Glossary

Introduction to Blockchain

Blockchain

A digital ledger where data is recorded in a chronological order. In Bitcoin's case, it is a decentralized, public ledger which contains transactional information. Users can verify that transactions have occurred simply by looking at the data that is publicized on the Bitcoin network. In a blockchain, the next piece of information that will be added is always linked to a previous, already confirmed information of the blockchain through the use of a hash which describes the past content. With the hash, every block of information in a blockchain becomes referenced with one another, and cannot be easily swapped out, thereby qualifying as an immutable ledger.

Block

In the context of blockchain, block refers to the collection of transactional data or information that are bundled together in a predetermined size. Information within a block gets added to the blockchain and becomes part of a blockchain permanently once the data is verified through pre-determined rules/protocols.

Decentralized

Describes a system where there are no centralized points of failure (eg. a pillar that holds an entire structure up), or an organization that has no central authority figure. Bitcoin is an example of a decentralized system.

Distributed Ledger

Ledgers whose data is stored and synced across a network of nodes. A distributed ledger is not limited to cryptocurrency (transactional data) and can store many other kinds of data. It can also be set up to be permission and private.

DAO

A decentralized autonomous organization (DAO) is an emerging form of legal structure. With no central governing body, every member within a DAO typically shares a common goal and attempt to act in the best interest of the entity. Popularized through cryptocurrency enthusiasts and blockchain technology, DAOs are used to make decisions in a bottoms-up management approach.

Immutable

A property characterized by inability to be changed and stays unchanged over time.

Open Source

Open-source software is a type of software released under a license in which the copyright holder grants users the rights to study, change, and distribute the software to anyone and for any purpose. It is also a philosophy, with participants believing in the free and open sharing of information in pursuit of the greater common good.

Smart contracts

Smart contracts are a relatively new concept due to the impossibility of a decentralized and unsupervised self executing contract prior to the creation of public blockchains. Unlike traditional contracts that relies on its participant's good faith to act on or enforced by a witness or notary, Smart contracts will execute its predetermined function as soon as its contract conditions are met. Just as cryptocurrencies made counter-party risk obsolete, smart contract removes the risk of contract defaults because it will execute autonomously and transparently.

Tokens & token standards

Burned Tokens

Tokens which have been sent to addresses whose private key are not known, effectively becoming unusable. Example burn addresses include 1BitcoinEaterAddressDontSendf59kuE on Bitcoin or 0x0000000000000000000000000000000000000000 on Ethereum.

Differences between fungible and non-fungible tokens

ERC20

ERC-20 is the technical standard for fungible tokens created using the Ethereum blockchain. A fungible token is one that is interchangeable with another token—whereas the well-known non-fungible tokens (NFTs) are not interchangeable. ERC-20 allows different smart-contract enabled tokens a way to be exchanged. Tokens, in this regard, are a representation of an asset, right, ownership, access, cryptocurrency, or anything else that is not unique in and of itself but can be transferred. The standard allows tokens representing one of these factors—along with smart contracts—to be exchanged for a token that represents another. Smart contracts are conditions written into the coding that execute different aspects of a transaction between parties.

https://www.investopedia.com/news/what-erc20-and-what-does-it-mean-ethereum/

ERC1155

ERC-1155 token standard allows each token ID to represent both non-fungible (NFTs) and fungible tokens which may have their metadata, token supply and other attributes. It is used to promote efficiency in batch token transfers, and it allows many types of NFTs to be created with a single contract.

https://www.coingecko.com/en/glossary/erc-1155

Fungible are Interchangeable

As we already mentioned, such tokens are interchangeable and can be exchanged with any other token of the equivalent kind. Fiat currencies are fungible. For example, $50 notes are interchangeable with other $50 notes. Similarly, one Bitcoin value can be exchanged with another Bitcoin, which makes no difference for holders.

Fungible Tokens are Divisible

These tokens can be divisible into smaller units, and one can get any number of units, and it does not matter to holders as long as the value remains the same.

Fungible Tokens are Uniform

All tokens of each type are identical in specification, and each token is identical to each other.

Immutable

Due to decentralization, security, immutability, Blockchain is considered to be the perfect technology for managing all types of digital assets. But with such interchangeable tokens, this would not be possible. Such tokens work fine for cryptocurrencies, and in fact, fungibility is the fundamental feature of any currency. Such tokens are built in such a way that each fraction of a token is equivalent to the next. For instance, Bitcoin, the most popular cryptocurrency, is fungible, which means one Bitcoin is equal to one Bitcoin, and it’s equal to all other Bitcoins. Such tokens are assumed to be interchangeable and divisible too. In simpler words, these are types of cryptographic tokens that are basically identical or uniform and can be interchanged with other fungible tokens of the same type without any issues. Such tokens relate to the things we use every day, and it applies to real-world well as digital assets.

Non-fungible tokens (NFTs)

Non-fungible tokens are special tokens that represent unique, collectible items. They are unique in the sense that they cannot be split or exactly changed for other non-fungible tokens of the same type. You can consider NFTs as tokens with no fungibility that offer a variety of unique opportunities for using blockchain technology. Crypto Kitties is the most popular example of non-fungible, collectible tokens. Every CryptoKitty is unique, and no two CryptoKitties are the same; these are impracticable to break a CryptoKitty into smaller pieces, trade them, and reassemble them to create an equally valuable CryptoKitty, unlike fungible assets like Bitcoin.

Non-Fungible are Non-Interchangeable

Unlike Fungible tokens, such tokens are non-interchangeable as they cannot be replaced with the non-fungible token of the same type.

Non-Fungible Tokens are Non-Divisible

These tokens cannot be divided in any sense.

Non-Fungible Tokens are Unique

Each token is different from all other tokens of the same type.

Infrastructure systems

Block Explorer

Block explorer refers to application or websites which display information and status of transactions of a given public blockchain network. They usually do this by running their own nodes (they become part of the network), and then index information that may be relevant to the users. This opens up access to the data of a blockchain and allows regular users to look at progress of transactions or verify that a transaction has occurred without needing to run a node themselves.

Bots

Refers to software or programmes that automatically trade based on preset behaviors (eg. buy @ $100, sell at $102, and then repeat). Bots have the advantage of being extremely quick and can react almost instantaneously.

Buy/Sell Tax

It is possible to code a smart contract token to have an innate on-chain "tax" whenever someone wants to buy or sell the tokens. The way it works is that a percentage of the tokens being bought or sold is transferred to a preset address - essentially "taxing" the buyer and seller and thus discourage wash trading. However, this code function can be abused where the tax rate is unreasonable, making it a Honeypot.

DEX

A decentralized exchange (or DEX) is a peer-to-peer marketplace where transactions occur directly between crypto traders. DEXs fulfill one of crypto’s core possibilities: fostering financial transactions that aren’t officiated by banks, brokers, or any other intermediary. Many popular DEXs, like Uniswap and Sushiwap, run on the Ethereum blockchain.

Frontrun

In traditional finance, frontrunning or tailgating is a practice where traders or brokers execute a trade before a prior large order is executed. The said trader or broker will then sell their trades higher to the large order, owing to the order's slippage tolerance. This is highly illegal and unethical in the traditional finance. In the cryptocurrency context, frontrunning works the same but in DEX's where orders made are broadcasted to the blockchain for all to see, a frontrunner will attempt to listen to the blockchain to pick up suitable orders to frontrun by orders on the market and placing enough fees to have the transaction mined faster than the target's orders.

Gas

A unit of measurement of the computational effort in conducting transactions or smart contracts on Ethereum blockchain. It is equivalent to 'fuel' - how much fuel (gas) does it take to conduct the requested transaction on Ethereum network.

Gas Price

A term refers to the amount of price user is willing to pay for a transaction on Ethereum blockchain.Gas price is denominated in Gwei.

IPFS

IPFS is a distributed system for storing and accessing files, websites, applications, and data. IPFS makes it possible to download a file from many locations that aren't managed by one organisation.

Supports a resilient internet. If someone attacks Wikipedia's web servers or an engineer at Wikipedia makes a big mistake that causes their servers to catch fire, you can still get the same webpages from somewhere else.

Makes it harder to censor content. Because files on IPFS can come from many places, it's harder for anyone (whether they're states, corporations, or someone else) to block things. We hope IPFS can help provide ways to circumvent actions like these when they happen.

Can speed up the web when you're far away or disconnected. If you can retrieve a file from someone nearby instead of hundreds or thousands of miles away, you can often get it faster. This is especially valuable if your community is networked locally but doesn't have a good connection to the wider internet. (Well-funded organizations with technical expertise do this today by using multiple data centers or CDNs — content distribution networks That last point is actually where IPFS gets its full name: the InterPlanetary File System. We're striving to build a system that works across places as disconnected or as far apart as planets. While that's an idealistic goal, it keeps us working and thinking hard, and almost everything we create in pursuit of that goal is also useful here at home. https://docs.ipfs.tech/concepts/what-is-ipfs/

In a global namespace linking all computing devices, IPFS employs content-addressing to uniquely identify each file. Rather than relying on a single server like BitTorrent, IPFS is based on a decentralized system of user-operators who each hold a fraction of the overall data, resulting in a robust file storage and sharing system. Using a distributed hash table (DHT), any user in the network can serve a file by its content address, and other peers in the network can find and request that content from any node that has it.

LP

To best understand liquidity providers, it helps to have a strong grasp on how liquidity pools function. The purpose of a Liquidity Pool is to allow the trade of crypto assets on a decentralized exchange market. To set up the decentralized crypto exchange market the first liquidity provider will make an initial stake with their own crypto assets. This stake will be set at an equal rate between the two exchanging tokens. The purpose of this equal exchange rate is to prevent arbitrage.

This initial stake into the pool will earn the provider a fee of 0.3% in the form of a ‘provider token’ for each trade conducted on the platform based upon the strength of the liquidity pool. This incentivizes further stakeholders to invest into the pool, to gain a portion of the 0.3% fee. As more stakeholders grow the pool, more trades can be conducted of its strength. Thus creating a positive ‘feedback loop’ of users and providers.

After each successful cryptocurrency token exchange on the platform, a price adjustment will take place. Attempting to best represent the ongoing value of the tokens. This is conducted by a deterministic algorithm called an Automated Market Maker or ‘AMM.’ Different exchange platforms with different Liqiuidty Pools and Providers use different AMMs to adjust value and provide incentives for stakeholders. Some examples of these different AMMs are Curve, Uniswap, and Balancer.

Order Book

An electronic list of all buy and sell orders in an exchange.

Oracles

In the context of crypto, oracles refers to services which verify real-world and provide data to blockchains/smart contracts. Oracles are needed for decentralized programmes to function trustlessly as using data from a centralized source would cause a programme to have a weak spot that can be easily manipulated.

Option

It is a financial instrument that refers to a contract that offers the buyer the right to buy or sell an underlying asset at a specified price and time.

Protocol

The set of rules that define interactions on a network, usually involving consensus, transaction validation, and network participation on a blockchain.

Subgraph

What is The Graph? Most applications on the Web do not exist in a vacuum and use data, interfaces and features from other sources, sites and apps. Same goes for the Web3, but in addition to the blockchain interoperability problem there is also pervasiveness of centralized services, legacy of the Web2.0.

The Graph offers an answer to both of these problems: instead of having to set up a centralized server or database, its users can plug into open APIs called subgraphs to query data. The Graph’s solution, called subgraphs, is an open API in The Graph ecosystem that can automatically perform processes like a normal API. For instance, a Uniswap subgraph can be used to query trade volumes and is integratable in applications, such as wallets.

Trust Buckets

A Trust Bucket is an NFT; it is also an erc20 token. A Trust Bucket is exactly the same code as any other SFT. It's simply not semi-fungible because it's unique - It has it's own price.

For example, a gold token in our system is an SFT as there can be many gold tokens that should all have the same price, a 'company' token cannot because only that company can mint their token.

Total Supply

The total number of coins or tokens that are in existence, including those circulating in the public market and those that are locked or reserved.

How Does It Work?

The Graph is powered by an open data layer on Ethereum. To extract and read the blockchain data, subgraphs abstract interacting with Ethereum’s JSON-RPC API. Pulling data from the blockchain directly and not from an in-house indexing database significantly increases the application loading speed and eliminates a single point of failure. All subgraphs are open-source and written in GraphQL, a common language for Web2.0 apps. It makes the subgraphs open, accessible and easy to work with.

Wallet

Analogous to an online bank account or an email client software. Cryptocurrency wallets is an interface that lets users store, send and receive cryptocurrencies. There are 3 popular categories of wallets, "Custodial" - where private key security (and by proxy, the cryptocurrencies themselves) is handled by a third party, "Hot" - wallets that is meant for frequent use, and "Cold" - wallets that is meant for secure and long term storage.

Wallet Address

Wallet Addresses, also plainly referred to as Addresses, is the string of alphanumeric where your cryptocurrencies are stored. An example of a wallet address on the Bitcoin Protocol is "3KJmVaMzKRxKbKTMQmfnKzecpsExs8tbkk" (CoinGecko's Bitcoin Donation address). Where the beginning "3" signifies that the addresses uses P2SH encoding, which is cheaper that sending to "1" addresses whilst still support "bc" addresses.

Whitelist

In the context of the cryptocurrency industry, a trader will be placed in a whitelist after completing some form of KYC checks, which will allow the trader early access to a token sale event. Typically, traders wants to be placed in a whitelist as that puts them in a potential advantage as they can purchase the token prior to a public token sale at which the coin will be sold at a higher price to the public.

Infrastructure systems 2

Asset custodians

Asset custodianship has traditionally been associated with capital market financial institutions that are responsible for the safeguarding of investors’ assets as well as providing other services like trade settlement, exchange, clearing, and corporate action execution. These custodians are temporarily entrusted with assets and are expected to minimise the risk of fraud, theft or loss to those assets. In line with accelerating investment into the crypto space, the demand for digital asset custodianship has grown tremendously. However, this has proven to be a space that is vastly different from traditional asset custodianship, hence the plethora of new players and technologies that are emerging all the time.

Like their traditional capital market counterparts, digital asset custodians are also responsible for the safekeeping of a client’s crypto assets, however the difference is that these custodians do not hold the asset itself but are responsible for the custody of the keys to these assets. Through safe key management, digital assets are cryptographically secured and the custodian, therefore, ensures that the asset cannot be accessed by any other party. For a family office to have transactional access to an asset, both a public and private key needs to be used.

Algorithm

Algorithm is a set of rules to follow to solve a problem or conduct a task. In computer or programming, an algorithm is needed for a computer to do its task accordingly. It is not a computer code and it needs to be converted to the language where the computer can understand.

Arbitrage

A practice of taking advantage of differences in price of the same commodity in two or more markets or exchanges. For example, cryptocurrency prices on Korean exchanges can be different from those on US exchanges. An arbitrage trader would be in both markets in order to buy in one and sell in another for profit.

Circulating Supply

Circulating supply can be defined as the supply that is currently in the hands of the general public.In the case of fairly mined proof-of-work systems (eg. Bitcoin), the total supply is approximately equivalent to the circulating supply, as there are no token generation events which puts large amounts of tokens in the hands of a select few. On the contrary, initial coin offering (ICO) which have token generation events typically have a lower circulating supply vs. the total supply, such that: Circulating supply = Total Supply - Team tokens - Foundation tokens - Locked tokens.

Custody & custodial assets

In the context of cryptocurrency, a "custodial" asset means an asset is placed under the care of a third party. This is similar to how banks have custody over their customer's funds. A Custodial Wallet refers to a wallet whose private key management falls under the care of a company. Examples of Custodial wallets include Coinbase, Nexo and other wallets where users do not have access to their private keys.

Decentralized Autonomous Organization (DAO)

Open source and decentralized systems that do not require centralized operators or controllers. A decentralized autonomous organization can vote on various aspects of a system without the need of central controller. Members of a decentralized autonomous organization are typically made up of token holders whose voting strength are proportional to their holdings relative to the whole ecosystem.

Impermanent Loss

Impermanent loss may occur when you provide liquidity to the AMMs. Impermanent loss is similar to measuring your opportunity cost of holding the token within the pools versus holding them in your wallet. Note: the loss is not realized until you remove your tokens from the liquidity pool. The higher the divergence between the value of holding your tokens in the pool and wallet, the higher is the impermanent loss.

Liquidity

It often refers to market activity in trading the cryptocurrencies. It signifies the speed of the buy and sell of the traded assets. The higher the liquidity, the less affected is the trading activity when price changes.

Market Maker

A market maker places prices that differ from the current market price for the orders. A market maker would typically want to sell at a higher price, and purchase at a lower price.

Market capitalization (market cap)

Traditionally, it refers to the monetary market value of a company based on outstanding shares of stock. Market capitalization is used to show the size of the company. in Crypto, market cap is measured by multiplication of the circulating supply of tokens or currency and its current price.

Node

Within the blockchain network, the nodes are computers that connect to the network and have an updated copy of the blockchain. Together with the miners they are the guarantors that the network works properly. The nodes in Bitcoin are very important because they help the mission of keeping the network decentralized.

Non-custodial

It is a decentralized type-of-wallet, where the users owns its private keys. Having the private keys equals to you owning full control of your funds but the danger is if you lose your private keys, you will lose your funds forever.

Off-chain

It refers to transactions occuring outside the blockchain and executed instantly. There are a number of methods to do off-chain transactions, eg, two interested parties do a transfer agreement. Next, a third party faciliatetes the transaction by becoming the guarantor in it.