Blockchain Glossary

Definition

The fee paid to validators or miners to process a transaction or smart-contract call on a blockchain. More complex actions (swaps, mints) consume more gas than simple transfers.

Common mistakes

• ✗Ignoring failed-tx gas (you can still pay fees even if a transaction reverts)
• ✗Confusing gas limit with gas price
• ✗Forgetting L2, bridge, or withdrawal delays when comparing “cheap” chains

Definition

A small denomination of ETH: 1 Gwei = 0.000000001 ETH (10⁻⁹ ETH). Gas prices on Ethereum are usually quoted in Gwei per unit of gas.

Common mistakes

• ✗Treating Gwei as a separate token (it is just a unit of ETH)

Definition

The difference in value versus simply holding two assets, when you provide them as liquidity in a typical AMM pool. It is “impermanent” because it can shrink if prices revert—but if prices diverge and stay apart, the loss is realized when you exit.

Common mistakes

• ✗Assuming fees always beat IL
• ✗Ignoring stablecoin depeg or correlated-asset risks
• ✗Comparing LP returns to spot without the same price path

Definition

A decentralized exchange mechanism where prices come from a formula and pooled liquidity, rather than a traditional order book. Uniswap-style constant-product pools are the most common example.

Definition

The difference between the expected trade price and the executed average price, often caused by price moving while your transaction confirms or by thin liquidity moving the AMM curve.

Common mistakes

• ✗Setting slippage extremely high “just to make it work” without checking pool liquidity
• ✗Ignoring that stable pairs can still slip during stress events

Definition

A smart-contract vault holding two or more assets that traders swap against. LPs deposit assets and earn trading fees proportional to their share of the pool.

Definition

Locking tokens to support network security (PoS) or a protocol’s economics, usually in exchange for rewards. Rewards may be inflationary, fee-based, or both.

Common mistakes

• ✗Confusing APR (no compounding in the rate) with APY (compounded)
• ✗Ignoring unbonding / lock-up periods when you need liquidity

Definition

The lowest current listing price for an item in a collection on a marketplace (often specific to one chain and marketplace). It is a rough liquidity signal, not a perfect valuation metric.

Common mistakes

• ✗Treating floor as the price you can sell any item for (rare traits differ)
• ✗Ignoring royalties and marketplace fees in net proceeds

Definition

A percentage paid to creators (or rights holders) on secondary sales. Enforcement depends on marketplace policy and chain standards; not all trades honor the same royalty rate in practice.

Common mistakes

• ✗Assuming royalty is always enforced on every venue
• ✗Forgetting platform fees on top of royalties

Definition

A schedule that releases tokens over time instead of all at once. Common elements are a cliff (no tokens until date X) and linear or periodic unlocks afterward.

Common mistakes

• ✗Mixing up cliff date with first unlock date
• ✗Ignoring whether amounts are pre- or post-tax in personal planning

Definition

The initial distribution / listing period when a token becomes transferable or claimable. Often paired with liquidity pool seeding and exchange listings.

Definition

How supply is split across team, investors, community, treasury, and liquidity. Good tokenomics make incentives and dilution explicit.

Definition

The original value of an asset for tax and P&L tracking, including purchase price and certain fees. DeFi can complicate basis when you swap, stake, or receive rewards.

Definition

Investing a fixed amount on a schedule rather than timing one lump sum. Reduces entry-timing risk but does not guarantee better returns.