Web3 Glossary
Web3 is an idea for a new iteration of the World Wide Web based on blockchain technology, which incorporates concepts such as decentralization and token-based economics.
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Collateral
any asset accepted as security for a loan, such as a physical asset like real estate, or a digital asset like an NFT.
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Consensus
the state of agreement amongst the nodes on a blockchain. Reaching consensus is necessary for new transactions to be verified and new blocks to be added to the blockchain.
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Consensus Mechanism
a process through which nodes on a blockchain come into agreement on a transaction or state of the network.
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Cryptocurrency
a digital asset designed to be used as a medium of exchange. Cryptocurrencies are borderless, secure, and maintained by blockchains as opposed to centralized banks or governments.
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DAO- Decentralized Autonomous Organization
an organization based on open-source code and governed by its users. DAOs typically focus on a specific project or mission and trade the traditional hierarchical systems of legacy corporations for guidelines written on the blockchain.
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Dapp- Decentralized Application
an application built on open-source code that lives on the blockchain. Dapps exist independent of centralized groups or figures and often incentivize users to maintain them through rewarded tokens.
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Data
in the context of the internet, data refers to a user’s personal information, such as name, age, location, interests, browsing history, device usage, purchasing habits, etc. Web3 aims to protect this personal data and give ownership of it back to the user.
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DD- Due Diligence
the process of conducting your own research on a cryptocurrency, stock, or other asset before investing. Doing your own DD is essential, as opposed to making an investment based on what someone else says or does.
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Decentralized
a system that operates without the control of a central figure or authority, and replaces it with a distributed peer-to-peer network.
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DeFi- Decentralized Finance
the ecosystem of borderless, trustless, peer-to-peer financial tools being built on public blockchains without the use of banks. DeFi apps are built to be open and interconnected, allowing them to be used in conjunction with one another.
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DEX- Decentralized Exchange
a peer-to-peer cryptocurrency exchange built on the blockchain. A DEX is run by its users and smart contracts instead of an intermediary figure or centralized institution.
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Difficulty
the level of computing power needed to verify transactions and mine blocks on a proof-of-work blockchain.
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Difficulty Bomb
the process of increasing the difficulty of a proof-of-work blockchain in order to motivate the transition to another consensus algorithm (such as proof-of-stake in the case of Ethereum).
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EIP- Ethereum Improvement Proposal
a standard format for presenting a new feature or process to the Ethereum community.
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ERC- Ethereum Request for Comments
the standard smart contract outline on which Ethereum-based smart contracts are built.
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ERC-1155
an Ethereum token standard which allows for fungible, non-fungible, and semi-fungible tokens to be managed by a single smart contract simultaneously. These are commonly used in gaming and collectible trading to reduce the number of necessary transactions.
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ERC-20
the Ethereum token standard, providing a standardized smart contract structure for fungible tokens.
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ERC-721
an Ethereum token standard that allows for the formation of unique tokens, otherwise known as NFTs, or non-fungible tokens. Unlike the ERC-20 standard, ERC-721 tokens have specific properties that allow each to be uniquely identified and valued independently of one another.
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Ethereum
a public blockchain serving as the foundation for decentralized applications. Ethereum is a turing complete language, allowing for users to write and deploy complex, self-executing smart contracts which live on the blockchain.
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Few
short for “Few understand”. A rallying cry that crypto folks are still early in this space and will make a lot of money when mass adoption comes.
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Fiat
a currency established as legal tender, often backed and regulated by a government, such as the US Dollar.