🔐 Web3, Blockchain & DeFi — PREMIUM GLOSSARY + CHEAT SHEET

📘 Ultimate Web3, DeFi & Blockchain Glossary and Cheat Sheet

Deepen your foundation and stay sharp in crypto. Rooted in DeFi Llama metrics and expanded with must-know Web3, DeFi, and investing terms. Perfect for beginners and pros alike. Bookmark this post.

🔤 Key Terms (Beginner-Friendly)

Blockchain – A decentralized digital ledger. Tamper-proof and transparent.

Cryptography – The encryption that keeps blockchain data secure.

Proof-of-Work (PoW) – Energy-heavy, miner-based transaction validation (used by Bitcoin).

Proof-of-Stake (PoS) – Energy-efficient validation through token staking (used by Ethereum).

Smart Contract – Self-executing code on the blockchain. Automates agreements.

dApp – Decentralized app that runs on blockchain (e.g., Uniswap, Aave).

Token – Any digital asset issued on a blockchain. Can be currency, utility, or governance.

Cryptocurrency – A digital currency (e.g., BTC, ETH) used for transactions.

Commodity Token – Token tied to real-world assets like gold or oil.

Asset – Anything of value on a blockchain (tokens, NFTs, crypto, real-world assets).

Composable – Protocols that stack together like Lego blocks (aka “money Legos”).

DAO – A decentralized organization run by token-holder voting instead of executives.

CEX – Centralized Exchange (e.g., Coinbase). Easier to use, requires trust.

DEX – Decentralized Exchange (e.g., Uniswap). Fully on-chain, non-custodial.

Stablecoin – A crypto pegged to fiat (like USD). Examples: USDT, USDC, DAI, FRAX.

DeFi – Decentralized finance. Tools for trading, lending, borrowing—without banks.

Protocol – A smart contract system or platform (e.g., Aave, Compound, Curve).

📊 Metrics & Mechanics

TVL (Total Value Locked) – How much money is deposited into a DeFi protocol.

Fees / Revenue / Treasury / FDV – Core DeFi Llama metrics to evaluate a protocol.

AMM (Automated Market Maker) – Algorithms for setting token prices in DEXs.

Liquidity Pool – A pair of tokens locked in a smart contract to enable trading.

Liquidity – How easy it is to buy/sell an asset without big price swings.

Staking – Locking tokens to secure a network or earn rewards.

Yield Farming – Moving assets across protocols to earn high returns.

Borrowing – Taking a loan against crypto collateral without selling it.

Lending – Supplying crypto to earn interest from borrowers.

Collateral – Crypto locked to back a loan. Can be liquidated if value drops.

Liquidation – Forced sale of collateral when the loan becomes unsafe.

Flash Loan – A no-collateral loan taken and repaid in a single transaction.

Looping – Repeatedly borrowing and depositing to increase exposure. High risk.

Leverage – Using borrowed money to amplify gains—or losses.

DCA (Dollar Cost Averaging) – Buying fixed amounts over time to smooth entry.

APR – Annual interest rate without compounding.

APY – Annual return with compounding included.

Slippage – The price change between order placement and execution.

Gas Fee – Fee paid to run transactions on Ethereum and other chains.

💡 Tokenomics & Utility

Tokenomics – The economic design behind a token (supply, utility, inflation).

Governance Token – Used to vote on decisions in a DAO or protocol.

Emission Rate – Speed at which new tokens are minted.

Burning – Destroying tokens to reduce supply and increase scarcity.

Airdrop – Free token giveaways to users (loyalty, promo, retroactive reward).

NFT – Non-fungible token. Unique digital ownership (art, collectibles, items).

⚠️ Risks & Culture

Impermanent Loss – Loss from providing liquidity due to price divergence.

MEV (Maximal Extractable Value) – Advanced traders/bots manipulating transactions for extra profit.

Rug Pull – A scam where developers drain protocol funds and disappear.

Whale – A person or wallet that holds large crypto amounts. Can move markets.

Degen – A high-risk, speculative trader chasing crazy gains.

FUD – Fear, Uncertainty, Doubt. Usually negative hype.

FOMO – Fear of Missing Out. Chasing pumps.

HODL – Hold On for Dear Life. Long-term mindset.

🧠 Tips for Beginners

Use DeFi Llama to track protocol TVL, revenue, and treasury strength.
Try low-risk tools like staking and DCA before jumping into yield farming.
Always DYOR (Do Your Own Research): Smart contract risk is real.
Centralized vs Decentralized: CEXs = easier. DEXs = more control.

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