Crypto Glossary — Plain-English Definitions
From "31% rule" to "Zero-knowledge proof". Bookmarkable definitions of every term you'll encounter trading and reading crypto news.
A
Address
A string identifier used to send or receive a specific cryptocurrency. Bitcoin addresses start with 1, 3, or bc1; Ethereum addresses start with 0x followed by 40 hex characters.
Airdrop
Distribution of tokens to wallet addresses, often free, used to reward early users or bootstrap a community.
AMM
Automated Market Maker. A decentralized exchange mechanism that prices assets via a formula (most commonly x·y=k) rather than an order book.
APY
Annual Percentage Yield. The return earned on a deposit including compounding effects. Often quoted in DeFi.
Arbitrage
Profiting from a price difference between markets for the same asset by buying low on one venue and selling high on another.
ATH
All-Time High. The highest price an asset has ever traded at.
B
Base fee
On Ethereum (post EIP-1559), the minimum gas fee burned with every transaction. Set algorithmically based on network demand.
Basis trade
A market-neutral trade exploiting the difference between spot and futures prices of the same asset.
Block reward
The new tokens issued to whoever produces the next block in a blockchain. Funds the network's security in PoW or PoS.
Bonding curve
A mathematical relationship between a token's supply and price, often used in token-launch mechanisms.
Bridge
A protocol that allows assets or messages to move between blockchains.
Burn
Permanently removing tokens from circulation by sending them to an unspendable address or destroying them via a smart contract.
C
CEX
Centralized Exchange. A platform operated by a single entity that custodies user funds and matches trades internally.
Circulating supply
The number of tokens currently in active public hands. Excludes locked, treasury, or unmined supply.
Cold wallet
A wallet whose private keys are stored offline, reducing exposure to remote hacks.
Custody
The holding of cryptographic keys (and therefore the underlying assets) on behalf of a user.
D
DAO
Decentralized Autonomous Organization. A protocol or community governed by on-chain token-holder votes.
DeFi
Decentralized Finance. Open, permissionless financial protocols (lending, exchange, derivatives) built on public blockchains.
DEX
Decentralized Exchange. A non-custodial trading venue that matches trades via smart contracts.
Dominance
An asset's share of total crypto market capitalization, expressed as a percentage.
Drawdown
The peak-to-trough decline in an asset's price, expressed as a percentage.
E
F
Fear & Greed
A composite sentiment index ranging 0–100 that combines volatility, momentum, dominance, social media, and search trends.
FUD
Fear, Uncertainty, Doubt. Originally a marketing term, repurposed in crypto to label bearish narratives.
Funding rate
On perpetual futures, a periodic payment between long and short positions that keeps the contract price tethered to spot.
G
H
I
K
L
L1 / L2
Layer 1 / Layer 2. L1 is the base blockchain (Ethereum, Solana, Bitcoin). L2 is a scaling layer built on top (Arbitrum, Optimism, Base, the Lightning Network).
Liquidation
The forced closure of a leveraged position when its margin falls below the maintenance requirement.
Liquidity
The depth of available buyers and sellers, measured by how easily one can transact without moving the price.
M
MEV
Maximal Extractable Value. Profit that block producers can extract by reordering, including, or censoring transactions.
Mining
The process of dedicating computational work to produce new blocks and earn block rewards on a proof-of-work chain.
Multisig
A wallet that requires multiple signatures to authorize a transaction (e.g., 2-of-3 or 3-of-5).
N
O
P
Perp
A perpetual futures contract with no expiry, kept tethered to spot via a funding rate.
PoS
Proof-of-Stake. A consensus mechanism where validators are chosen in proportion to staked capital.
PoW
Proof-of-Work. A consensus mechanism where miners compete to solve a cryptographic puzzle to produce the next block.
R
S
Slippage
The difference between the expected and executed price of a trade, usually caused by limited liquidity.
Smart contract
Code that runs on a blockchain and executes deterministically when called.
Spot
The market for immediate delivery of an asset (as opposed to a derivative referencing it).
Stablecoin
A cryptocurrency designed to track the value of a reference asset (usually the U.S. dollar).
Staking
Locking tokens in a network or protocol to earn rewards, typically in proof-of-stake systems.