DLC.Link Glossary

A Non-Fungible Token (NFT)

A unique cryptographic token that exists on a blockchain and cannot be replicated. It can represent the identity or property rights of digital or physical items like artwork and real estate on a blockchain.

Application Programming Interface (API)

A set of definitions for different types of requests and calls that can be made, the data types that can be used, and how to make those requests. It acts as a bridge between two software systems, enabling data transfer between them.

Asset

Anything of value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

Attestor

The DLC attestor creates pre-signatures for potential contract outcomes using the users' keys, its own private key, and a nonce. When the DLC is closed, the attestor views the observed outcome and attests to the corresponding signature, allowing the winning party to execute the contract.

Automated Market Maker (AMM)

A type of algorithmic trading system used in DeFi to facilitate liquidity and trading of digital assets. Instead of using order books like traditional exchanges, AMMs utilize liquidity pools that traders can trade against.

Bitcoin (BTC)

Bitcoin is a digital currency which operates free of any central control or the oversight of banks and governments. Instead it relies on a peer-to-peer network (blockchain technology) and cryptography.

Bitcoin Dominance

A metric for the relative market share of BTC compared to all other cryptocurrencies. It's obtained by dividing the market capitalization of all other cryptocurrencies by the market capitalization of Bitcoin multiplied by 100.

Bitcoin Hashrate

The computational power miners spend to process and confirm transactions on the Bitcoin blockchain. It's an indicator of the network's level of security and decentralization.

Bitcoin+

The idea that Bitcoin (BTC) is the best decentralized and resilient asset which lends itself to being pristine collateral but should be able to integrate and talk with other systems such as banks.

Block

A set of Bitcoin transactions from a certain period. Blocks are arranged on top of each other so that one block depends on the previous to form a chain of transactions - blockchain.

Block Height

A specific location in a blockchain is measured by the number of confirmed blocks preceding it. The current block height of a blockchain indicates its current size or time in existence.

Blockchain

A distributed ledger with growing lists of records (blocks) securely linked together through cryptographic hashes. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.

Blockchain Oracle

An entity with an on-chain and off-chain presence that relays data bi-directionally so that both environments can use it.

Burning

Burning a cryptocurrency means intentionally and permanently removing some tokens or coins from circulation by sending them to inaccessible or unusable addresses. It reduces the total supply of an asset and consequently controls inflation.

Collateral

An asset or property pledged by a borrower to a lender as security for a loan. If the borrower defaults, the lender may seize the collateral.

Consensus Mechanism

A consensus mechanism or algorithm is a fault-tolerant system through which blockchain nodes agree about the network's current state. It establishes immutability and security in a blockchain network.

Counterparty Risk

Counterparty risk in crypto refers to the likelihood or possibility of one party involved in a transaction failing to fulfil/honour their obligations, resulting in potential losses for the other party.

Currency Pair

A price quote of the exchange rate for 2 different currencies traded in money markets, e.g., BTC/USDT. The first listed currency is the base currency, while the second is the quote currency. The base currency represents how much of the quote currency is needed to get one unit of the base currency.

DeFi Protocol

A decentralized financial system running on a blockchain network to facilitate peer-to-peer financial services without intermediaries. It’s governed by specific standards, codes, and procedures to enable various financial services, like borrowing.

Debt

An amount of money an individual borrows and have to pay back later, often with an interest. In crypto, the interest is much lower than in traditional lending.

Decentralization

The transfer of power, authority, control, and decision-making processes from a centralized entity to a larger distributed network. Public blockchains, like Bitcoin, are politically decentralized (no one controls them) and architecturally decentralized (there is no infrastructural central point of failure). However, they are logically centralized (there is one commonly agreed state, and the system behaves like a single computer.)

Decentralized Application (DApp)

A software application running on a decentralized network, typically a blockchain. Unlike traditional applications on centralized servers, DApps function on peer-to-peer networks, meaning single entities or individuals do not control them.

Decentralized Autonomous Organization (DAO)

A system designed to distribute decision-making, management, and ownership of an entity. Decisions are made from the bottom up and governed by a community organized around specific rules enforced by smart contracts.

Decentralized Exchange (DEX)

A decentralized exchange (DEX) is a peer-to-peer (P2P) marketplace that connects crypto buyers and sellers. In contrast to centralized exchanges (CEXs), DEXs are non-custodial, meaning users remain in control of their private keys when transacting.

Decentralized Finance (DeFi)

An umbrella term for apps, platforms, and organizations that allow users to borrow, lend, stake, and trade digital currencies on peer-to-peer basis. DeFi services are automated by smart contracts on blockchain networks.

Deposit

A crypto deposit is a transaction that allows an individual to send crypto to a recipient address. This is an 'on-chain' transaction, meaning the crypto is transferred via the blockchain.

Discreet Log Contract (DLC)

An exciting new technology that facilitates conditional payments on the Bitcoin network. By creating a DLC, two parties can enter into a monetary contract redistributing their funds to each other without revealing any details to the blockchain.

Do Your Own Research

Do Your Own Research, commonly abbreviated as DYOR, is a crypto slang emphasizing the importance of conducting thorough research and due diligence into a project before investing in it.

Ether (ETH)

The native token of the Ethereum network. All transactions on Ethereum require gas fees to be paid in ETH.

Ethereum

A decentralized, open-source, and distributed computing platform that facilitates the creation and deployment of smart contracts and DApps.

Ethereum Virtual Machine (EVM)

A computation engine for the Ethereum blockchain, which serves as the runtime environment for deploying smart contracts and DApps.

Exchange-Traded Fund (ETF)

An investment vehicle that tracks the value of an asset, like Bitcoin, and trades on traditional market exchanges instead of crypto exchanges. It offers traditional investors a regulated investment option, enabling them to invest in BTC, for example, without directly owning it.

Fiat

A government-issued currency that is not backed by a commodity, such as gold or silver. It is typically designed by the issuing entity to be a legal tender, and is under government regulation.

Genesis Block

The first validated block in a blockchain holding significance as the starting point for all subsequent blocks and transactions. The Bitcoin genesis block was mined on January 03, 2009, marking the birth of the Bitcoin blockchain.

Hold On for Dear Life (HODL)

A long-term investment strategy where individuals buy and hold assets for a long time, resisting the temptation to sell for short-term gains.

Interest Rate

The percentage which an individual or financial institution charges or earns over a specific period as a result of either borrowing or investing/lending.

Know Your Customer (KYC)

The process of verifying customer identities to help curb fraud, corruption, money laundering, and terrorism financing activities.

LP Token

A token issued to liquidity providers (LPs) on a DEX that runs on an automated market maker (AMM) model. The token represents the user's share of the pool and can be used to withdraw the staked assets along with any rewards.

Ledger (financial)

In crypto, a ledger is a database or a list of every transaction that has ever taken place on the network. For instance, a blockchain is a decentralized ledger maintained by a network of computers that work together to verify and record transactions.

Liability

An obligation to pay or repay a debt or to settle an outstanding claim. A liability is settled over time through the transfer of economic benefits including money, goods, or services.

Liquidation Penalty

A fee rendered on the price of assets of the collateral when liquidators purchase it as part of the liquidation of a loan that has passed the liquidation threshold.

Liquidation Threshold

The percentage at which a loan is defined as under-collateralised. For example, a liquidation threshold of 75% means that if the value of the loan rises above 75% of the collateral, the loan is under-collateralised and could be liquidated.

Liquidity Pool

A collection of funds (usually trading pairs of equivalent value) locked in a smart contract on a DeFi network. It enables users to buy and sell crypto on DEXs and other DeFi platforms without the need for centralized market makers.

Liquidity Provider (LP)

A user who has deposited assets into a liquidity pool for use by a decentralized exchange (DEX) for automated market making (AMM). Liquidity providers are generally incentivized to deposit assets into the pool by receiving incentive rewards

Loan-to-Value (LTV)

The ratio of a loan's value to the collateral value. It is calculated by dividing the amount borrowed by the value of the collateral, expressed as a percentage.

Mainnet

A live version of an independent blockchain running its own network with its own infrastructure, such as the Bitcoin mainnet. It forms the backbone of a blockchain ecosystem, responsible for validating, recording, and broadcasting transactions.

Market Cap

Market capitalization or market cap is a metric used in both traditional and crypto markets to measure and track the market value of an asset. It's calculated by multiplying the current price of an asset by its circulating supply.

Multisig Wallet

A multisig wallet requires more than 1 private key to access crypto assets or sign transactions. It brings an extra level of security, minimizing the likelihood of compromising a wallet.

Node

A computer that participates in a blockchain network by storing, confirming, and broadcasting transactions and blocks to other computers. Any individual can run a node anywhere in the world as long as they're connected to a decentralized network and meet the minimum requirements.

Non-custodial

A way to describe a service or software that manages cryptocurrency assets while giving users full control over the private keys that cryptographically prove ownership of those assets.

Satoshis

Satoshis, named after the pseudonymous Bitcoin creator, Satoshi Nakamoto, are the smallest units of Bitcoin (BTC). 1 Satoshi is equivalent to 100 millionth of a BTC.

Schnorr Signature

A type of digital signature invented in the 1980s that facilitates signature aggregation while maintaining privacy standards.

Seed Round

An early investment in a private company or project in exchange for equity (a share of ownership and future revenue.)

Self-wrapping

Holding the asset being tokenized onto another blockchain within the primary user of the wrapped asset's wallet.

Smart Contract

Computer programs that facilitate, verify, and enforce the negotiation and performance of some sort of agreement. These programs are based upon if, then logic – if x action happens, then y action occurs automatically.

Solidity

An object-oriented programming language that was created to construct and design smart contracts on Blockchain platforms such as Ethereum. It compiles and runs on the Ethereum Virtual Machine (EVM).

Testnet

An identical copy of a blockchain network created for the sole purpose of testing out new products and features. It functions as a development hotbed where developers can try out new functionalities before integrating them into the main blockchain – mainnet.

Total Value Locked (TVL)

A metric used to measure the overall health of a DeFi protocol. It helps to gauge whether a DeFi asset is undervalued or overvalued. For example, if it is below 1, it's likely undervalued.

Two-Factor Auntentication (2FA)

An extra layer of protection for online accounts – in addition to usernames and passwords. It requires the input of codes generated by SMS or authentication Apps, such as the Google Authenticator App.

Unspent Transaction Output (UTXO)

The amount of digital currency remaining after completing a crypto transaction. It can be used as input in a new transaction.

Volatility

The degree of uncertainty or risk associated with the value of an asset. Generally, high-cap assets, like BTC, are less volatile and, therefore, less risky than small-cap assets/newly minted tokens.

Wallet

A crypto wallet is a computer program or device that stores cryptocurrency keys and enables owners to access or spend their digital assets. It comprises a public key (the wallet address) and a private key for signing transactions.

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