage of the sale price. The ERC-2981 standard normalizes how to query that fee, though its payment depends on whether the marketplace chooses to apply it.
- PFP (Profile Picture NFT)A PFP (Profile Picture) is an image used as an avatar or profile photo. In an NFT context, it refers to collections whose tokens are associated with avatar images. Collection size, attributes and access features depend on the project; no collection size is mandatory.
- Play-to-earn (P2E)Play-to-earn (P2E) is a video-game economic model in which players obtain digital assets with market value, fungible tokens or NFTs, in exchange for their time and skill and can sell or trade them outside the game, thereby inverting the traditional pay-to-play model.
- ProvenanceProvenance is the documented history of an asset’s origin and transfers. An on-chain record can show token creation and transfers. It does not automatically establish creator identity, copyright or authenticity of an associated object; those connections require additional evidence.
- RevealA reveal is the NFT launch mechanic by which each token's final image and metadata stay hidden during the mint, showing a generic placeholder, and are unveiled afterward, usually once the mint closes, by switching the source of the metadata.
- Semi-fungible token (SFT)A semi-fungible token (SFT) is a token that can behave as fungible, interchangeable and with quantity, in one phase and become non-fungible or unique in another, or that combines a unique identity with a divisible numeric value. It bridges the fungible ERC-20 model and the non-fungible ERC-721 model.
- Soulbound token (SBT)A soulbound token (SBT) is a non-transferable token permanently tied to an account or wallet, designed to represent credentials, affiliations, reputation or identity rather than transferable financial value. Its defining feature is non-transferability: it cannot be bought or sold on a secondary market.
- Token burnA burn is the verifiable, irreversible destruction of a token that in formal implementations removes ownership and emits a Transfer event to the zero address, the exact mirror of minting, so that no one can ever move it again.
DAOs & governance
How a community or organization is organized, votes and is managed in a decentralized, on-chain way, covering voting models, treasury management and how decision power is shared. See the blockchain development service
- Conviction votingConviction voting is a continuous decision-making mechanism in which a vote's weight grows the longer a voter keeps tokens staked on a proposal and decays when they withdraw, so a proposal passes when its accumulated conviction crosses a threshold, without discrete votes or a rigid quorum.
- DAO (Decentralized Autonomous Organization)A DAO (Decentralized Autonomous Organization) coordinates decisions and resources through shared rules and digital tools, often smart contracts. It may use on-chain or off-chain votes, delegates and multisignature accounts. Its autonomy, distribution of control and legal recognition depend on design and jurisdiction.
- DAO treasuryA DAO treasury is the set of assets funding the organization’s activities. Governance contracts, multisignature accounts or combinations of both may control it. Spending rules, signers and emergency permissions determine who can move funds and under what conditions.
- ERC-4824 (Common Interfaces for DAOs)ERC-4824 (Common Interfaces for DAOs) is an Ethereum interface standard that defines a minimal API so any DAO contract becomes uniformly discoverable and describable, both on-chain and off-chain, through a daoURI function that points to structured JSON-LD metadata.
- ERC-6372 (Contract Clock)ERC-6372 (Contract Clock) is an Ethereum interface standard that lets a contract announce, in a machine-readable way, which time source it uses internally, block number or timestamp, via the clock() and CLOCK_MODE() functions, making on-chain governance portable across chains.
- FutarchyFutarchy is a form of governance proposed by economist Robin Hanson in which participants vote on the values to maximize but bet on beliefs, delegating the policy decision to prediction markets that estimate which option will improve the chosen welfare metric.
- Governance attackA governance attack is one where an actor acquires enough voting power, by buying it, borrowing it through a flash loan or accumulating it, to pass a malicious proposal that benefits them, typically draining the treasury or changing critical protocol parameters in their favor.
- Governance delegateA governance delegate is the person or entity that receives the voting power of one or more governance-token holders and votes on their behalf in a DAO's proposals, without ever custodying the tokens and revocably at any time.
- Governance tokenA governance token is a token, usually ERC-20, that grants its holder voting rights over a protocol or DAO's decisions, with voting power typically proportional to the delegated balance and implemented through the ERC20Votes extension.
- Governor contractA Governor contract is the smart contract that runs the full on-chain governance cycle of a protocol or DAO, from proposal creation and voting through to the binding execution of approved actions, with OpenZeppelin Governor as its reference implementation.
- Off-chain votingOff-chain voting is a vote not recorded as an on-chain transaction, since the voter signs a message stored off the blockchain. Its reference model is Snapshot, which uses EIP-712 signatures persisted to IPFS and so removes the gas cost.
- On-chain proposalAn on-chain proposal records a decision submitted to governance on the network. It may include contract calls for execution if approved. Voting, execution and delays follow specific rules; proposal approval does not necessarily mean its actions have executed.
- Optimistic governanceOptimistic governance is a model where a proposal is approved by default and executes after a set period unless a veto is exercised within that window, flipping the burden compared with requiring an active vote in favor until quorum is reached.
- Progressive decentralizationProgressive decentralization is the strategy of building crypto applications by gradually handing control from the founding team to the community, rather than decentralizing from day one. The framework, popularized by Jesse Walden of a16z in 2020, orders product, community and decentralization into successive phases.
- Proposal executionProposal execution is the final step of the on-chain governance cycle where an approved proposal runs the transactions it encodes, such as transferring funds, changing parameters or upgrading contracts. Only then does the decision take effect on-chain, with no human intermediary translating it into action.
- Quadratic fundingQuadratic funding is a capital-allocation mechanism for public goods that distributes a matching pool by weighting the number of contributors over the size of each contribution, so many small donations attract more matching funds than a single large donation of the same total.
- Quadratic votingQuadratic voting is a governance mechanism where each voter gets a budget of credits and the cost of casting several votes on one option grows as the square, so spreading influence by the true intensity of each preference is rewarded over concentrating power on a single issue.
- Quorum (governance)Quorum in governance is the minimum participation required for a proposal to be valid, regardless of the for-or-against outcome. If it is not reached, the proposal is considered defeated even when it has a majority of the votes cast.
- Rage quitRage quit is a mechanic originated in MolochDAO that lets a member leave the organization by burning their shares in exchange for their proportional slice of the treasury, during a window before a proposal executes, as protection for the minority against majority decisions.
- SubDAOA SubDAO is a subordinate, semi-independent DAO, with its own governance and often its own token, that operates autonomously over a specific function or domain within a larger DAO, as an organizational scaling pattern that delegates operational decisions without every tokenholder voting on each one.
- Token-weighted votingToken-weighted voting is the governance system where vote weight is proportional to the number of governance tokens an address controls, following the one token, one vote rule. It is the dominant scheme in on-chain DAOs thanks to its simplicity and natural resistance to fake-account creation.
- Vote delegationVote delegation is the mechanic by which a holder assigns their voting power to a delegate, another address or themselves, without transferring ownership of their tokens, so the delegate votes with the accumulated weight while the holder keeps their assets and can revoke at any time.
- Vote snapshot (checkpoint)A vote snapshot, or checkpoint, captures each account's voting power at a fixed reference point, a block number or timestamp, so only the tokens held or delegated at that moment count. It neutralizes last-minute vote buying and flash-loan attacks against on-chain governance.
- Voting powerVoting power is the weight an address's vote carries in an on-chain governance decision. It usually derives from the balance of governance tokens the address controls or has been delegated, measured at a specific reference point, and it determines who decides on protocol parameters, treasury and upgrades.
Decentralized identity
Identity, reputation and verifiable credentials the user controls without depending on a central issuer, the basis for proving who you are or what you meet without giving up your data. See blockchain regulation by country
- Decentralized Identifier (DID)A DID (Decentralized Identifier) is a globally unique, persistent, resolvable identifier that its holder controls with a private key, without depending on a central registration authority, serving as a W3C standard that anchors verifiable credentials.
- DID methodA DID method is the specification defining how a decentralized identifier (DID) is created, resolved, updated and deactivated on a specific network, occupying the second segment in did:method:identifier and setting where the identifier's truth lives and how anyone verifies it.
- EU Digital Identity Wallet (EUDI)The EU digital identity wallet (EUDI Wallet) is an official app, foreseen by the eIDAS 2 regulation, that will let any European citizen and business store and share identity documents and credentials (ID, diplomas, licenses) securely, interoperably across countries and with control over which data they share.
- On-chain identityOn-chain identity is the binding of verifiable attributes, such as credentials, attestations and memberships, to a wallet on a blockchain, so that a smart contract can check who an address is and gate its access, serving as the substrate for permissioned access to RWA and security tokens.
- On-chain reputationOn-chain reputation is the verifiable, auditable record of an address or agent's behavior, derived from its blockchain activity, such as transactions, repayments, governance votes and received attestations, built from attestations, non-transferable tokens and scoring engines, with no single standard.
- Proof of PersonhoodProof of personhood is a mechanism to show that behind an address or account there is a real, unique human, without necessarily revealing their identity, and it is the central defense against sybil attacks, where a single actor creates many fake identities.
- Self-Sovereign Identity (SSI)Self-sovereign identity (SSI) is a digital identity model in which the user owns and controls their identity and data, without depending on a central provider, and it is an umbrella term covering decentralized identifiers (DID), verifiable credentials (VC) and the user's wallet.
- Verifiable Credential (VC)A verifiable credential (VC) is a cryptographically signed digital attestation made by an issuer about a subject, following the W3C data model, which the holder keeps in a wallet and presents to a verifier to prove an attribute, such as a passed KYC, without revealing the rest.
Bitcoin
The concepts specific to Bitcoin, its transaction model and its ecosystem of layers and standards, from the UTXO model and the halving to emerging standards like Runes and BRC-20. See fundamentals guides on the blog
- BIP (Bitcoin Improvement Proposal)A BIP (Bitcoin Improvement Proposal) is a standardized design document describing a proposed feature, process or change to Bitcoin, and it is the protocol's formal mechanism for technical governance, conceptually parallel to Ethereum's EIPs.
- Bitcoin addressA Bitcoin address is a cryptographically derived text string that encodes a locking script, meaning the conditions required to spend funds. It is not an account and holds no balance. It carries a version byte and a checksum that detects typing errors before sending.
- BRC-20BRC-20 is an experimental fungible-token standard on Bitcoin built on top of the Ordinals protocol, embedding JSON data in inscriptions tied to individual satoshis to represent a token's deploy, mint and transfer operations.
- CoinJoinCoinJoin is a collaborative Bitcoin transaction technique where several users combine their payments into a single transaction with multiple inputs and outputs, breaking the common-input-ownership heuristic so an external observer cannot reliably link which output belongs to which participant.
- Difficulty adjustmentThe difficulty adjustment is the consensus mechanism that recalibrates Bitcoin's proof-of-work difficulty every 2,016 blocks to keep the average block time near ten minutes, regardless of how much computing power joins or leaves the network.
- HalvingThe halving is the scheduled event in Bitcoin's consensus that cuts the block subsidy, the new BTC a miner receives per block, in half every 210,000 blocks, roughly every four years, and it implements the network's fixed monetary policy.
- RunesRunes is a protocol for creating and transferring fungible tokens natively on Bitcoin using the UTXO model, where balances attach directly to transaction outputs and the instructions are encoded inside the on-chain transaction itself.
- SatoshiA satoshi is the smallest indivisible unit of Bitcoin in the protocol, equal to 0.00000001 BTC, so one bitcoin divides into one hundred million satoshis, and the protocol counts all amounts internally in whole satoshis rather than fractional BTC.
- UTXO (Unspent Transaction Output)A UTXO (Unspent Transaction Output) is an amount of bitcoin created by a previous transaction that has not yet been used as an input to another, and the set of all UTXOs represents all the spendable bitcoin that exists at a given moment.
Regulation & compliance
The legal and compliance framework that applies to crypto-assets and companies in the sector, covering MiCA, KYC and AML processes, the Travel Rule and regulated roles such as CASP and VASP. See blockchain regulation by country
- AML (Anti-Money Laundering)AML (Anti-Money Laundering) is the body of laws, controls and procedures that require financial institutions and crypto-asset service providers to detect, prevent and report any use of the financial system to legitimize funds of illicit origin.
- CASP (Crypto-Asset Service Provider)A CASP (Crypto-Asset Service Provider) is a legal person or other undertaking professionally providing one or more crypto-asset services to clients and entitled to do so under MiCA. Entitlement may come from authorization or the conditions applicable to certain already-regulated financial entities.
- DORADORA (Digital Operational Resilience Act) is Regulation (EU) 2022/2554, which requires the financial sector to withstand, respond to and recover from information and communication technology incidents, applicable across the EU since 17 January 2025.
- FATF (GAFI)FATF (Financial Action Task Force), known in Spanish as GAFI, is the intergovernmental body that sets the global standards against money laundering, terrorism financing and proliferation financing, through the 40 Recommendations that jurisdictions adopt into national law and whose application it evaluates.
- KYC (Know Your Customer)KYC (Know Your Customer) is the set of processes by which a company verifies the actual identity of its customers, collecting documentation, checking the source of funds and monitoring transactions, to comply with anti-money-laundering and counter-terrorism-financing regulations.
- MiCAMiCA is Regulation (EU) 2023/1114 on markets in crypto-assets. It regulates certain offers, issuers and service providers in the European Union. Crypto-assets classified as financial instruments are excluded and remain subject to their specific legislation.
- Proof of ReservesProof of reserves verifies specified assets a custodian claims to hold. It may combine address-control signatures with commitments to customer balances. It is a limited snapshot: by itself it does not prove solvency, complete liabilities or that reserves are unencumbered.
- Regulatory sandboxA regulatory sandbox is a legal framework that lets companies test innovative products or business models in a controlled environment, under regulator supervision and for a limited time, with bounded exemptions from certain requirements and safeguards for customers.
- Travel RuleThe Travel Rule is the AML standard that requires financial institutions and crypto-asset service providers to collect, transmit and retain identifying data on the originator and the beneficiary that travels alongside a transfer of virtual assets, in line with FATF Recommendation 16.
- VASPVASP (Virtual Asset Service Provider) is the FATF category for individuals or legal entities professionally conducting certain virtual-asset activities for others. It includes exchange, transfer, custody and certain issuance-related services. Registration or licensing requirements depend on the jurisdiction.
What is the Metlabs glossary
This glossary explains blockchain concepts, mechanisms, metrics and standards. Each entry distinguishes what the term means, how it is used and the conditions or risks to understand. You can consult primary sources and follow links to other concepts and further reading. The Metlabs team maintains the definitions in Spanish and English.
