Glossary

Plain-language definitions for words you’ll find across the site.

An identity in a blockchain system that can hold assets or authorize actions. How an account is controlled depends on the network and the type of account.

An identifier used to refer to an account or program on a blockchain. You can share an address to receive assets. It is not a private key, and knowing it does not by itself give control over the account.

Permission for a smart contract to use a particular token from your wallet, up to an amount you authorize. An approval can remain active after you leave the website.

Ways to express a return over a year. APR does not include compounding; APY includes it. Compounding means putting earnings back to work to generate further earnings. A displayed rate is not a promise of future returns.

A batch of transactions, together with information the network uses to check it and link it to the previous block.

A shared digital record maintained by a network of computers. It records transactions, and some blockchains also run applications. Read [ Blockchain ] 101 for the basics.

Assets you provide to back a loan. For example, you might deposit ETH to borrow a stablecoin.

The rules a network uses to agree on which blocks form its accepted history and in what order. Different blockchains use different methods to reach that agreement.

The distribution of control and responsibility across independent participants instead of one central operator. The degree of decentralization varies between networks.

An application for exchanging assets through smart contracts.

Mathematically connected values used to sign requests and check signatures. A private key is kept secret; the matching public key can be shared. Also called a key pair.

Proof created with a private key for a particular message or transaction. Others can check it using the matching public key. It shows use of the key, rather than proving the real-world identity of the person using it.

The point at which a network treats a recorded update as settled. The conditions for reaching finality and the strength of that assurance depend on the network.

The unit used to measure the work needed to process a transaction or run a smart contract on Ethereum. The fee is calculated from the gas used and its price, and is paid in ETH.

How decisions about a protocol are made, such as changing its rules or fees. Some protocols let token holders vote, though the amount of control they have varies.

A digital fingerprint calculated from data. The same input gives the same hash; changing the input will almost certainly change the result. Blocks include the previous block’s hash to link their history together.

The sale or seizure of collateral to repay a loan when the position no longer meets the service’s borrowing requirements.

How easily an asset can be bought or sold without moving its price much. In DeFi, the word also refers to assets available for trading or borrowing.

Assets deposited into a smart contract so a service can use them, for example to let people swap tokens. People who supply those assets may earn fees and can also lose money.

A computer running software that participates in a blockchain network. Nodes can share and check transactions and blocks, and store records. Their exact responsibilities vary by type.

A system that provides information a smart contract needs but cannot establish from its own records alone, such as an asset’s market price. Its reliability depends on its sources and the rules for accepting reports.

A secret value used to create digital signatures. Anyone who obtains it may be able to authorize actions for the associated account, so it must be protected.

A set of rules and programs that makes a service work. In DeFi, the protocol is the machinery behind a service; a website is one way to interact with it.

A value mathematically related to a private key, used to check signatures created with that private key. It can be shared without revealing the private key. An address may be derived from it, but they are different values.

A set of secret words that can restore access to many wallets. Anyone who has it can control the associated assets.

A program on a blockchain that follows rules written in code. It can handle actions such as exchanging assets or managing a loan.

A token designed to track a reference value, often one US dollar. That target is a design goal, rather than a guarantee.

Committing a blockchain’s native asset to help secure a network that uses proof of stake. On Ethereum, validators use ETH to participate in checking and proposing blocks, earning rewards while taking on penalties and other risks.

Exchanging one token for another.

A digital asset recorded on a blockchain. Depending on its design, it can represent a currency, voting rights, or a claim on other assets.

An instruction you send to a blockchain, such as transferring tokens or using an application.

A tool that manages the keys you use to access your assets and approve transactions. The assets are recorded on the blockchain, rather than stored inside the wallet itself.

Income generated by an asset or activity, such as interest, trading fees, or staking rewards. It can change over time and doesn’t account for every possible loss.