Web3 Glossary: Crypto, DeFi and Blockchain Terms Explained

Last updated: 12 November 2026

Short, plain-English definitions of the terms that come up most often in the Bulletin, in our client work and in crypto news. Each entry links to an article or service page that goes deeper. Definitions are reviewed by the Blockchain Army editorial team under our Editorial & AI policy; if you spot an error, write to general@bc.army.

A

Account abstraction

Making a crypto account behave like a programmable smart contract instead of a plain key pair, so it can support features such as spending limits, social recovery, batched transactions or gas paid by a third party. On Ethereum this is implemented through ERC-4337 and, since the Pectra upgrade, EIP-7702.

Airdrop

A distribution of tokens to wallet addresses, usually to reward early users or to spread ownership at launch. Airdropped tokens are often sold quickly, which is why airdrop design matters for post-launch price stability. Read more →

AMM (automated market maker)

A decentralized exchange design in which trades are executed against a pool of tokens priced by a formula (for example x·y=k) rather than against an order book. Read more →

Audit (smart contract audit)

An independent review of smart-contract code that looks for vulnerabilities, logic errors and deviations from the specification before (and sometimes after) deployment. An audit reduces risk; it does not guarantee that code is bug-free. Read more →

B

Blob

A large, temporary data package attached to Ethereum blocks since the Dencun upgrade (EIP-4844, March 2024). Layer-2 rollups post their transaction data in blobs, which is much cheaper than ordinary calldata. Read more →

Block explorer

A website that lets anyone search a blockchain's transactions, addresses, blocks and smart contracts, such as Etherscan for Ethereum. Read more →

Blockchain

A shared ledger maintained by a network of computers, in which records are grouped into blocks, each cryptographically linked to the previous one, so that past entries are very hard to alter. Read more →

Bridge

A protocol that moves tokens or messages between blockchains, typically by locking assets on one chain and issuing a representation on another. Bridges hold large pools of value and have been frequent targets of hacks. Security services →

Buyback and burn

A token-economics mechanism in which a project uses revenue to buy its own token on the market and permanently remove it from circulation, reducing supply. Read more →

C

CASP (crypto-asset service provider)

Under the EU's MiCA regulation, a company authorised to provide crypto-asset services such as custody, exchange, trading platforms or transfers. The transitional period for firms operating under older national regimes ended on 1 July 2026. Read more →

CLARITY Act

The Digital Asset Market Clarity Act, a US bill that would set out how digital assets are split between SEC and CFTC oversight. It passed the House in July 2025; a Senate procedural vote failed in September 2026. Read more →

Cold wallet

A wallet whose private keys are kept offline, for example on a hardware device, making them far harder to steal remotely than keys on an internet-connected system. Read more →

D

DAO (decentralized autonomous organization)

An organisation whose rules and treasury are managed by smart contracts, with decisions taken by votes of token holders or members. Read more →

dApp (decentralized application)

An application whose core logic runs in smart contracts on a blockchain, usually with a regular web or mobile interface on top. Read more →

DeFi (decentralized finance)

Financial services such as trading, lending, borrowing and derivatives built with smart contracts, which users access directly from their wallets without a traditional intermediary. Read more →

DEX (decentralized exchange)

A trading venue run by smart contracts where users swap tokens from their own wallets, without depositing funds with an exchange operator. Read more →

E

EIP (Ethereum Improvement Proposal)

A design document proposing a change to Ethereum, from protocol upgrades to token standards. Network upgrades bundle a set of accepted EIPs. Read more →

EIP-7702

An Ethereum change activated with the Pectra upgrade (May 2025) that lets a regular account delegate its behaviour to smart-contract code by signing an authorization. It enables smart-wallet features, but a malicious authorization can hand control of an account's assets to an attacker. Read more →

ePBS (enshrined proposer-builder separation)

A proposed Ethereum protocol change (EIP-7732) that builds the separation between block proposers and block builders into the protocol itself, instead of relying on external relays. Read more →

ERC-20

The standard interface for fungible tokens on Ethereum and EVM-compatible chains, defining functions such as transfer, approve and balanceOf. Read more →

ERC-721

The standard interface for non-fungible tokens (NFTs) on Ethereum, where each token ID is unique. Read more →

F

FDV (fully diluted valuation)

A token's price multiplied by its maximum or total supply, including tokens not yet in circulation. A large gap between FDV and market capitalisation signals future supply entering the market. Read more →

Flash loan

An uncollateralised loan that must be borrowed and repaid within a single blockchain transaction. Flash loans are used for arbitrage and refinancing, and also in price-manipulation attacks. Read more →

Fork

A change to a blockchain's rules. A hard fork is not backward-compatible and requires nodes to upgrade; a soft fork tightens rules in a backward-compatible way. The term also describes copying a project's code to start a new one. Read more →

G

Gas

The unit that measures the computation a transaction uses on Ethereum and EVM chains. Users pay gas multiplied by the gas price, in the network's native token. Read more →

GENIUS Act

The US federal law for payment stablecoins, signed in July 2025. It sets reserve, redemption and supervision requirements for issuers; regulators spent 2026 writing the implementing rules. Read more →

Governance token

A token that gives holders voting rights over a protocol's parameters, treasury or upgrades. Read more →

H

Hot wallet

A wallet whose keys are used from an internet-connected system so it can sign transactions quickly, as exchanges do for withdrawals. Convenience comes with a larger attack surface, so hot wallets should hold only what operations require. Read more →

I

Impermanent loss

The shortfall a liquidity provider can suffer compared with simply holding the two tokens, caused by their relative price changing while they sit in an AMM pool. Read more →

L

Layer 2 (L2)

A network that processes transactions off a main blockchain (layer 1) and settles the results back to it, to increase throughput and lower fees while inheriting the base chain's security. Read more →

Liquidity pool

A smart contract holding two or more tokens that traders swap against. Liquidity providers deposit the tokens and earn a share of trading fees. Read more →

M

Market maker

A firm or program that continuously quotes buy and sell prices for an asset, providing liquidity and tighter spreads. Token projects often sign agreements with market makers at launch. Market making →

Mempool

The waiting area where valid transactions sit before a block producer includes them in a block. Pending transactions in a public mempool are visible to everyone, including bots. Read more →

MEV (maximal extractable value)

Value that can be captured by choosing which transactions go into a block and in what order, for example through arbitrage, liquidations or sandwiching other users' trades. Read more →

MiCA (Markets in Crypto-Assets Regulation)

The EU regulation (EU) 2023/1114 that sets common rules for crypto-asset issuers and service providers, including white papers, marketing communications, stablecoins and CASP authorisation. Read more →

Multisig (multi-signature wallet)

A wallet or contract that requires several independent keys (for example 3 of 5) to approve a transaction, so no single compromised key can move funds. Read more →

N

NFT (non-fungible token)

A token that represents a unique item, such as a piece of art, a membership or an in-game asset, and is not interchangeable with other tokens of the same contract. Read more →

O

Oracle

A service that brings external data, such as asset prices, onto a blockchain so smart contracts can use it. Weak or manipulable oracles are a common cause of DeFi exploits. Read more →

P

Private key

The secret number that controls a blockchain account and signs its transactions. Anyone who has the private key controls the funds. Read more →

Proof of stake

A consensus method in which validators lock up (stake) the network's token for the right to propose and attest to blocks, and can lose part of it for misbehaviour. Ethereum has used proof of stake since September 2022.

R

Reentrancy

A smart-contract vulnerability in which an external call lets an attacker re-enter a function before its first execution has finished, for example withdrawing funds repeatedly before a balance is updated. Read more →

Rollup

A layer-2 design that executes transactions off-chain and posts compressed data and proofs to the layer-1 chain. Optimistic rollups rely on fraud proofs; ZK rollups on validity proofs. Read more →

Rug pull

A scam in which a project's creators drain its liquidity or treasury and abandon it, leaving holders with tokens that cannot be sold at a meaningful price. Read more →

S

Seed phrase

A list of 12 or 24 words that encodes a wallet's private keys and can restore it on any compatible device. It should never be typed into a website or shared. Read more →

Slippage

The difference between the price a trader expects and the price at which the trade actually executes, caused by low liquidity or price movement. Wallets and bots let users set a maximum slippage. Read more →

Smart contract

A program deployed on a blockchain that executes automatically according to its code, holding and moving assets without an intermediary. Read more →

Sniper bot

A trading bot that tries to buy a token in the first blocks after liquidity is added or trading opens, typically with high gas fees and pre-set slippage. Read more →

Stablecoin

A token designed to hold a stable value, usually one US dollar, backed by reserves such as cash and short-term government debt, or by crypto collateral. Read more →

Staking

Locking tokens to help secure a proof-of-stake network or a protocol in exchange for rewards, with the risk of penalties or lock-up periods. Read more →

T

Testnet

A public copy of a blockchain used for testing, where tokens have no intended monetary value. Ethereum's main testnets are Sepolia and Hoodi. Read more →

TGE (token generation event)

The moment a project's token is created and first distributed or becomes transferable, often followed by exchange listings. Read more →

Token approval (allowance)

Permission a wallet gives a smart contract to spend a set amount of a token on its behalf. Unlimited or forgotten approvals are a common way funds are drained, so they should be reviewed and revoked. Read more →

Token unlock

The scheduled release of previously locked tokens, for example team or investor allocations, into circulation according to a vesting schedule. Read more →

Tokenomics

The economic design of a token: supply, allocation, vesting, emissions, utility and the mechanisms that create or capture value. Read more →

Trading bot

Software that places trades automatically according to rules, often through a Telegram interface for on-chain tokens. Many custody users' keys, which makes their security critical. Read more →

TVL (total value locked)

The value of assets deposited in a DeFi protocol's smart contracts, commonly used as a rough measure of its size. Read more →

V

Vesting

A schedule that releases tokens gradually over time, often after an initial cliff, to align team and investor incentives with the project's long-term success. Read more →

W

Web3

A term for internet services built on blockchains, where users hold their own assets and identities in wallets instead of relying on a platform's accounts. Read more →

White paper

A document that explains a crypto project's purpose, technology and token. Under MiCA, most public offers of crypto-assets in the EU require a white paper with prescribed content. Read more →

X

x402

An open payment standard introduced by Coinbase in 2025 that uses the HTTP 402 'Payment Required' status code so websites, APIs and AI agents can request and settle small stablecoin payments inside ordinary web requests. Read more →

Z

Zero-knowledge proof

A cryptographic proof that a statement is true without revealing the underlying data. ZK proofs are used for privacy and to verify rollup computations on layer 1.