Have you ever tried to DPoS on an OTC but found out that the AMM was DLT? Or how about when the LP was a little too TVL, so you had to EIP before the ROI went completely ZKR?
Yes, crypto is full of acronyms, abbreviations, and initialisms. It makes sense, too: crypto is an internet-native technology, so coining new words, phrases, and language shortcuts is to be expected in a space whose discourse usually plays out on Twitter, Telegram, and Discord. But it’s precisely crypto’s esoteric language that makes a sometimes impenetrable world feel more “inside baseball” than it should be.
Unmask Crypto is here to help demystify some of that language. After reading through this list, you’ll no longer be confused every time someone asks about your CEX preferences.
APR: Annual Percentage Rate is the annual rate of interest paid to investors from borrowers. You’ll see it in DeFi protocols that have yield farming programs. Importantly, APR does not take compound interest into account, which makes it easier to compare rates from other lenders.
APY: Annual Percentage Yield is the actual annual rate of return. Unlike APR, APY takes compounding interest into account, making it the ideal number to calculate returns on investment.
AML: Anti-Money Laundering is a framework of rules and regulations to combat money laundering through whitelisting customers, risk management, and transaction monitoring. Crypto-related activities such as tax evasion and market manipulation are among AML’s targets.
API: Application Programming Interface is a suite of tools and protocols to assist in building applications. APIs help specify actions and usage for individual software components.
ACH: Automated Clearing House is an electronic-based network for financial transactions in the US. It’s mostly used for moving low-value payments between bank accounts and supports credit transfers and direct debits.
AMM: Automated Market Makers are a critical part of the DeFi ecosystem. Rather than using a traditional market of buyers and sellers, AMMs automate permission-less trading through on-chain, crypto-funded liquidity pools and prices determined by a mathematical formula. These innovations help solve human-related market-making issues such as slippage, latency, and market manipulation.
ATH: All-Time High refers to the peak price of an asset on a given exchange and trading pair. It is often used as a reference point for the theoretical max trading price of an asset, with its breakage serving as a bullish indicator of further price discovery.
ATL: All-Time Low is the opposite of ATH, referring to the lowest price of an asset on a given exchange and trading pair.
BIP: Bitcoin Improvement Proposal refers to a series of documents that outline new features or processes intended to improve the Bitcoin protocol.
BTD: Buy The Dip is a phrase used to encourage potential investors/traders to purchase an asset, with the assumption that the downturn is a temporary reprieve from further upside.
CEX: Centralized Exchanges are the primary way that users trade cryptocurrencies, exemplified by exchanges such as Coinbase, Binance, and Kucoin. Trades are facilitated through an order book of buyers and sellers. Due to these exchanges taking over the custody of user assets, cryptos are not actually being traded; they are instead represented by IOUs until withdrawal.
CT: Crypto Twitter refers to the best/worst place on the internet.
DApp: Decentralized Applications are apps that run on a blockchain, allowing them to be open source, decentralized, and secure. These apps allow for greater transparency and avoid having a single point of failure because of their distributed nature.
DAO: Decentralized Autonomous Organizations are internet-native organizations owned and governed by its community members and participants. Unlike most digital coops, DAOs are powered by tokenization and web3 tools, automated through code-based contracts on a blockchain.
DCA: Dollar-Cost Averaging refers to a long-term investment strategy designed to reduce the impact of volatility on an investor’s overall purchase. The strategy involves dividing up the total investment allocation across strict, regular time intervals that execute regardless of the asset’s price.
DeFi: Decentralized Finance is a form of finance that is enabled through blockchain-based protocols and code-based contracts, most popularly built on Ethereum. DeFi does not rely on central intermediaries like banks and centralized exchanges (CEX).
DEX: Decentralized Exchanges are peer-to-peer exchanges that do not rely on a centralized entity. Self-executing smart contracts enable trust-less transactions between wallets, with no KYC requirements or custody options.
DLT: Distributed Ledger Technology refers to the technology underlying blockchains. This technological infrastructure is what makes blockchains so significant, allowing for immutability, decentralization, and permanent records of transactions on a public ledger
DSN: Decentralized Storage Networks are an emerging class of networks that are designed to offer decentralized alternatives to giant cloud-based storage companies like Amazon and DropBox.
DPoS: Delegated Proof-of-Stake is a consensus mechanism in which participants vote for delegates that work to maintain irrefutable agreements in a digital-based democratic system. Because it is based on a delegate system with voting power proportional to a participant’s stake, DPoS is intended to be more efficient and less energy intensive than Proof-of-Stake.
DYOR: Do Your Own Research refers to an adage that is meant to encourage people to verify information through their own research and not take people at their word. It’s a popular acronym in crypto circles due to the amount of scams, misinformation, and bad actors in this emergent space.
EIP: Ethereum Improvement Proposal refers to a series of documents that outline new features or processes intended to improve the Ethereum protocol.
EMA: Exponential Moving Averages is a type of moving average that weights recent data points to better indicate price momentum. The technical indicator bases its buy and sell signals on crossovers and divergences from the average.
ENS: Ethereum Name Service is a blockchain naming standard that’s most popular for substituting wallet addresses with a user-friendly name (e.g. mywallet.eth). It can also be used for decentralized, censorship-resistant websites.
ERC: Ethereum Request for Comments defines a set of rules and standards for tokens and their interactions on the Ethereum blockchain. Currently, the most popular ERCs are fungible tokens described by ERC-20 and non-fungible tokens (NFTs) outlined by ERC-721.
ETF: Exchange Traded Funds are securities that combine a group of assets like stocks and cryptos and allows them to be traded as a single stock.
FA: Fundamental Analysis is a type of value-investment strategy in which the fundamentals of a project -- the tech, the team, the tokenomics, the growth prospects -- are taken into consideration when determining an asset’s value.
FOMO: Fear of Missing Out describes a feeling of urgency and potential regret of missing out on a potentially profitable investment.
Forex/FX: Forex stands for foreign exchange markets, which trade fiat currencies.
FUD: Fear, Uncertainty, and Doubt is a perceived rhetorical trick to spread misinformation and negativity among the cryptocurrency market, as well as to mislead those outside the crypto space.
GWEI: Gigawei represents 1 million weis, the latter of which is the smallest base unit of ether (similar to satoshi and pennies to Bitcoin and the US dollar). GWEI is more often encountered than “wei,” because Ethereum gas prices are specified in GWEI.
ICO: Initial Coin Offering is a type of crowdsale/crowdfunding mechanism to raise capital for nascent blockchain projects. The phrase is a play on Initial Public Offerings (IPOs) from traditional markets.
IEO: Initial Exchange Offering is a way for blockchain projects to align a crowdsale approach to raising capital with an exclusive launch on a centralized exchange. The implied vetting process and white paper scrutiny in these partnerships have been framed as a reaction to the scams and manipulation of the ICO craze.
IPFS: The InterPlanetary File System (IPFS) is a burgeoning protocol and network for peer-to-peer data storage and distributed file systems. Files, websites, apps, and data are distributed in this decentralized protocol to address the limitations and problems of HTTP.
KYC: Know Your Customer is a process that seeks to authenticate the identity of a customer due to AML regulations. KYC is particularly notable here due to crypto’s focus on privacy and DeFi applications circumventing KYC requirements.
L1: Layer-1 is a term to describe the main blockchain architecture of a given protocol, such as Bitcoin and Ethereum.
L2: Layer-2 is an overlaying network on top of an L1 architecture, intended to provide scalability solutions to L1 inefficiencies. The lightning network is an L2 example for Bitcoin, while Polygon (formerly Matic) and Optimism are L2 examples for Ethereum.
LP: Liquidity Providers are those who provide liquidity on decentralized exchanges (DEX), represented in the form of LP tokens
MA: Moving Average is a technical indicator that calculates the average value of a discrete set of data points and expresses itself as a line alongside price action on a chart.
MCAP: Market Capitalization is the total value of mined coins of a given cryptocurrency. The value is calculated by multiplying the number of circulating coins by the current market price of a single coin.
MACD: Moving Average Convergence/Divergence is a technical indicator that shows the relationship between two moving averages, calculated most frequently by subtracting the 26-day EMA from the 12-day EMA. The MACD is intended to signify strength, direction, and momentum.
Multi-Sig: Multi-Signature is a digital signature structure that allows a group of users to sign a single document or verify a transaction in a shared wallet or asset management platform. It is oftentimes expressed as a joint signature.
NFT: Non-Fungible Tokens are blockchain-based units of data that represent digital assets like photos, audio, video, and more. These tokens certify that the digital asset is unique and cannot be exchanged in the same way as like-kind currencies like Bitcoin.
OTC: Over the Counter refers to financial transactions that occur outside of an exchange. In crypto, these are oftentimes private exchanges between high-volume traders, institutional investors, and hedge funds.
P2P: Peer-to-Peer represents interactions between parties on a distributed network that don’t rely on a central server.
P/E: Price-to-Earnings Ratio is a term from traditional finance that describes the relationship between an asset’s price and its earnings per share. In crypto, P/E ratios for decentralized exchanges remunerate liquidity providers with their launched DEX tokens.
PA: Price Action trading refers to analyzing raw price data to make trading decisions without third-party indicators, fundamental analysis, or news.
PnL: Profit and Loss describes the realized or unrealized value in a trader’s position. The PnL on a trade is considered unrealized until the position is closed.
PoA: Proof of Authority is a consensus mechanism that delivers speedy transactions through reputation-based validators whose identity is being staked. It is billed as a better solution to the energy-intensive, non-scalable Proof-of-Work algorithm.
PoH: Proof History is an innovation on the Solana blockchain that provides a method of cryptographically verifying the passage of time between two events. Unlike PoW, PoS, and PoA, PoH is not a consensus mechanism.
PoS: Proof of Stake is a consensus mechanism that selects blockchain validators proportionate to the amount of associated crypto held by the validator. It is framed as the primary alternative to Proof of Work, which requires massive computing power and energy.
PoW: Proof of Work is the primary consensus mechanism in crypto, most popularly equated with Bitcoin. It requires increasingly large amounts of computational energy to solve puzzles to validate transactions and create new blocks.
P&D: Pump and Dump refers to a fraudulent scheme in which the price of a cryptocurrency is artificially inflated (“pumped”) in order to sell once people have bought in (“dumped”).
ROI: Return on Investment is the ratio between the profit and cost of investment.
RSI: Relative Strength Index is a technical indicator that measures the speed and change of price moments. It is considered a momentum oscillator, indicating whether an asset is considered “overbought” or “oversold.”
Sats: A satoshi is the smallest unit of Bitcoin, equalling one hundred millionth of a single Bitcoin.
SegWit: Segregated Witness was part of a Bitcoin Improvement Proposal (BIP) that changed the way Bitcoin stores transaction data by segregating signature from block content. It was implemented in 2017 and has since inspired several layer-2 (L2) innovations.
SNARK: Succinct Non-Interactive Argument of Knowledge is a cryptographic proof generated by Ethereum’s layer-2 (L2) solution called Zero-Knowledge Rollup (ZKR).
SSI: Self-Sovereign Identity is a way of establishing trust through digital identities by a three-way verification process between two parties and authenticated by a trusted issuer.
TA: Technical Analysis is a trading and investment strategy that analyzes markets through price, volume, and chart patterns. It is often used as a complement or alternative to fundamental analysis (FA).
TOR: The Onion Router is a free, open-source network of volunteer relays that conceal a users’ location and usage to enable anonymous communication. It is most popularly associated with the dark web and Silk Road.
TPS: Transactions per second.
TVL: Total Value Locked represents the number of assets that are currently staked in a protocol, a number that is particularly useful for DeFi tracking sites and measuring the overall health of the DeFi and yielding markets.
TX: Transaction refers to the exchange of cryptos on a blockchain.
WBTC/WETH: Wrapped Bitcoin and Wrapped Ether allows Bitcoin and Ethereum to trade those assets with other ERC-20 tokens on decentralized exchanges (DEX).
ZKR: Zero-Knowledge Rollup is a layer-2 (L2) solution that increases scalability by bundling hundreds of transactions into a single transaction, generating a cryptographic proof called SNARK (succinct non-interactive argument of knowledge).
2FA: Two-Factor Authentication is a common two-step method of verifying and authenticating a user. It is implemented to protect both the user’s credentials and the resources they’re accessing.