Blockchain Glossary
50 key terms explained — from smart contracts and gas to MEV and ZK proofs.
Smart Contract
Self-executing programs deployed on a blockchain that automatically enforce and execute the terms of an agreement. Once deployed, they run deterministically without intermediaries, and their code cannot be altered — making security audits critical before deployment.
Gas
The fee required to execute transactions or smart contract operations on Ethereum. Every EVM opcode has a fixed gas cost, and users set a maximum gas limit and gas price (in gwei). Gas compensates validators for computational work and protects the network from infinite loops.
EVM
The Ethereum Virtual Machine — the sandboxed runtime environment that executes smart contract bytecode on Ethereum and all EVM-compatible chains. Every Ethereum node runs the EVM, making execution deterministic across the entire network.
L2
Layer 2 — secondary networks built on top of a main blockchain (L1) that inherit its security while improving scalability. L2s process transactions off-chain and periodically post results to L1. Examples include Arbitrum, Optimism, and Base for Ethereum.
Rollup
A type of L2 scaling solution that bundles (rolls up) hundreds of transactions into a single L1 transaction. Optimistic rollups (Arbitrum, Optimism) assume validity and use fraud proofs to challenge invalid states. ZK rollups (zkSync, StarkNet) use cryptographic proofs for immediate validity.
ZK Proof
Zero-Knowledge Proof — a cryptographic method where one party proves knowledge of information to another party without revealing the information itself. In blockchain, ZK proofs power privacy protocols and ZK rollups, allowing validity of computation to be verified without re-executing it.
AMM
Automated Market Maker — a type of decentralized exchange protocol that uses mathematical formulas to price assets. Instead of order books, AMMs use liquidity pools. Uniswap's constant product formula (x × y = k) is the most well-known implementation.
Liquidity Pool
A smart contract containing reserves of two or more tokens, provided by liquidity providers in exchange for trading fees. Liquidity pools power AMMs and enable decentralized trading without a counterparty. Providers earn fees proportional to their share of the pool.
Tokenomics
The economic model governing a token's supply, distribution, and utility. Includes: total supply, emission schedule, vesting periods, token utility (governance, fee payment, staking), and mechanisms for value accrual. Tokenomics design significantly affects a protocol's long-term viability.
DAO
Decentralized Autonomous Organization — a governance structure where token holders vote on protocol decisions. Smart contracts enforce governance outcomes, and there's no central authority. Voting mechanisms include token-weighted, quadratic, and time-weighted systems.
Bridge
A protocol that enables transferring assets between different blockchain networks. Bridges lock tokens on the source chain and mint equivalent tokens on the destination chain. Cross-chain bridges are among the highest-risk components in DeFi — many major exploits have targeted bridge protocols.
Oracle
A service that brings off-chain data (prices, weather, sports scores) onto the blockchain. Since smart contracts can't natively access external data, oracles act as bridges. Chainlink is the dominant decentralized oracle network. Oracle manipulation is a common DeFi attack vector.
Reentrancy
A smart contract vulnerability where an external call allows an attacker to re-enter a function before its state is updated. The 2016 DAO hack ($60M) exploited reentrancy. Prevented by the Checks-Effects-Interactions pattern and ReentrancyGuard modifiers.
Multisig
Multi-signature — a wallet or contract requiring multiple private key signatures to authorize a transaction. Common configurations: 3-of-5 or 4-of-7. Used for treasury management, protocol upgrades, and any high-value operation where no single key should have full control.
ABI
Application Binary Interface — the standard specification for how to interact with a smart contract. It defines function signatures, parameter types, return types, and event schemas. Without the ABI, external code cannot call a contract's functions correctly.
Bytecode
The low-level, machine-readable instructions that the EVM executes. Smart contracts written in Solidity or Vyper are compiled into bytecode before deployment. The bytecode is what's actually stored on-chain; the Solidity source code is typically not.
Opcode
A single EVM instruction — the fundamental unit of computation. The EVM has ~140 opcodes covering arithmetic (ADD, MUL), storage (SLOAD, SSTORE), control flow (JUMP, JUMPI), and environment access (CALLER, CALLVALUE). Each opcode has a fixed gas cost.
Solidity
The primary high-level programming language for writing Ethereum smart contracts. Syntactically similar to JavaScript and C++. Statically typed, with special blockchain-specific constructs (payable functions, modifiers, events). Version 0.8+ includes built-in arithmetic overflow protection.
Rust (for Solana)
The primary programming language for Solana smart contract (program) development, typically via the Anchor framework. Rust's ownership model and type system catch many bugs at compile time. More complex to learn than Solidity, but enables Solana's high-performance parallel execution.
Anchor
The dominant framework for Solana program (smart contract) development. Anchor provides Rust macros that handle serialization/deserialization, account validation, and error handling, significantly reducing boilerplate and common security vulnerabilities in raw Solana programs.
Hardhat
The most popular Ethereum development environment. Hardhat provides a local blockchain for testing, a TypeScript/JavaScript testing framework, and a plugin ecosystem for tasks like contract verification, gas reporting, and deployment. Often used alongside Foundry.
Foundry
A fast, Rust-based Ethereum development toolkit. Foundry enables writing tests in Solidity itself (rather than JavaScript), property-based fuzz testing, and invariant testing. Preferred by security researchers and developers focused on deep contract testing.
The Graph
A decentralized indexing protocol for blockchain data. Developers define Subgraphs specifying which contracts and events to index, and The Graph nodes make the data queryable via GraphQL. Powers the data layer of many DeFi frontends.
IPFS
InterPlanetary File System — a peer-to-peer distributed file storage protocol. Content is addressed by its hash (CID) rather than location. Used extensively in Web3 for NFT metadata and images, decentralized frontends, and any data that needs to exist outside a blockchain.
Merkle Tree
A cryptographic data structure where each leaf is a hash of data, and each branch is a hash of its children. The root hash efficiently represents all data. Used in blockchain for transaction proofs, state roots, and common DeFi patterns like gas-efficient allowlists.
Nonce
A number used once. In Ethereum, each wallet address has a nonce that increments with each sent transaction, preventing replay attacks. In proof-of-work mining (now historical for Ethereum), the nonce is the variable miners adjust to find a valid block hash.
Private Key
A secret 256-bit number that proves ownership of a blockchain address. Used to sign transactions. Anyone with access to a private key has complete control over the associated wallet. Losing a private key means permanently losing access to the funds it controls — there is no recovery.
Public Key
A cryptographic key derived from the private key using elliptic curve cryptography (secp256k1 on Ethereum). The public key is used to verify signatures and derive the wallet address (the last 20 bytes of its Keccak-256 hash). It can be safely shared.
Wallet
Software or hardware that stores private keys and enables users to sign transactions and interact with blockchains. Types: software wallets (MetaMask, Phantom), hardware wallets (Ledger, Trezor), smart contract wallets (Safe, Argent). A wallet doesn't store tokens — it stores the keys that prove ownership on-chain.
EOA
Externally Owned Account — a standard Ethereum account controlled by a private key, as opposed to a contract account. EOAs can initiate transactions; contract accounts can only react to them. All user wallets (MetaMask, etc.) are EOAs.
Proxy Contract
A smart contract that forwards calls to a separate implementation contract using delegatecall. The proxy stores state while the implementation provides logic — enabling upgrades by pointing to a new implementation. Common patterns: Transparent Proxy, UUPS, Beacon Proxy.
Upgradeable Contract
A smart contract system where the logic can be changed after deployment. Achieved through proxy patterns (the proxy forwards calls to an implementation that can be replaced). Upgradeability introduces centralization risk — whoever controls the upgrade key can change contract behavior.
Flash Loan
An uncollateralized loan that must be borrowed and repaid within a single blockchain transaction. If the loan is not repaid by transaction end, the entire transaction reverts. Used legitimately for arbitrage and collateral swaps; used maliciously to temporarily inflate capital for oracle manipulation attacks.
MEV
Maximal Extractable Value — profit that block validators (or searchers who pay them) can extract by manipulating transaction order, inclusion, or exclusion. Common forms: sandwich attacks (front-running + back-running DEX trades), arbitrage, and liquidations. MEV can extract significant value from regular users.
Sandwich Attack
An MEV strategy where an attacker front-runs a victim's DEX trade (buying before them to move the price up) and back-runs it (selling immediately after). The victim gets a worse price; the attacker profits from the spread. Targets large DEX swaps with wide slippage tolerance.
Front-Running
The practice of observing a pending transaction in the mempool and submitting your own transaction with a higher gas price to be included first. In DeFi, front-running is used to exploit price-sensitive operations like large DEX trades, NFT mints, and governance actions.
TVL
Total Value Locked — the total value of assets deposited in a DeFi protocol or across all DeFi protocols. TVL is a common metric for measuring protocol size and adoption, though it can be distorted by double-counting across protocols and leveraged positions.
Staking
Locking tokens in a smart contract to earn rewards or participate in network security. In proof-of-stake blockchains (Ethereum), validators stake ETH to propose and attest to blocks. In DeFi, staking typically means locking protocol tokens to earn a share of fees or additional token emissions.
Yield Farming
The practice of providing liquidity to DeFi protocols in exchange for token rewards. Users move assets between protocols to maximize returns. While potentially lucrative, yield farming involves smart contract risk, impermanent loss, and token emission sustainability risk.
Impermanent Loss
The opportunity cost experienced by AMM liquidity providers when the price ratio of pooled tokens changes from the time of deposit. If you deposit ETH/USDC and ETH rises, you would have made more money just holding ETH. 'Impermanent' because it reverses if prices return to deposit ratios.
Slippage
The difference between the expected price of a trade and the price at which it executes. Caused by trade size relative to available liquidity — large trades move the price more. Users set a slippage tolerance; if the actual slippage exceeds it, the transaction reverts.
Price Oracle
A mechanism for bringing price data on-chain. On-chain sources include AMM TWAPs (time-weighted average prices). Off-chain sources include Chainlink, Pyth, and Redstone. Oracle design is security-critical — manipulated prices can drain protocol funds.
Chainlink
The dominant decentralized oracle network, providing smart contracts with access to off-chain data (prices, randomness, event outcomes). Chainlink uses a network of independent node operators who aggregate data and publish it on-chain. Powers price feeds used by most major DeFi protocols.
ERC-20
The Ethereum token standard for fungible tokens. Defines a common interface (transfer, approve, allowance, totalSupply, balanceOf) that enables interoperability between tokens, DEXes, wallets, and other smart contracts without custom integration code.
ERC-721
The Ethereum standard for non-fungible tokens (NFTs). Each token has a unique ID and associated metadata. Defines functions for ownership tracking, transfer, and approval. The standard that powers most NFT collections, from PFP projects to tokenized real-world assets.
ERC-1155
A multi-token standard that handles both fungible and non-fungible tokens in a single contract. More gas-efficient than deploying separate ERC-20 and ERC-721 contracts. Used extensively in gaming for managing multiple item types with different quantities.
Cold Wallet
A cryptocurrency wallet that is not connected to the internet. Hardware wallets (Ledger, Trezor) are the most common form. Cold wallets are the most secure way to store large amounts of cryptocurrency, as they're immune to online attacks and malware.
Hot Wallet
A cryptocurrency wallet that is connected to the internet. Software wallets like MetaMask, Phantom, and Coinbase Wallet are hot wallets. Convenient for frequent transactions but more vulnerable to online attacks than cold wallets. Not recommended for storing large amounts.
Testnet
A blockchain network that mirrors the functionality of a main network (mainnet) but uses worthless test tokens. Used by developers to test smart contracts and dApps before deploying to mainnet. Major Ethereum testnets: Sepolia, Holesky. Solana testnets: devnet, testnet.
Mainnet
The primary, live blockchain network where real transactions occur with real monetary value. Contrasted with testnets and devnets used for development. Deploying to mainnet is irreversible — smart contract bugs cannot be patched, only worked around via upgradeable patterns or new deployments.