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Absolute Return Arbitrage
Absolute return arbitrage seeks to generate positive returns regardless of the direction of the market. Investors using this approach incorporate various strategies and arbitrage techniques to exploit pricing inefficiencies and achieve consistent returns
Account Abstraction
Account Abstraction is the process of making interacting with the blockchain easier. It allows a user to manage their account using a smart contract instead of a private key. In short, it gives the user more control and reduces technical complexity
Active Investing
Active investing is an investment strategy that involves ongoing buying and selling activity in the market. The best active investors still have a long-term outlook on the market, but also look to optimize the investing strategy based on shorter term price movements
Actively Validated Services (AVS)
Actively Validated Services (AVS) are any system that require their own distributed validation and security. The EigenLayer protocol popularized security for AVSs as EigenLayer allows new services to leverage the strong security of the Ethereum network without needing to build out their own validator network. This speeds up the launch process, reduces cost, and enhances application-level security
Airdrop
An airdrop is a distribution method in the digital asset space where tokens or coins are sent for free to a large number of wallet addresses. Airdrops are typically used as a marketing strategy to increase awareness, drive adoption, and reward loyal community members or early adopters. The recipients are usually chosen based on certain criteria, such as holding a specific digital asset, participating in a community activity, or completing promotional tasks
Alternative Digital Assets
Alternative digital assets, also known as altcoins or alts, are digital assets that are not Bitcoin. They are built on different blockchain network from Bitcoin. There are thousands of alts in the market today, and each alt claims to have a unique value proposition across the various sectors of the digital asset industry
Automated Market Maker
Automated market makers (AMMs) are types of decentralized exchanges that use code to facilitate the trade of digital assets. In the traditional financial market, liquidity is maintained through high buyer and seller activity. However, AMMs use liquidity pools to maintain liquidity
Backwardation
Backwardation is a market condition where the price of the futures contract is lower than the price of the underlying asset during the contract's maturity. The futures market being in backwardation is a bearish signal in the market because it indicates that the market believes the price of the underlying asset will be lower in the future
Beta
Beta is a measure of the asset's sensitivity to the overall market movements
Beta-Neutral Strategy
Beta-neutral strategies look to eliminate or neutralize market risk by balancing the beta of a portfolio. Investors using this strategy create a portfolio with equal and opposite exposures to market movements to make the portfolio's beta close to zero, allowing investors to isolate and profit from the asset's idiosyncratic risk
Bitcoin
Bitcoin is the first decentralized digital asset. After the global financial crisis, an unknown person (or entity) named Satoshi Nakamoto created bitcoin based off of the free market ideology. Today, bitcoin is seen as a store of value with immutable and non-sovereign properties
Bitcoin Cash
Bitcoin Cash is a cryptocurrency that was created as a result of a hard fork from Bitcoin in 2017. The goal of Bitcoin Cash was to improve on Bitcoin's scalability issues by increasing block size limits and reducing transaction costs. However, this has also led to concerns around centralization
Bitcoin Runes
Bitcoin Runes is a recent development in the Bitcoin ecosystem. It transforms bitcoin into a more functional platform by enabling the creation of fungible tokens on the Bitcoin network. These fungible tokens can be used in ways similar to ERC-20 tokens on the Ethereum network
Block
A block within a blockchain is a blob of data that contains the history of transactions that occurred over a given time interval. Blocks are added by the computers on the network (miners or validators) via the consensus protocol. These computers check the blocks to ensure that the transactions are sound and that the references match up
Blockchain
A blockchain is a decentralized ledger that is organized as a series of "blocks" containing data. Computers running the blockchain are distributed all throughout the world, and use a special set of rules to add the blocks to the blockchain. Once transactions are recorded on the chain, they cannot be tampered with
Central Bank Digital Currency
Central Bank Digital Currencies are fiat currencies that exist in digital form and are distributed by a given country's central bank
Centralized Exchange
A centralized exchange is a platform that facilitates the trading of cryptocurrencies and other digital assets. The exchanges act as intermediaries between buyers and sellers, providing a centralized infrastructure for conducting transactions and orders. Centralized exchanges also manage the private keys of its users
Chevron Deference
The Chevron Deference was a precedent set by the Supreme Court in 1984 that stated that judges should defer to federal agencies when the rules they make are reasonable ad the enabling law was ambiguous. In June, the Supreme Court overturned that decision. In the digital asset industry, this could mean that the SEC's interpretative power over the digital asset industry is now more limited
Coin
Coins are digital currencies that operate within their own blockchains. Bitcoin and Ethereum are examples of coins. The purpose of the coin is as a medium of exchange, store of value, or as payment paid to the computers working on securing the network via the consensus protocol
Commodity Tokens
Commodity tokens serve as a resource on their blockchain networks. For example, ETH on the Ethereum network serves as a fuel to power operations, similar to how a car needs gasoline to run
Common Risk
Common risks are risks associated with the overall market and broader economic factors. Common risks are attributable to factors that impact the overall market, such as interest rates and inflation
Consensus Protocol
The consensus protocol is the special set of rules that computers running the blockchain follow to add blocks. The consensus protocol determines the "truth" behind what actually occurred in the system, and enables the block addition accordingly. Consensus involves tradeoffs: optimizing for speed means limiting participants, while optimizing for decentralization limits speed
Contango
Contango is a futures market condition where the price of the future's contract is higher than the price of the underlying asset at maturity. The futures market being in contango is considered a bullish sign because it signals that the market believes that the price of the underlying asset will increase in the future
Correlation
The correlation between two assets measures the degree and direction of a linear relationship between the movements of the two assets. The correlation can range from -1 to 1. If two assets have a correlation of -1, they are perfectly negatively correlated with one another, while a correlation of 1 means they move in lockstep with each other. A correlation of 0 means that the assets do not have any relationship in their movements
Cryptocurrency
Cryptocurrency are a digital, encrypted, and decentralized medium of exchange. Cryptocurrency is a broad term that encompasses different categories of tokens including commodity tokens, utility tokens, and governance tokens
Cryptography
Cryptography is the process of hiding or coding information. In the digital age, this is needed to facilitate information exchange. Cryptography allows two computers communicating with one another to encode the message (privacy) and ensure that the message was not tampered with (integrity). Cryptography also helps the communicating parties ensure that the messages received are authentic
DAO
DAOs are decentralized (rules cannot be changed by a single individual) and autonomous (operate based on smart contracts and without human intervention) organizations (coordinate activity among a distributed community). The DAO extends traditional corporate governance into the digital world by encoding laws into smart contracts
Decentralized Exchange
A decentralized exchange is a platform that allows users to trade cryptocurrencies directly with each other without an intermediary or centralized authority. These exchanges are non-custodial, since users retain control over their own private keys and funds
DeFi
DeFi, or decentralized finance, is a financial technology that includes decentralized applications used for financial operations such as trading, lending, and saving. These applications are encoded in smart contracts that have been deployed to various blockchain networks. DeFi has unlocked the door to a world of programmable, faster, and more powerful financial applications
Delta
The delta of a portfolio measures the sensitivity of the portfolio's value to the price of the underlying asset
Delta-Neutral Strategy
Delta-neutral strategies involve creating a portfolio where the overall delta is zero. Investors can do this by combining the asset and derivatives on the asset to balance out the delta, making the portfolio unaffected by small changes in the price of the underlying asset
DePIN
DePIN, or Decentralized Physical Infrastructure Networks, refers to a protocol using blockchain technology to incentivize creating, maintaining, and operating real-world infrastructures in a decentralized manner
Derivative
Derivatives are usually used for risk hedging. An investor may sign a derivatives contract allowing them to purchase an asset at a specific price. This allows them to hedge against potential fluctuations in the value of the asset
Digital Asset
A digital asset is anything created and stored digitally, is identifiable and discoverable, and has or provides value
Digital Asset Ecosystem
A digital asset ecosystem encompasses many different types of digital assets, including: cryptocurrencies, tokenized assets, virtual assets, non-fungible tokens (NFTs), and more
Digital Currency
Digital currencies are digital assets that perform all the functions of fiat money, in that users can pay for goods or services with them. Essentially, it would be considered legal tender
Directional Strategy
A directional trading strategy is an investment or trading approach that seeks to profit from anticipated movements in the price of an asset. These strategies focus on predicting the direction of the price movement and taking positions accordingly
Discounted Cash Flow (DCF)
A DCF model is a financial valuation method used to estimate the value of an investment or company based on expected future cash flows. The guiding principle behind a DCG is that the value of an asset is equal to the present value of its future cash flows, discounted back to today's value using a discount rate
Distributed Ledger
A distributed ledger is a database that is consensually shared and synchronized across multiple parties. Distributed ledgers can record static and dynamic data about publicly traded (permissionless) blockchains or private and permissioned blockchains
Diversification
Diversification is an investment strategy that is aimed at reducing risk of an investor's overall portfolio by spreading investments across a variety of assets and sectors. Diversified portfolios can reduce the overall risk and volatility of an investment portfolio, since different assets may react differently to the same economic events
Double-Spending Problem
The double-spending problem is the issue that a currency could be used to purchase two assets with the same coin because there is no one authority on validating digital currency transactions. The problem can be solved through consensus mechanisms and blockchain technology
EigenLayer
EigenLayer is a middleware built on the Ethereum network. EigenLayer allows protocols that are built on it to leverage Ethereum's trust network. This will allow protocols built on EigenLayer to have low barriers to entry, since they can just leverage Ethereum's security to create their ecosystems
EIP-1559
EIP-1559 is an upgrade to the Ethereum network that simplified the fee market mechanism. Previously, the fee mechanism in Ethereum was based on a first-price auction, where users bid a set amount of money to have their transactions processed, and the highest bidder won. Now, with EIP-1559, there is a set 'base fee' required to be included in the next block
ERC-20
ERC-20 is a widely used standard for creating and issuing fungible tokens on the Ethereum blockchain. This standard has significantly contributed to the growth and development of the Ethereum ecosystem. By creating a common framework for creating and managing tokens, ERC-20 unlocked a wide range of applications, from simple tokens to complex financial instruments. These common set of rules ensure interoperability and ease of integration within Ethereum
Epoch
An epoch refers to a specific period during which certain events or processes occur. For blockchains, the concept helps in organizing and managing processes such as block validation, staking rewards, and other consensus-related activities
ETF
An ETF, or exchange-traded fund, is an investment fund traded on stock exchanges. ETFs hold assets and operate with an arbitrage mechanism to keep trading close to its net asset value. The Bitcoin ETF gives investors exposure to underlying asset, without the investor having to manage the security of Bitcoin
eETH
eETH is the native token for EtherFi. Minting eETH allows users to get exposure to Ethereum staking rewards, EtherFi loyalty points, restaking rewards, and the ability to provide liquidity to Decentralized Finance protocols
Ethereum
Ethereum was created by Vitalik Buterin in 2013. While the Bitcoin Network unlocked the monetary use case of blockchain technology, Buterin argued that blockchain technology allowed for other opportunities in the space. Through smart contract technology, Ethereum opened the door for developers and applications to benefit from blockchain technology
Ethereum Virtual Machine (EVM)
Ethereum Virtual Machine is a computation engine, which acts like a decentralized computer that has millions of executable projects
EtherFi
EtherFi (ETHFI) is a decentralized, non-custodial liquid staking protocol for Ethereum. Users can stake their Ethereum in exchange for liquid tokens that can be used in decentralized finance applications. Under the hood, EtherFi integrates with EigenLayer's restaking technology, simplifying the restaking process and increasing rewards for its users
Exit Liquidity
Founders or early investors in blockchain protocols will sell their ownership of a protocol via a liquidity event. When these founders and early investors sell their token holdings, these holdings are purchased by other individuals or companies. These entities represent the exit liquidity
Expected Return
Expected returns are the returns that you expect to earn, on average, when you invest in an asset
Fair Launch
A fair launch is a way of launching a digital asset project to ensure that tokens are distributed equitably among ecosystem participants. The protocol does not engage in any pre-sales to founders or VCs, and the process of distributing the tokens is transparent, with equal opportunity for participation
Flash Loan
A flash loan is a type of DeFi loan that is swiftly processed, acquired, and repaid in a short period without the need for collateral. Flash loans are an innovative solution that are unique to decentralized applications
Fork
A fork in a blockchain network is created when nodes disagree about which block to add in the block addition process. This disagreement creates a "fork" in the blockchain and creates two parallel chains.
A soft fork does not result in a permanent split in the network and is generally done when the network needs to update.
A hard fork occurs when the nodes do not reach consensus, creating two branches. New blocks accepted on one fork will be rejected by the other
Form 10-K
Form 10-K is an annual report required by the Securities and Exchange Commission (SEC) that provides an overview of a company's financial performance and operations. Investors and analysts look through these documents to assess the financial health, business strategy, and risks of a publicly traded company
Fraud Proof
A fraud proof is a cryptographic proof used to identify and demonstrate that a transaction or block in a blockchain is invalid or fraudulent. Fraud proofs are essential for maintaining trust and security in certain blockchain protocols, particularly in layer 2 scaling solutions and cross-chain interactions
Fully Distributed Valuations
The fully distributed valuation is the entire token supply that the protocol will ever issue, multiplied by the price of each individual token. This differs from the market capitalization, which is the total dollar valuation of a protocol based on circulating supply multiplied by the price of each individual token
Fundamental Analysis (FA)
Fundamental analysis is a method of evaluating the underlying economic and financial factors that affect the value of an asset. It's often used in traditional financial markets to analyze stocks, bonds, and commodities, but it can also be applied to digital assets. Ultimately, it is used to determine an asset's intrinsic value
Game Theory
Game is a mathematical framework used for analyzing strategic interactions between rational decision-makers. It provides tools for understanding how individuals and groups make decisions in situations where the outcome depends on the actions of all participants
Gas
Gas (in the context of digital assets), specifically within the Ethereum network, refers to a unit of measurement for the computational work required to execute transactions and smart contracts.=
Go-to-market
Go-to-market (GTM) is a the path that a company takes to launch a product or service into the market. A GTM strategy outlines the necessary steps to engage with customers, create demand, and obtain a competitive advantage
Governance Token
Governance tokens are tokens that gives holders the right to vote on decisions affecting the decision-making of a protocol. These tokens fuel blockchain-based voting systems
Halving
The bitcoin halving is an event that happens once every four years. Miners on the bitcoin network get some bitcoin as a reward for participating in the block addition process. During the halving, the reward gets slashed in half, creating a supply shock in the bitcoin network. The most recent halving happened on April 19, 2024
Hash Rate
Hash rate is the computational power used to mine and process transactions on a blockchain network that uses Proof of Work for its consensus mechanism
HODL
HODL is an acronym for "hold on for dear life". It's a meme among digital asset investors and a play-on-words on the word "hold". The term refers to an investment strategy of buying digital assets with the intent of never selling it
Honeypot
A honeypot is a scam used in the digital asset industry to trap victims and steal their assets or sensitive information. This can involve setting up a fake website of wallet that looks legitimate, but is instead designed to lure and deceive use into giving information or currency. The scammer will then usually disappear
Idiosyncratic Risk
Idiosyncratic risks are risks associated with a specific asset, and that are not related to the broader market or economic factors. For a specific company, this could be specific management decisions, product failures, or lawsuits
Illiquid Market
An illiquid market is a market without many buyer and sellers, or where assets cannot be bought and sold quickly without affecting the asset's price
Immutable
Immutability is the core defining feature of the blockchain. It ensures data cannot be altered, deleted, or tampered with once it has been recorded
Impermanent Loss
The temporary loss of funds experienced by liquidity providers in a liquidity pool due to volatility in the price of assets
Interoperability
Interoperability is about systems talking to each other - whether devices, networks, or applications. It is a way of enabling compatibility between systems
Intrinsic Value
Intrinsic value is the true (inherent) value of an asset, company, or investment based on fundamental analysis, independent of the asset's current market price. It reflects the underlying worth of the asset based on objective financial metrics, rather than market sentiment or speculation
Layer 1 Blockchain
Layer 1 refers to the base layer (the foundational blockchain network). The base layer encompasses the main blockchain protocol that includes the consensus mechanism, transaction validation, and network security. Bitcoin, Ethereum, and Solana are examples of Layer 1 blockchains
Layer 2 Blockchain
Layer 2 blockchains are secondary frameworks built on top of Layer 1 blockchains to improve scalability, reduce costs, and increase transaction throughput without altering the Layer 1 base layer. Layer 2 blockchains address scalability and performance issues in the Layer 1 blockchains by offloading transactions from the main blockchain. Lightning Network for Bitcoin and Optimism for Ethereum are examples of Layer 2 blockchains
Liquid Market
A liquid market is a market with a high level of activity and numerous buyers and sellers, ensuring that assets can be quickly bought or sold without significantly affecting the asset's price
Liquidity Pool
A liquidity pool refers to a collection of funds locked in a smart contract to facilitate trading on decentralized exchanges (DEXs) and lending platforms
Liquid Staking
Liquid staking is a mechanism in the cryptocurrency and blockchain space that allows users to stake their digital assets and simultaneously receive a liquid staking token (LST) that represents the staked asset
Liquidation
Liquidation is the process of converting digital assets into cash or cash equivalents, often used to meet financial obligations, settle debts, or close out a trading position. Liquidation commonly occurs when an investor's position is forcibly closed to prevent further losses.
Lockup Period
Lockup period is the timeframe during which certain parties are restricted from selling or trading their shares following an initial investment, IPO, or other liquidity events. Lockup periods are important to stabilize markets and prevent price volatility, and to protect other investors in the fund/market
LST Restaking
LST Restaking is the process of taking liquid staking tokens (LSTs) that have been received as a representation of staked assets and staking them again in various DeFi protocols to earn additional yields or rewards
M1 Money Supply
The M1 money supply is a key economic indicator used to measure the money in circulation. M1 consists of the most liquid forms of money, such as currency in circulation (physical money such as coins and bills), demand deposits (checking accounts where money can be withdrawn on demand), as well as other checkable deposits such as NOW (negotiable order of withdrawal)
M2 Money Supply
The M2 money supply is a key economic indicator used to measure the total amount of money in circulation within an economy. M2 includes M1 as well as less liquid forms of money that are easily convertible to cash or checking deposits. These include savings deposits, small-denomination time deposits, and retail money market mutual funds
Management Fee
Management fee is a charge that the investment manager charges for managing an investment fund - including mutual funds, ETFs, Venture Capital funds, and hedge funds. The fee is charged as a percentage of the fund's assets under management (AUM) and it covers administrative costs, portfolio management, and operational expenses
Market-Neutral Strategy
A market neutral strategy involves the investor seeking to avoid some form of market risk entirely via hedging. True market-neutral portfolios have zero correlation with this risk that the investor is looking to mitigate. This sort of strategy aims to profit from both rising and falling digital asset prices, while minimizing exposure to the overall market movements
Mean Reversion Strategy
Mean reversion strategies are based on the idea that asset prices and returns eventually move back towards their historical average or mean level. Investors identify when an asset's price deviates significantly from historical average, and bets on a reversion to the mean
Mempool
A mempool is a digital asset node's mechanism for storing information on unconfirmed transactions, acting as a waiting room for transactions that have not yet been included in a block
Merge (Ethereum 2.0)
The Merge is the transition of Ethereum from its original Proof of Work (PoW) mainnet to a new Proof of Stake (PoS) network. In essence, it involves changing the validation system for the Ethereum blockchain
Merkle Tree
A Merkle tree is a data structure used in cryptography and computer science to verify the integrity of data stored or transmitted. It consists of a tree-like arrangement of hashes, where each hash represents a block of data. The Merkle tree ensures data integrity by comparing hashes at each level of the tree. At the top of the tree is, which represents the combined hash of all data blocks. This root hash can be used to verify the integrity of the entire data set
MetaMask
MetaMask is a popular digital asset wallet and browser extension that allows users to interact with the Ethereum blockchain and decentralized applications
Miners
Miners are participants in a blockchain network who use their computational resources to solve complex mathematical problems, validate transactions, and add new blocks to the blockchain. In return for their efforts, miners are rewarded with newly created cryptocurrency tokens and transaction fees.
Minimum Variance Portfolio
The minimum variance portfolio is a portfolio of assets that aims to achieve the lowest possible risk for a given set of assets, regardless of expected returns
Momentum Strategy
Momentum strategies are based on the idea that assets that have performed well in the past will continue to perform well into the future, and vice versa. Investors look to capture gains from the continuation of existing price trends
Mount Gox
Mount Gox was a bitcoin exchange launched in Japan in 2010. It handled over 70% of all bitcoin buys and sells worldwide, but in early 2014, it ceased its operations once it was revealed that it was involved in the loss and theft of hundreds of thousands of bitcoin. In June 2024, Mount Gox announced that 140,000 bitcoin would be moved to clients
Multiparty Compute
Multiparty computation allows parties, who each have their private data, to come together to evaluate a computation without revealing their sensitive information. The multiparty computation protocol ensures privacy (the private information cannot be inferred from the protocol) and accuracy (bad actors cannot force honest actors to output an incorrect result)
Multi-signature (multi-sig)
A special type of digital signature scheme where there can be multiple signers for a single digital signature. A multi-signature or “multi-sig” transaction is only valid if it is signed by a set threshold of participants, just like some legal documents require a co-signer.
Multi-signature schemes enable more advanced smart contracts and Layer 2 scalability solutions. They are also particularly important for digital asset custody
Net Interest Margin
Net interest margin is a financial metric used to measure the profitability of a financial institution (or blockchain protocol). The net interest margin represents the difference between the interest income the institution or protocol earns on its assets, and the interest expense that it pays on its liabilities
Node
A node is a device or computer connected to a blockchain network that participates in the network by maintaining a copy of the blockchain and performing various functions such as validating transactions, storing data, and relaying information to other nodes. Nodes are essential for the decentralization, security, and reliability of a blockchain network
Non-Fungible Tokens (NFTs)
Non-fungible Token (NFT) is a type of digital asset that uses blockchain technology to represent ownership and verify the authenticity of a unique item or piece of content. Unlike digital assets such as Bitcoin or Ethereum, which are fungible and can be exchanged on a one-to-one basis, NFTs are unique and cannot be exchanged on a like-for-like basis
On-Board and Off-Board
On-boarding is the process of swapping fiat for digital assets, usually through an exchange. Off-boarding is the process of selling digital assets for fiat currency, also through an exchange
Open Interest in Futures
Open interest refers to the total number of outstanding derivative contracts, specifically futures and options, that are held by market participants at the end of each trading session. Unlike stocks, where the number of issued shares stays constant, the supply of futures contracts fluctuates daily based on market activity
Operator
An operator in the context of digital assets is an individual or entity responsible for managing and maintaining a particular component or service of a blockchain network. This can include running nodes, validators, miners, or other essential infrastructure that supports the functionality, security, and efficiency of the blockchain
Optimistic Rollup
An optimistic rollup is a type layer 2 scaling solution that relies on off-chain computation to trustlessly record transactions that happen in layer 2. Periodically, the system publishes a Merkle root of the transactions that happen within the rollup in order to update the "state" of the rollup on the main underlying blockchain. A network of external validators checks the Merkle roots to make sure that they are correct before the state is updated some time later. If an inconsistency arises, then the validator can publish a fraud proof during the dispute period, which can cause the state of the system to be rolled back to the previous valid state
Passive Investing
Passive investing, also known as a "buy-and-hold" strategy, is a portfolio strategy for long-term investment horizons with minimal trading in the market. Investors who seek to build wealth gradually may find this approach helpful. They do not seek to profit from short-term price fluctuations or market timing
Pendle
Pendle is a DeFi protocol that tokenizes and trades future yield. By separating the ownership of the underlying asset from its future yield, Pendle creates new financial instruments that can be traded on its platform. Users on Pendle can sell their future yield for liquidity, or can speculate on the future yield of various DeFi assets. In short, traders can use Pendle to strategize yield optimization
Permissionless
A system is said to be permissionless when it has no so-called “gatekeepers.” In the case of blockchains, we can say that Bitcoin is permissionless since no entity can forbid anybody else from using it or limiting its use for any purpose
Points
Points are used to track a user's activity with decentralized applications or measure the user's contribution. Points are often connected to airdrops
Private Key
A confidential code known only to the owner of a digital wallet, used to access and manage digital assets. Private keys prove ownership of the underlying address
Probability Distribution
A probability distribution is a statistical function that describes all possible values of a random variable, such as the price of an asset, and their associated probabilities. The distribution gives a holistic overview of the likelihood of different outcomes
Product Beta
A product beta is a crucial testing phase in the development cycle of a product. The product is released to a select group of users to test the functionality, performance, and user experience before official launch
Proof of Stake
Proof of Stake (PoS) is a consensus algorithm used by blockchain networks to validate transactions and create new blocks. In PoS, validators are chosen to create new blocks and confirm transactions based on the number of cryptocurrency tokens they hold and are willing to "stake" as collateral.
Proof of Work
Proof of Work (PoW) is a consensus algorithm used by blockchain networks to validate transactions and create new blocks. In PoW, miners compete to solve complex mathematical puzzles using significant computational power. The first miner to solve the puzzle gets the right to add a new block to the blockchain and receive a reward, typically in the form of newly minted digital asset tokens and transaction fees
Protocol
A protocol is a formal set of rules, conventions, and standards that dictate how data is transmitted, received, and interpreted across a network. In the context of blockchain technology, a protocol defines the mechanisms for consensus, transaction validation, network communication, and security, ensuring that all participants in the network can interact with each other in a consistent and reliable manner
Provenance
Provenance refers to the documented history and origin of an asset, detailing its creation, ownership, and any transactions or changes it has undergone over time. In the context of blockchain and digital assets, provenance provides a transparent and immutable record of an item's lifecycle, ensuring authenticity, traceability, and accountability
Pseudonymous
Transactions in the digital asset space are often pseudonymous, meaning that they are done without revealing the identities of the parties involved. Instead, these transactions will usually be linked to a public key or cryptographic address of the users
Public Address
A public address is a unique alphanumeric string derived from a user's public key, used to receive cryptocurrency transactions on a blockchain network. It serves as a destination for sending funds and is shared publicly to facilitate transactions. A public address is akin to a bank account number in traditional finance, allowing others to send digital assets to the address holder
Quantitative Strategy
Quantitative liquid strategies are strategies that rely heavily on mathematical models, algorithms, and statistical methods for trading decisions. These strategies can be fully automated via code, or can be used in a more discretionary way
Restaking
Restaking via a platform like EigenLayer typically means depositing one's ETH or liquid staking token (LST) into the protocol, and then selecting which Actively Validated Service (AVS) to secure in exchange for interest
SAB 121
SAB 121 is a guideline created by the Securities and Exchange Commission in March 2022 that required publicly traded banks to hold custodied digital assets on their balance sheets. Generally, custodial assets of a bank are always held off-balance sheet. This rule has made it difficult for banks to custody digital assets. As of May 16, 2024, both the House of Representatives and the Senate voted against the recommendation
SAFT
SAFTs are "Simple Agreement for Future Tokens". SAFTs are used to raise funds for blockchain projects before the project's tokens are fully developed and ready for distribution. Investors, generally VCs, receive the right to future tokens once the network is operational. This is analogous to the SAFE notes created by YCombinator
Scalability
Scalability is the capability of a blockchain network to accommodate a growing number of transactions, users, and data without suffering from performance degradation, excessive delays, or high costs. It involves enhancing the network's throughput (transactions per second), reducing latency, and maintaining or improving security and decentralization
Security Token
A security token is a digital asset that represents ownership rights or a stake in a real-world asset, such as shares in a company, real estate, or bonds. Security tokens are issued on a blockchain and are subject to federal securities regulations, providing legal rights and protections similar to traditional securities
Self-Custody Wallet
A self-custody wallet is a type of digital asset wallet that allows users to have full control and ownership of their private keys, and thus their digital assets. In a self-custody wallet, users are solely responsible for managing and securing their private keys, without relying on any third-party service or custodian
Sentiment Strategy
Sentiment strategies involve analyzing market sentiment - the overall attitude or mood of investors towards a particular asset or market. Investors use the news and social media to gauge market mood and make investment decisions
SHA-256
SHA-256 (Secure Hash Algorithm 256-bit) is a cryptographic hash function that generates a 256-bit (32-byte) fixed-size hash value from input data of any size. SHA-256 is commonly used for ensuring data integrity, digital signatures, and within blockchain protocols such as Bitcoin
Sidechain
A sidechain is an independent blockchain that operates in parallel to a primary (main) blockchain, facilitating the transfer of assets and data between the main chain and the sidechain. Sidechains are used to enhance scalability, introduce new features, and provide more flexibility in the development and deployment of blockchain applications
Slashing
Slashing is a penalty mechanism in blockchain networks, particularly those using Proof of Stake (PoS) or similar consensus algorithms, designed to deter and penalize malicious or negligent behavior by validators. When a validator is found to be acting against the network's rules, a portion of its staked assets is forfeited or "slashed," reducing its economic incentives and protecting the network's security and integrity
Smart Contract
A smart contract is a self-executing contract with the terms of the agreement directly written into code. It runs on a blockchain network, where the code and the agreements contained therein are executed automatically when predetermined conditions are met. Smart contracts facilitate, verify, and enforce the negotiation or performance of a contract without the need for intermediaries
Spot Trading
Spot trading involves the immediate exchange of a financial instrument at the current price. A spot trade is the most common type of trade among digital assets and forex, where two coins are traded against each other. In addition to cryptocurrency pairs, spot trading includes commodities, bonds, and stocks
Stablecoin
A stablecoin is a type of digital asset that is designed to minimize price volatility by being pegged to a stable reserve asset, such as a fiat currency (e.g., USD), a commodity (e.g., gold), or another cryptocurrency. Stablecoins aim to combine the benefits of digital assets—such as fast transactions and security—with the stability of traditional financial assets
Staking
Staking is the process of locking up digital assets within a blockchain ecosystem. By doing so, the "staker" participates in the security and block addition process of the network via Proof of Stake. The staker earns a return on the principal for participating in this process
Tangency Portfolio
The tangency portfolio, also known as the market portfolio, is the portfolio that maximizes the Sharpe Ratio
Transactional Tokens
Transactional tokens are digital assets that are used primarily as a medium of exchange to facilitate transactions within a blockchain network or ecosystem. These tokens are designed to be used for buying goods and services and transferring value between users in a fast, secure, and efficient manner
Trend-Following Strategy
Trend following strategies aim to profit from established market trends by riding the momentum of a trend until it shows signs of reversal. Investors use indicators to identify and confirm trends, and look to capitalize on these trends
Token
A token is a digital asset that is created, issued, and managed on a blockchain. Tokens can represent various types of assets, rights, or utilities and are used within decentralized applications, platforms, and ecosystems to facilitate transactions, incentivize behavior, or provide access to specific services
Tokenization
Tokenization is the process of representing real-world assets or rights as digital tokens on the blockchain. Tokens can represent ownership or rights to a particular asset and can be traded. Tokenization allows for both cost reduction and capital efficiency in the transaction process
Tokenomics
Tokenomics, a blend of "token" and "economics," refers to the study and design of the economic system surrounding a digital asset or blockchain-based token. It involves the analysis and strategic planning of various factors such as token creation, distribution, supply, demand, utility, and incentive mechanisms to create a sustainable and functional economy within the blockchain ecosystem
Token Generation Event
A Token Generation Event (TGE) is a process in which a new digital asset or token is created and distributed to investors, developers, and other stakeholders. TGEs are typically associated with the initial distribution of tokens for a new blockchain project or decentralized application and are important for funding the development and operation of the project
TOTAL3
TOTAL3 is TradingView's index of the top 125 digital assets after removing Bitcoin and Ethereum. In other words, TOTAL3 measures the market capitalization of the alternative digital assets
Total Value Locked (TVL)
Total Value Locked (TVL) is a metric used in the decentralized finance (DeFi) sector to measure the total value of digital assets that are currently locked or staked in a specific DeFi protocol or smart contract. TVL reflects the amount of capital being used within the protocol and serves as an indicator of its popularity, liquidity, and trustworthiness
Token Unlocks
Token unlocks refer to the process of releasing or making available previously restricted or locked tokens for use, trading, or transfer. This process typically follows a predetermined schedule outlined in a project's tokenomics or vesting plan. Token unlocks are common in digital asset projects where tokens are initially locked to ensure stability, incentivize long-term participation, or comply with regulatory requirements
Trading Bot
A trading bot is a software program that uses algorithms to automate the process of trading financial assets, such as digital assets. Trading bots analyze market data, identify trading opportunities, and execute trades on behalf of the user according to predefined strategies and parameters. These bots aim to increase efficiency, remove emotional decision-making, and capitalize on market movements in a timely manner
Trustlessness
Trustlessness is a fundamental principle in blockchain and decentralized systems, referring to the ability of a system to function securely and reliably without requiring participants to trust each other or any central authority. In a trustless system, security, integrity, and correctness are maintained through cryptographic protocols, consensus mechanisms, and decentralized network architecture, ensuring that no single party can manipulate or control the system
Uniswap
Uniswap is a decentralized exchange (DEX) protocol that allows users to swap various digital assets directly from their wallets. It uses an automated market maker (AMM) system instead of traditional order books to facilitate token exchanges, providing liquidity through user-contributed liquidity pools
USDC
USDC (USD Coin) is a stablecoin. USDC is issued by Circle, a financial technology firm, in Collaboration with Coinbase. It is pegged 1:1 to the US dollar and is known for transparency and commitment to bein fully backed by reserve assets, in the form of cash and short term US Treasury bonds
USDT
USDT (Tether) is a stablecoin issued by Tether Limited, which is part of the Bitfinex trading platform. USDT, like USDC, is also pegged 1:1 to the US dollar. However, Tether has faced scrutiny and controversy regarding its reserve backing. While Tether claims that USDT is fully backed by reserves, the messaging around the adequacy of this backing has been vague
Utility Token
A utility token is a type of digital asset that provides users with access to a product or service within a specific blockchain ecosystem. Unlike security tokens, utility tokens are not intended to represent ownership or investment in an asset. Instead, they are used to enable functionality and incentivize participation within a decentralized network or application
Validator
A validator is a participant in a blockchain network, particularly those using Proof of Stake (PoS) or similar consensus mechanisms, responsible for verifying and validating transactions, maintaining the blockchain's integrity, and participating in the consensus process. Validators are essential for securing the network, proposing and validating new blocks, and ensuring that all transactions comply with the network's rules
Value Investing
Value investing is an investment strategy focused on buying securities that are undervalued based on fundamental analysis. The goal is to invest in assets trading below their intrinsic value, with the assumption that their true worth will be recognized over time
Volatlity
Volatility of an asset is the standard deviation of the returns of the asset. It is a measure for how "spread out" the distribution is - by how could the actual return deviate from the expected return. Volatility is a measure of risk - higher volatility means higher risk
Wallet
A wallet is a digital tool or application that allows users to store, manage, and interact with their digital assets, such as cryptocurrencies and tokens. Wallets facilitate the sending and receiving of these assets and provide a means for users to monitor their balances and transaction histories. They can be software-based (online or mobile apps) or hardware-based (physical devices)
Web 3.0
Web 3.0 or Web3, is the next generation of the internet that emphasizes decentralization, user empowerment, and enhanced privacy. It leverages blockchain technology, decentralized protocols, and smart contracts to create an internet where users have more control over their data, identities, and digital interactions. Web 3.0 aims to move away from the centralized structures of Web 2.0, where a few large companies dominate the internet
Whale
A "whale" refers to an individual or entity that holds a large amount of a particular cryptocurrency or financial asset. The term "whale" is used because, like the large mammal in the ocean, a whale in the financial market has the potential to make significant waves and impact the market due to the size of their holdings and trading activities
Whitelist
A whitelist is a list of approved addresses that are permitted to interact with a specific smart contract or participate in a particular blockchain event, such as a token sale or airdrop. Whitelisting addresses ensures that only vetted and authorized participants can engage with the smart contract, enhancing security, compliance, and controlled access
Whitepaper
A whitepaper is an authoritative report or guide that provides detailed information about a specific project, product, or technology, typically within the context of digital assets. It outlines the problem being addressed, the proposed solution, technical specifications, implementation strategies, and potential benefits. Whitepapers serve as a key document for investors, developers, and stakeholders to understand the project's vision, methodology, and potential impact
Yield Farming
Yield farming is a strategy in decentralized finance (DeFi) where users lend or stake their cryptocurrency assets in DeFi protocols to earn rewards, typically in the form of additional digital asses. These rewards can come from transaction fees, interest, or new tokens provided by the protocol as an incentive. Yield farming aims to maximize returns on digital asset holdings by leveraging various DeFi platforms