Introduction

Most newcomers to the Web3 space often feel overwhelmed by the sheer amount of jargon. A few months ago, I was a newbie too, and I experienced my fair share of confusion when I heard terms like Ape, Moon, Alpha, Degen and WAGMI. These are just some of the basic lingo in the Web3 space. Then there are more complex terms like smart contracts, Layer 2, sharding, rollups, the blockchain trilemma, NFTs, ERC-20 tokens, staking, liquidity, and the list goes on!

This article aims to break down most of the commonly used jargon in the Web3 space. If I’ve missed any, feel free to note them in the comments, and I will update the article to include them. Let’s work together to make this the go-to guide for every newcomer in the Web3 world.

A for Apple, Let's dive in!

Common

  • Ape: To "ape" means to jump into a crypto investment, such as buying a new token, NFT, or similar asset, often impulsively.
  • Bear: Represents sellers in the crypto market.
  • Bear Market: A period dominated by bears, characterized by pessimism and a decline in the value of assets.
  • Bull: Represents buyers in the crypto market.
  • Bull Market: A period dominated by bulls, usually characterized by optimism and an increase in the value of assets.
  • Bull Run: A period in the crypto markets where the prices of assets rise significantly over a sustained period.
  • Chad: Someone who makes high-stakes moves, takes calculated risks, and frequently comes out ahead.
  • Degen: Someone who engages in highly speculative, risky trading or investing.
  • DYOR: Short for "Do Your Own Research," advising individuals to conduct their own investigation before making investment decisions.
  • FOMO: Short for "Fear of Missing Out," referring to the anxiety of missing profitable investment opportunities.
  • FUD: Stands for "Fear, Uncertainty, and Doubt." This refers to negative news, rumors, or misinformation spread with the intent of causing panic or hesitation among investors or the community. FUD usually leads to investors selling off their assets.
  • GM: Short for "Good Morning."
  • GN: Short for "Good Night."
  • Moon: refers to a significant increase in the price of an asset. A coin or token will "moon" means that its price will rise significantly.
  • Pump and Dump: This is a market manipulation scheme that involves artificially inflating the price of a cryptocurrency to mislead investors. The orchestrators, often referred to as "pumpers," create hype through various channels, enticing unsuspecting individuals to buy in. Once the price has been sufficiently pumped, they sell off their holdings at the inflated price, realizing significant profits. After the dump, the price typically crashes, leading to substantial losses for those who bought in during the hype.
  • Shilling: This refer to all actions involved in promoting or endorsing a cryptocurrency, token, or project usually to create hype and drive up prices.
  • Shit coin: This refers to a cryptocurrency that is considered to have little to no value or utility. People buy shitcoins because they are often very cheap, allowing for the purchase of large quantities, or due to hype and FOMO (fear of missing out) created by social media and online communities.
  • WAGMI: Short for "We Are Gonna Make It."
  • Whales: These refer to entities/accounts that hold large amounts of a cryptocurrency. They are often referred to as market movers as their entry and exit in the market affects the stability of the crypto market.

More Technical

  • Account: This any entity capable of performing a transaction. There are majorly two types: EOA (externally owned account) and smart contract accounts.
  • Block: This is a collection of transactions. A blockchain is basically a chain of these blocks, which contain transactions.
  • Blockchain: this is a decentralized and distributed ledger which stores transactions immutably and is bound by a mechanism called consensus which dictates how it state is changed.
  • Block Explorer: A block explorer is a web-based tool that allows users to interact with blockchain data. It enables users to view all transactions in a block, access specific details of any transaction, and interact with smart contracts. Block explorers are essential for transparency and verification within blockchain networks. Examples include Etherscan for Ethereum and Blockscout.
  • Blockchain Trilemma: This refers to the challenge of achieving scalability, security, and decentralization simultaneously in a blockchain. The core issue is that there is often an imbalance among these three key features in every blockchain; none has successfully attained a perfect equilibrium across all three. For instance, Ethereum prioritizes security and decentralization more than scalability, which can result in slower transaction times and higher fees during periods of high demand.
  • Bridge: This is an infrastructure or platform that facilitates interoperability between different blockchains. It allows users to move tokens from one chain to another. For example, if Alice has 4 ETH on the Ethereum mainnet but wants to stake some ETH in a dApp on the Base mainnet, she would use a bridge to transfer her ETH from the Ethereum mainnet to the Base chain. Bridges can also support various tokens, including USDC, USDT, and many others, not just Ethers.
  • Coin: This is the native token or means of exchange of any blockchain. E.g BTC for bitcoin and ETH for Ethereum. They are different from other tokens. In the ethereum blockchain which allows for smart contract development, it is possible to create tokens like USDC, USDT and many more, but it is not possible to create the coin Ethers (ETH) because it is natively built in to the Ethereum blockchain.
  • Consensus Mechanism: This is the system by which nodes in a blockchain agree on the state transition and make critical decisions affecting the protocol. When a transaction is made, the nodes need to agree on the validity of that transaction before it is added to the blockchain. There are lots of mechanisms adopted by different blockchains: Proof of stake by Ethereum, Proof of work by Bitcoin. Some chains combine more than one consensus mechanisms, we also have: Proof of authority, proof of burn.
  • Cryptography: This is a branch of mathematics that focuses on securing information. It is the foundation of blockchain technology. More specifically, a blockchain is a series of blocks linked together, where the hash of the previous block is stored in the next block. This linkage makes it virtually impossible to alter the data in any block, as any modification would change the block's hash and invalidate the previously stored hash. To successfully alter even a single piece of information in a transaction, all subsequent blocks would also need to be edited, which is computationally infeasible. This security is achieved through cryptography, with concepts like public and private keys and hashing all stemming from it.
  • Client: is a software that allows a user or node to interact with the blockchain network. By running a client, a node becomes part of the blockchain protocol. This is the main software that makes a blockchain or protocol decentralized. The client contain the set of rules governing the network. E.g RETH and GETH for ethereum.
  • Decentralization: This refers to the distribution of power such that there is no central authority willing it.
  • EOA: short for 'externally owned account'. This is an account that has a private and public key. Basically this account is simply a public key pair.
  • Ethereum: this is essentially a Layer 1 blockchain. On a deeper level, it functions as a global singleton state machine. This means that its software is run by nodes across the world, maintaining a single global state, with state transitions determined by the Proof of Stake consensus mechanism. It also features the Ethereum Virtual Machine (EVM), which executes Turing-complete programs (smart contracts) that update the blockchain's state. These elements make Ethereum a decentralized platform for executing smart contracts and decentralized applications (dApps).
  • EVM: Short for Ethereum Virtual Machine. This is a stack-based machine which executes smart contracts on the ethereum blockchain.
  • Fungible Token: This is a type of token that is interchangeable. This token is not unique, all are the same. An example is USDT.
  • Gas: This concept was introduced with the Ethereum blockchain. For every transaction on the blockchain, there is some computational effort required to execute it. Gas is a measure of that computational effort. Say a car moves from point A to B, it expends some form of fuel, that fuel is gas in the case of blockchain. Gas is paid for in the native coin of the chain, e.g in the Ethereum blockchain, gas is paid in ETH.
  • Hashing: This is the process of converting input data of any size into a fixed size output using a hash function. A hash function is a one-way function that hashes data. An example is the keccak256 which is widely used in Ethereum.
  • Layer0: The basic foundation that connects blockchains to each other and the internet. It’s the infrastructure that allows different blockchains to communicate. Examples include Polkadot’s relay chain and Cosmos's IBC.
  • Layer1: The main blockchain where transactions happen. These are often known to be the mother chains are they provide the infrastructure for many solutions to be built on. Examples are Bitcoin and , Ethereum.
  • Layer2: A protocol built on top of Layer1 to make it faster and handle more transactions. It helps take some load off the main blockchain. Examples include Optimistic Rollups, ZK-Rollups, and the Lightning Network. Layer2 solutions were introduced to solve the blockchain trilemma.
  • Liquidity: This represents how easily an asset can be traded in a market without changing its price too much. High liquidity means it's easy to buy or sell the asset quickly, while low liquidity means it's harder to trade.
  • Mnemonic Seed: This is a group of 12 - 24 words which forms the master key / seed of every wallet. The mnemonic is selected from 2048 words according to BIP39 (Bitcoin improvement proposal). Once the mnemonic of an account is gotten, the malicious actor has total control of all the accounts linked to it.
  • Blockchain Network: This is a decentralized and distributed linkage of nodes that share share a common data state and decide the future states through consensus.
  • Node: This refers to a device (computer, phone, etc) running the blockchain software (client). A Node is a participant of a blockchain network.
  • NFT : short for Non-Fungible Token. This is a unique token. Each Nft minted is unique and are not interchangeable.
  • Optimistic Rollup: This is a type of rollup which is 'optimistic'. Optimistic here means that all transactions processed off-chain (in the rollup) are assumed to be valid until proven otherwise. They rely majorly on fraud proof mechanism whereby anyone who detects an invalid transaction can submit a fraud proof.
  • Private Key: This is a secret, randomly generated number used to securely control ownership of assets and sign transactions. It is 32 bytes / 64 hexadecimal character long.
  • Public Address: A public address is derived from the public key by taking the last 20 bytes of the Keccak-256 hash of the public key. The address is typically prefixed with `0x`, which signifies a hexadecimal number. This address is used to receive value, such as tokens or cryptocurrencies, on the blockchain. For example, a typical Ethereum address looks like this: 0xfB96E899a63fbee55a3044ed522De6677D82D57E.
  • Public Key: This is a key that is gotten from the private key and used to generate the public address. It is 32 bytes / 64 hexadecimal character long.
  • Rollups: A method used to make blockchains faster and cheaper. They bundle multiple transactions into a single one and process them outside the main blockchain (off-chain). Afterward, the result is sent back to the main blockchain, reducing the load. There are optimistic and ZK rollups.
  • Sharding: A way to split a blockchain into smaller pieces called "shards" to handle more transactions at the same time. Each shard processes its own transactions and data, which helps the network scale without slowing down
  • Smart Contract: This is piece of software / program which executes all or part of an agreement. It is immutable, and self executing. Most read and write capabilities in the blockchain are powered by smart contracts because through them, the state of the blockchain is updated.
  • Stable coin: This is type of cryptocurrency that is designed to maintain a stable value relative to an asset or a bunch of assets, typically a fiat currency like the US Dollar. Stablecoins aim to reduce the price volatility commonly associated with cryptocurrencies. E.g USDC, DAI and USDT. When you save value in form of stable coins, there is a low chance of it losing value because stable coins are have very low volatility.
  • Staking: This is the act of locking up value (tokens) to gain results or right to certain privileges. Anything of value can be staked in a smart contract.
  • Token: this is digital asset created on a blockchain that can represent various assets or utilities.
  • Transaction: This is any action that can alter the state of blockchain. E.g transfer of coins (like ETH, BTC, etc), minting an NFT, transfer of tokens (like DAI,USDT etc), deploying a smart contract, interacting with any smart contract. These actions require digital signatures.
  • Wallet: A wallet is a software application that helps users manage private keys and accounts. There are two main types of wallets: custodial and non-custodial wallets.
    • Custodial Wallets: In custodial wallets, users do not own their private keys; a third party (the custodian) manages and safeguards the keys on their behalf. Examples include exchanges like Binance and Coinbase.
    • Non-Custodial Wallets: In non-custodial wallets, users own their private keys, giving them full control over their funds. These wallets require users to take responsibility for the security and management of their keys. Examples include Trust Wallet, MetaMask, Rabby Wallet, and Phantom.
  • Web3: This is the third version of the web powered by the blockchain. It is the decentralized web where there is no central authority deciding the state of data, rather every node participating in the network decide.
  • ZK Rollups: Unlike Optimistic Rollups, which assume transactions are valid unless proven otherwise, they use cryptographic proofs to verify the validity of transactions, ensuring correctness from the start.

These are the few I could take down and I hope you find it valuable, help add more to the list via the comments! Thank you!