Crypto Lingo, everyday crypto words explained
Crypto lingo is a list of everyday crypto words that are frequently used in the crypto community. Words like rug pull, FUD, DEX, HODL, CEX, MOON, ATH, TVL, altcoin, DCA, DYOR, Shards oracle e.tc.
FUD is actively spreading fear about the viability of a project/asset in the short to medium term. When people spread FUD they usually leverage popular channels for maximum impact. Which is to generate uncertainty, doubt and eventually a sell-off of the asset under attack. FUD is often conceived from a maliscious, opportunistic or ignorant angle.
FOMO is the reactive fear of missing out on something that is potentially benefiting other people. In the context of crypto industry, inexperienced crypto owners will buy into a crypto asset that has made rapid gains, lest they miss out on gains wave.
What is an Altcoin?
An altcoin is any crypto assets that is not bitcoin. Before Ethereum and other cryptocurrencies came along, Bitcoin was the only cryptocurrency coin. Ethereum, Litecoin and other crypto currencies became alternatives to the Bitcoin offering, hence the term 'altcoin'. Ethereum is the largest and most well-known altcoin. It also has the largest crypto ecosystem. BNB, Solana, XRP, Monero, Polkadot & Cardano make the list of other popular altcoins.
TPS is the number of transactions per second, assuming that each transaction take the same amount of time to process. In the context of a blockchain, transactions almost never take the same amount of time to process. This way, TPS is an aggregate number that is merely useful for speed comparison purposes.
In reality, TPS is hardly a truthful representation of the actual throughput of a blockchain system. Different transactions are bound to be of different choices, the network conditions are subject to change and a host of other factors determine the throughput of a blockchain.
A CEX is a centralized exchange for cryptocurrencies. All trading is facilitated a merchant company. These companies have centralized databases that manage order books, host customer wallets and manage their clients' crypto coins until they decide to withdraw.
Good examples of CEXs include Binance, Coinbase, Gemini, Etoro, Bitstamp, Uphold, Coinmama, Localbitcoins e.t.c
Most CEXs use an order book model.
A DEX is a decentralized exchange for cryptocurrencies. Put differently, a dex trading software for crypto that runs on a network of computers. All trading is automated and there are no mediators like in CEX.
Good examples of DEXs include:
- Uniswap (for ethereum ecosystem)
- Pancakeswap (for Binance Smart Chain)
- MinSwap ~ the largest DEX on Cardano
- Wingriders ~ the 2nd largest cardano DEX
- Sundaeswap ~ the third larget DEX on Cardano
For a long time, DEXs used an Automated Market Maker Model (AMM). Now it's possible to have DEXs that use an order book model on Cardano. These DEXs also support the AMM model.
To HODL is to hold on to ones crypto assets and refrain from selling in the short or medium term, in the face of FUD and FOMO. Regardless of the temptation to FOMO into other crypto assets that promise larger returns.
This resolve is usually advised by the belief that these crypto assets will perform better in the long run. Besides, it has been demonstrated that failure to HODL often leads to most crypto owners getting REKT
DCA is dollar cost average. To DCA is to allocate a specific amount of money that should buy crypto assets at regular intervals.
Before making an investment into any crypto project, users should always do their own research. They should not depend on the promises or projections of crypto thought leaders, founders, crypto shills or celebrities.
What is "Rug Pull"?
Rug Pulling happens when developers of a crypto asset drop their project and swindle their investors by running away with investors' funds.
A rug pull might also occur when a crypto project delivers less tokens per amount invested than they had promised their investors or partners.
What is an Oracle in DeFi?
An oracle in the context of DeFi is data aggregator. It provides up-to-date data inputs for smart contracts scripts on blockchain to process outputs. A good example of an Oracle is Chainlink.
Smart contracts need oracles because blockchain have storage constraints and are often dumb about real-world data.
All times high. For example, Bitcoins ATH was 69,044. Or Ethereum hit an ATH of $4,878 in November 2021.
An reward earned by miner in Proof of Work chain or a validator in Proof of Stake chain for signing the latest block. It is an incentive for the miners or validators to keep block propagation live for transactions verification and security.
This an acronymn for "Minimum attack vector". It's an estimate of the minimum subset of network participants an attacker would need to control to compromise a blockchain, usually by generating at least 51% of defective blocks.
Initial coin offering. Like during an IPO, a crypto entity, sells its tokens to the public. ICO are usually conducted during a project launch as crowdfunding strategy
IDO stands for "Initial DEX offering". It's a decentralized form of an ICO. Funds are raised by selling tokens to the public through a decentralized exchange (DEX). A DEX launchpad e.g DAO maker is needed for this process.
A DAO is decentralized autonomous organisation. This an organisation whose control is spread across different computer users, node and or networks. They are not controlled by any centralized entity.
Total value locked in an blockchain/dApp ecosystem. It's an aggregation of the value of all the assets and contracts in an ecosystem. For example Ethereum's ecosystem has a TVL of over 39 billion USD.
A dApp is a decentralized application. An application that operates on a decentralized blockchain. In most cases a dApp has two components i.e a smart contract contract that lives on-chain and off-chain components that consists off-chain logic.
This special software which allows the movement of assets between two blockchains.
It stands for "Secure Asset Fund for Users". In general use it means that users funds held in a crypto instutition, DAO or smart contract are safe. Initially, it was used by Binance referring to a special fund that it sets aside to refund its users in the event of a hack.
Whenever there's speculation of a security breach, it's common for crypto teams to reassure their users, "your funds are SAFU".
An upgrade that requires all nodes in the network to upgrade to the new protocol to participate in block generation and confirmation.
An upgrade that is backward compatible. Nodes running older versions of the protocol can still participate in block generation.
First published on Jan 24, 2022