Cryptocurrency and Blockchain Dictionary
A complete list of crypto definitions
Cryptocurrency and blockchain glossary
Commonly used terms in the blockchain and cryptocurrency
Terms commonly used in the world of blockchain and cryptocurrency
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Layer 0
Layer 0 is a network framework running beneath the blockchain. It is made up of protocols, connections, hardware, miners, and everything else that forms the foundation of the blockchain ecosystem.
Layer-1 Blockchain
A layer-1 blockchain is a set of solutions that improve the base protocol itself to make the overall system a lot more scalable. There are two most common layer-1 solutions, and these are the consensus protocol changes as well as sharding. When it comes to consensus protocol changes, projects like Ethereum are moving from older, clunky consensus protocols such as proof-of-work (PoW) to much faster and less energy-wasteful protocols such as proof-of-stake (PoS).
Liquidity Provider Tokens
Liquidity provider tokens or LP tokens are tokens issued to liquidity providers on a decentralized exchange (DEX) that run on an automated market maker (AMM) protocol. Uniswap, Sushi and PancakeSwap are some examples of popular DEXs that distribute LP tokens to their liquidity providers.
Mainnet
An independent blockchain running its own network with its own technology and protocol. It is the term used to describe when a blockchain protocol is fully developed and deployed, meaning that cryptocurrency transactions are being broadcasted, verified, and recorded on a distributed ledger technology (blockchain).
Market Capitalization (Market Cap)
It shows the total value of all coins together. Many beginners make the mistake to only look at the unit price of a coin to decide if the coin in question is worth much or little. The market cap is a more suitable instrument for this.
Maximum Supply
This is the maximum number of coins that will exist for a token or cryptocurrency. If there is a max supply defined, no more coins can be created. ‘Burned’ coins are part of this supply, so therefore it is always larger than or equal to the total supply.
Merkle Tree
A tree structure in cryptography, in which every leaf node is labelled with the hash of a data block and every non-leaf node is labelled with the cryptographic hash of the labels of its child nodes. Hash trees allow efficient and secure verification of the contents of blockchains, as each change propagates upwards so verification can be done by simply looking at the top hash.
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