Glossary

From “Adaptive State Sharding” to “Wallet”: In our glossary we take a look at important terms from the world of blockchain technology and cryptocurrencies. Simply formulated and easy to understand.

Jump to the desired section: F-J  |  K-O  |  P-S  |  T-Z

A ... like Adaptive State Sharding

Adaptive State Sharding is a scaling technique that Elrond uses to partition transaction processing, storage and network. Each shard thus only needs to process (and store) a fraction of all transactions in parallel with other shards. The result is a massive performance increase in the Elrond network with the ability to scale performance linearly.

For more info, see the term “sharding” …

An airdrop is a distribution (usually free) of cryptocurrencies to specific, random, or all addresses on a blockchain.

Altcoin is a collective term for all cryptocurrencies that were created after the first cryptocurrency, Bitcoin.

APR stands for the annual return on invested capital (interest). APY includes the so-called compound interest, i.e. the annual return including the reinvestment of your interest income, in our case your EGLD tokens during staking.

Assets are assets such as precious metals, stocks, tokens, and NFTs.

An AMM – like Maiar Exchange –  is a protocol on a decentralized exchange and a core concept of the DeFi ecosystem. Instead of using an order book like a traditional exchange, assets are valued according to a mathematical formula – in this case a pricing algorithm.

In the world of automated market making users don’t need a counterpart (another trader) to make a trade. Instead, they interact with a smart contract that “makes” the market.

The liquidity in the smart contract is provided by users (liquidity providers) of the exchange in so called liquidity pools. This essentially allows anyone to become a market maker on Maiar Exchange and – that’s the best part – earn fees for providing liquidity.

AMMs have carved a niche for themselves in the DeFi space due to their simplicity and ease of use. No wonder, then, that they are an essential part of the overall crypto vision.

Find out more here:
https://istari.vision/en/use-cases-elrond/defi/maiar-exchange-next-generation-automated-market-maker/

APR (simple interest) vs. APY (compound interest)
Understanding Adaptive State Sharding
What is an Automated Market Maker?
What are Assets, Coins, Tokens?
What is Sharding in Crypto?

B ... like Blockchain

Bitcoin is the first cryptocurrency and has the largest crypto market capitalization in the world. The Bitcoin blockchain is based on a proof-of-work consensus mechanism. This has been continuously expanding the blockchain since Satoshi Nakamoto launched it in 2008.

Blocks are data structures of the blockchain that contain data such as transaction data, timestamps, signatures and hashes. Valid transactions are bundled in a block.

The block reward is the reward that a miner/validator receives for the calculation of a new block. The block reward is usually covered by the transaction fees of the transactions contained in the block and, if applicable, an inflationary block reward share.

A blockchain is a decentrally distributed database that stores a transaction history in an immutable and tamper-proof manner. In contrast to conventional databases, no central administrative power or central authority is required. Created transactions (such as sending cryptocurrency amounts) are validated by the distributed network. Validated transactions are bundled into a block and this is appended to the blockchain after validation by the network participants (consensus mechanism). The block is added as a new record on all computers in the network and stored locally. Through this process, network participants can independently execute transactions and send data or amounts of money among themselves without the need for intermediaries (such as banks, merchants, notaries, etc.).

Block time indicates how much time it takes to create a block and attach it to the blockchain.

What is a Blockchain?
What are Sidechains in Crypto?

C ... like Cold Wallet

A coin is an independent cryptocurrency with its own underlying (blockchain) technology, such as EGLD (eGold), Bitcoin or Ether.

A cold wallet (e.g. paper wallet or hardware wallet) is a way to store one’s blockchain-based assets, such as cryptocurrencies, offline. It secures the private key and is not connected to the Internet.

A consensus mechanism refers to an algorithm that reaches agreement on the state of a network among its participants. Consensus mechanisms are used in distributed systems, such as distributed ledgers/blockchains, to ensure that all participants have an identical copy of the distributed database. See also: Proof-of-Work and Poof-of-Stake

The cost average effect states that by regularly investing (e.g. with the help of a savings plan) in an asset (e.g. EGLD tokens), the purchase price is harmonized and a positive ROI is achieved.

A crypto exchange is a trading platform for cryptocurrencies. A distinction is made between centrally managed (e.g. Binance, Coinbase) and decentralized (e.g. Maiar Exchange, UniSwap) crypto exchanges.

Cryptocurrencies are digital currencies based on cryptographic processes (such as blockchain protocols). See also: EGLD (eGold)

12 consencus mechanisms and how they work
What is cost average in crypto?
Not Your Keys, Not your Crypto (Meaning + Issues)
Setting up a Ledger Nano X

D ... like DeFi

dApps (decentralized applications) run decentrally (on multiple nodes) over a peer-to-peer network. It is not possible to block or censor a dApp. They are based on open source code and have their own blockchain or use the blockchain of a dApp platform. With their own cryptocurrency or token, users are rewarded for providing computing power.

A DAO is an organization or company without hierarchical management that is collectively owned and managed by its members. Decisions are governed by proposals and votes to ensure that everyone in the organization has a voice.

DeFi stands for Decentralized Finance and includes all blockchain-based financial services. This includes, for example, Automated Market Makers (AMM) and DAOs (Decentralized Autonomous Organizations).
Delegators are network participants who make their cryptocurrencies available (delegation) to validators (such as Istari Vision) as part of staking so that they can operate nodes and contribute to the blockchain network infrastructure. For delegating (through staking), delegators receive returns, see also APR/APY.

DEX stands for Decentralized Exchange, or decentralized (crypto) trading exchange that enables secure peer-to-peer transactions between network participants.

In the context of blockchain technology, decentralization is the property of distributedness. This refers to independent computers / network participants that communicate without a central authority and intermediaries.

Distributed ledger means “distributed ledger of accounts” and stands for the distributed storage of transaction histories. Blockchain technology is a specific type of distributed ledger technology and is therefore subordinate to it.

At its most basic, DNS allows complex information, such as a wallet address, to be mapped to a human-readable name. This means instead of sending money to a wallet address, such as erd1hmlnypa0c9x7canxgdsue86ckla0zekv0258f2q40ady50v8yxc92y5k2y, it can simply be sent to @AliceJohnson.

What is DeFi?
DeFi – The Future Of Finance Explained
The Truth About DeFi
Lending And Borrowing In DeFi Explained
What is a Decentralized Exchange (DEX)?
Screencast Maiar Exchange – a walk through the Devnet
What is a DAO?
What is a dApp?

E ... like EGLD

EGLD or eGold is the native coin of the Elrond blockchain. EGLD is used for paying transaction fees in the Elrond network, as well as for staking and rewards. The maximum possible amount in circulation is limited to 31,415,927 EGLD, at the latest when this amount is reached EGLD will be non-inflationary.

The Elrond Standard Digital Token (ESDT) is a token standard for creating new tokens on the Elrond blockchain. Like eGold, ESDT tokens enjoy the benefits of the Elrond blockchain (speed, low transaction fees, network security). ESDT tokens can be created and configured at low cost (0.05 EGLD) and in a few minutes through a single transaction. More about ESDT tokens …

F ... like FinTech

Fiat money is money that has no intrinsic value. Unlike gold or eGold, for example, fiat money only has value as long as, for example, a state ensures that it can be exchanged for goods and commodities.

FinTech is the abbreviation for financial technology and describes innovations and new technologies in the financial sector. More about FinTech …

First layer stands for the main architecture of a blockchain network. In some cases, a blockchain has a second layer (see also second layer). This is a second network that lies on top of the first layer blockchain and is intended to enable scalability, for example.

A flash loan is a type of uncollateralized lending that has become popular across a number of decentralized finance (DeFi) protocols. For experienced crypto traders flash loans introduce an innovative tool for arbitrage and quick trades that weren’t possible before blockchains. Flash loans have the following unique properties:

– Based on smart contracts
– Unsecured
– Instant

A distinction is made between soft forks and hard forks. A hard fork is a split of the blockchain into two (or more) strands that results from serious changes in the blockchain protocol. These strands are independent of each other, but are based on the same block of origin. A soft fork is similar to a software update, where the blockchain does not necessarily split. As a rule, soft forks are backward compatible, i.e. network participants without an “update” are not excluded from what is happening….

Soft Fork versus Hard Fork in Crypto
What are Flashloans?

H ... like Hard Wallet

As a rule, block rewards decrease over time. In some blockchains, the reward for generating a new block is halved after regular time intervals. This is called halving.

Hard wallets (or hardware wallets) such as Ledger are a very secure form of storing access data. The private keys are held offline, often on USB sticks that have been converted for this purpose, making them completely secure. The person who owns these private keys to the coins also owns the digital currencies.

The hashrate is a unit of measurement for the computing power of a blockchain network (especially proof of work). In simple terms, it indicates the speed at which the many complex computing operations are performed when a new block is opened up.

The term HODL is a common term in the crypto scene that stands for the staying power when holding coins. Its origin is a user’s typo in a forum post in 2013 of the word “Hold”. However, it can also be seen as an acronym for “Hold On for Dear Life”.

Hot wallets run on devices connected to the Internet (e.g. computer, cell phone or tablet). Since the private security words are generated on a device connected to the Internet, they cannot be considered 100% secure (see the comparison Hard Wallet / Hardware Wallet).

I ... like Internet of Things

Impermanent loss is the difference between

a) holding crypto assets (HODL strategy) versus
b) locking them in an automated-market-maker-based pool (liquidity pool)

Impermanent loss happens when you provide liquidity to a liquidity pool and the price of your deposited assets divert (in either way) compared to when you deposited them. However, impermanent loss does not set in, if the price of the token pair rises or falls in the same ratio, let’s say from 1:10 to 10:100. (factor 10 for both tokens).

If there’s a lot of trading volume happening in a given pool, it can be profitable to provide liquidity even if the pool is exposed to impermanent loss. This, however, depends on the protocol, the specific pool, the deposited assets, and even wider market conditions.

In case of the Maiar Exchange impermanent loss will be counteracted by

a) trading rewards (0,25 % of all transactions made within the liquidity pool distributed to all liquidity providers within the pool according to their liquidity share) and

b) MEX token rewards

The term “impermanent” derives from the fact, that losses only become realized (permanent) once you withdraw your coins from the liquidity pool. Impermanent loss is one of the fundamental concepts that anyone providing liquidity to an AMM should understand.

Find more details here:

https://elrond.com/blog/maiar-exchange-mex-tokenomics/
https://istari.vision/en/use-cases-elrond/defi/maiar-exchange-next-generation-automated-market-maker/

Initial Coin Offering (ICO) is a (often unregulated) method of crowdinvesting. It is used by companies whose business model is based on cryptocurrencies. In the process, tokens are issued to the public at a so-called token sale on a centralized or also decentralized exchange. The ICO is comparable to the initial public offering (IPO) of a company.

Ein Initial Exchange Offering ist vergleichbar mit einem Initial Coin Offering, mit dem Unterschied, dass der Token-Sale ausschließlich auf einer Kryptobörse stattfindet.

Als Internet of Things (Internet der Dinge) wird eine Infrastruktur bezeichnet, die physiche und virtuelle Objekte miteinander vernetzt und auf Grundlage von Informations- und Kommunikationstechnologie zusammenarbeiten lässt. Mehr über das Internet of Things als Blockchain-Anwendungsfall …

What is Impermanent Loss?
What is an ICO?
Avoiding Impermanent Loss

L ... like Ledger

Ledger is the term used to describe the recording and collection of transactions. Blockchain technology falls under the collective term of distributed ledger technology. Ledger is also the name of a hardware wallet.

The term Lending stands for the granting of credit. Lending is also gaining importance in the blockchain space. Advanced blockchain applications and DApps are designed to enable users to lend or receive loans in the form of cryptocurrencies.

A liquidity pool is a collection of funds locked in a smart contract. Liquidity pools are used to facilitate decentralized trading, lending, and other functions. Liquidity pools are the backbone of many decentralized exchanges (DEX), such as Maiar Exchange. Users called liquidity providers (LP) add an equal value of two tokens in a pool to create a market. In exchange for providing their funds, they earn trading fees from the trades that happen in their pool, proportional to their share of the total liquidity.

What is a Liquidity Pool in Crypto? (EN)
How do Liquidity Pools work? (EN)
Setting up a Ledger Nano X (EN)

M ... like Maiar

Maiar is a digital wallet and payment app developed by Elrond that allows managing cryptocurrencies on mobile. Maiar can be used to send and receive payments. In addition, cryptocurrencies can be invested in the Maiar app to receive interest earnings (Staking). Advantage of Maiar is that, for example, payments can be sent to phone numbers or herotags, so there is no need for long hash addresses. More about Maiar in the Elrond DeFi 2.0 module …

The mainnet is a functioning network that has been successfully launched. If a blockchain project switches from an already existing blockchain to its own blockchain, this is referred to as a mainnet startup.

The market capitalization is the calculated total value of the coins/tokens in circulation for a project. It results from ‘price’ x ‘number of coins in circulation’.Elrond on Coinmarketcap.com

Mass adoption refers to the phase in the lifecycle of a product or technology in which the general population shows interest in it. In the case of blockchain, this also includes those people who have not yet been familiar with the technology.

The metachain is the superordinate blockchain of the Elrond network. It is where the data (transactions, blocks) of the lower-level shards are authenticated and finalized. It facilitates communication between shards, the storage and maintenance of a validator register, triggers new epochs, and processes the rewarding and sanctioning of validators.

Miners are the actors in a blockchain network who validate transactions and update the transaction history. Depending on the consensus mechanism, they either need powerful hardware (PoW or Proof-of-Work) or have to deposit a certain stake – or deposit – in the form of the network’s native cryptocurrency (PoS or Proof-of-Stake).

Mining primarily refers to the process of “mining cryptocurrencies” in a proof-of-work network. In this process, the “miners” use computing power to solve cryptographic puzzles. Colloquially, validating transactions in a proof-of-stake network is also called mining.

N ... like NFT

The native token of a blockchain usually represents the underlying software technology and is implemented directly into the network protocol with its functions and properties. Elrond’s native token is called EGLD (eGold).

Nodes are network nodes that serve as connections for communication and transaction validation in a peer-to-peer network.

A non-fungible token (NFT) is a cryptographic token that represents a unique digital asset, such as a digital work of art, piece of music, or other digital asset of value. An NFT governs proof of authenticity and ownership on a blockchain network. NFTs are not interchangeable and bring scarcity to the digital world. More on NFT in our Use Case Art, Gaming, Entertainment …

What is an NFT? (EN)
NFT Mania – Hype Or A New Paradigm? (EN)

O ... like Open Source

Open source originally goes back to open source software (OSS). It is software code that is available to the public and can be modified as desired, e.g. to develop your own applications or optimize the code.

Blockchains cannot access data that is outside their own network. In order to provide and integrate this data in a blockchain-compatible manner, so-called oracles have been developed (e.g. Chainlink). In the context of the blockchain, an Oracle acts as a kind of agent that verifies events and data from the real world and makes them available for smart contracts on the blockchain.

P ... like Proof-of-Stake

Peer-to-peer stands for direct computer connections. In the context of blockchain technology, this refers to networks formed exclusively by computer-to-computer communication.

The private key is part of a key pair of an asymmetric encryption method and enables access to the assets of a public address. It is also called secret phrase or seed phrase. In the case of the Elrond blockchain, the private key occurs as a sequence of 24 words.

Proof of Stake is a consensus method in which network participants such as Istari Vision (validators) pay a deposit (at Elrond 2500 EGLD) in order to be allowed to participate in the mechanism. Unlike PoW (Proof-of-Work), the network participant who solves a cryptographic puzzle is not allowed to create the next block. The block creator is selected at random.

Proof of Work (PoW) is an energy-intensive consensus method in which so-called miners expend computing power to solve cryptographic puzzles. The first miner to solve the puzzle gets to create the next block and receives the block reward. Bitcoin uses the PoW consensus method.

The public key is the public address of “blockchain accounts”. Transactions are addressed to this key, e.g. to send cryptocurrencies.

What is Proof of Stake?
What are public and private keys?

R ... like Rewards

Rewards are rewards for participation in the consensus (process). Validators receive the rewards for proposing and validating blocks. Delegators also receive rewards for providing cryptocurrencies to validators (such as Istari Vision) as part of Staking.

A roadmap is a written plan that chronologically represents blockchain project goals and milestones.

Royalties are revenues that the creator of a smart contract receives, for example, when other users trigger the smart contract. At Elrond, 30% of the transaction fees flow back to the creator of a smart contract as royalties.

S ... like Smart Contract

Scam means fraud.

Secure Proof-of-Stake (SPoS) is a special form of proof-of-stake and consensus mechanism of the Elrond blockchain. With SPoS, a random value decides which validator is selected to create the next block. As the block is created, the random value also changes. In this way, the network is optimally protected against attacks. SPoS is considered a particularly secure consensus procedure.

Some blockchains have a second layer (see also first layer blockchains), a kind of second layer in the form of a network, which lies on top of the main blockchain architecture. Second layers are intended to solve problems such as scalability.

The seed phrase (or secret phrase) is the “master key” to a crypto wallet, consisting of 12 or 24 words. If the password to the wallet is forgotten, the seed phrase is the only way to recover the wallet and the cryptocurrencies in it.

Shards are smaller partitions of the Elrond network and are used for scaling: Each shard is responsible for a part of the state (accounts, smart contracts, blockchain) and transaction processing, so that each shard only has to process a fraction of the transactions. Thus, the performance of the Elrond blockchain is massively increased by the so-called Adaptive State Sharding.

Scalability is the property of a blockchain to adapt the throughput to transaction processing (upwards) and thus exclude performance losses. The Elrond network is arbitrarily scalable because it can process transactions in parallel by adding more shards (see Shards).

Smart contracts are programs on the blockchain that automatically respond to certain events with specified actions (if this, then that). They enable the complete (contractual) automation of processes related to payments or transactions.

With a soft wallet (or software wallet), the security words of the wallet are kept online or on a device with Internet access. This means that – in contrast to a “hard wallet” – they have a lower security standard.

A stablecoin is a token that is tied to a specific item of value, currency, or the like. In most cases, these tokens represent fiat currencies.

Staking is the mechanism for validating transactions in the proof-of-stake consensus process. In this process, users (delegators) deposit a minimum amount of the specific coin (e.g., EGLD) with a validator (such as Istari Vision) for a flexible period of time. In return, users receive rewards in the form of passive income. Through staking, delegators secure the blockchain and make a valuable contribution to decentralization. More info on EGLD Staking …

STOs are traded via a security token platform. STOs are submitted to the Securities and Exchange Commission (SEC) via this platform. The SEC is a regulatory authority that checks the crypto startup for seriousness and thus offers investors security by only granting approval in the event of a positive assessment.

A swap, or token swap, can have two meanings:

1) Direct exchange of a certain amount of a crypto token for another token, either between users on a centralized exchange or in a token pool on a decentralized exchange.

2) Migration of a crypto token from one blockchain platform to another blockchain, for example in the course of a separate mainnet launch, as with Elrond in early September 2020 (1000 ERD : 1 EGLD).

Swap pools or liquidity pools are the basis of decentralized exchanges (DEX). Users of DEX can deposit tokens into swap pools and provide liquidity in this way. Traders can trade/exchange their tokens in these pools while the price is determined by the Automated Market Maker (AMM).

Synthetics are derivatives on a blockchain, i.e. crypto assets whose value depends on an underlying asset or index.

What are Smart Contracts?
What is Staking?
What is a Stablecoin?

T ... like Token

A blockchain’s testnet is an alternative blockchain to a project’s mainnet and is used to test features or applications on a blockchain before they are released on the mainnet.

Tokens are digital units that represent the value or existence of tangible or intangible goods. In the context of the blockchain, cryptocurrencies that use an existing blockchain as a platform are referred to as tokens. Examples are ESDT tokens on the Elrond blockchain or ERC-20 tokens on the Ethereum blockchain.

Tokenomics determines the economics of a token. They determine what function a token should have, how many there will be, and how and in what rates they will be distributed or “burned”.

Synonymous with ICO (Initial Coin Offering). The TGE is an event in which a project or company enables the public to acquire the project’s own token for the first time. The acquisition can be done through centralized exchanges, decentralized exchanges or even launchpads.

Trading describes the short-term buying and selling of financial instruments such as securities, currencies, commodity certificates or cryptocurrencies. Trading can practically be seen as the opposite of long-term planned investments.

Transactions that can be processed using blockchain technology can be virtually any form of transfer of data and information (transfers of value, property rights, contracts, music, other artist rights, etc.). For this purpose, the transactions are encrypted using cryptographic processes, strung together and stored in blocks (blockchain) so that the original information only appears as a reduced numerical value (hash value).

Content to follow shortly.

Transaction fees are the costs incurred for the settlement of a transaction. They can vary depending on the blockchain, the type of transaction (standard transaction, smart contract, NFT …) and the consensus mechanism.For more information on the transaction cost of the Elrond blockchain, see our cost calculator or the FAQ at: “What are the costs of payments or transactions with EGLD?”.
The transaction speed of a blockchain is specified in TPS (transactions per second). The value indicates how many transactions can be processed by a blockchain within one second. Thanks to Adaptive State Sharding, the Elrond blockchain enables a particularly large number of TPS and is theoretically infinitely scalable. More information in our Feature Comparison and the Benefits of the Elrond Blockchain …

V ... like Validation

Validators (like Istari Vision) are active network participants who verify transactions and contribute to the consensus mechanism. They deposit a stake (a kind of deposit of 2500 EGLD) and receive rewards for their work.

W ... like Wallet

A wallet is a digital wallet for various crypto assets. Users can access the blockchain via the wallet and manage their assets and execute transactions.

Wrapped tokens enable bridges between different blockchains. This means, for example, that tokens from the Ethereum blockchain can be “wrapped” on the Elrond blockchain. The value of the wrapped Ethereum token on the Elrond blockchain is linked to the value of Ethereum.

What is a Cryptocurrency Wallet?
Screencast I How To Create an Elrond Wallet

Y ... like Yield Farming

Yield farming (liquidity mining), is a way to generate rewards with cryptocurrency holdings. It means locking up cryptocurrencies and getting rewards. Yield farmers will typically move their funds around quite a lot between different protocols in search of high yields. As a result, DeFi platforms may also provide other economic incentives to attract more capital to their platform. Just like on centralized exchanges, liquidity tends to attract more liquidity.

What is Yield Farming?

Whether you’re a crypto beginner or an advanced user: check out our FAQ for information on the technology behind the Elrond blockchain, Elrond’s native token EGLD, staking and more.

From “Adaptive State Sharding” to “Wallet”: In our glossary we take a look at important terms from the world of blockchain technology and cryptocurrencies. Simply formulated and easy to understand.

In our podcast series, we give you insights into one of the most innovative and powerful blockchains in the world and talk to industry representatives about their use cases.

In our screencasts we introduce you to technical processes like setting up and using an Elrond wallet. Recorded step by step and easy to follow.

A lot is written about the technology behind Elrond, Elrond’s native token EGLD (eGold) and use cases for the Elrond blockchain. Take a look at selected articles and books worth reading.

There are many videos on the Elrond blockchain. Click through our selection to see what influencers from the crypto scene have to say about Elrond and EGLD.

Contact us

Do you have questions about Istari Vision or the application possibilities of the Elrond blockchain?
We are looking forward to your inquiry!

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