Glossary

A distribution of free tokens to wallet addresses, often as a marketing strategy, community reward, or retroactive reward for early protocol usage. Be cautious of unsolicited airdrops, as they are sometimes used in scams.

A type of DEX that uses a mathematical formula and liquidity pools (instead of an order book) to determine asset prices and execute trades. Users trade against the pool rather than matching with another trader.

The annualized rate of return on an investment, accounting for compounding. In DeFi, advertised APYs can fluctuate significantly and may include unsustainable token incentives alongside organic yield.

The practice of profiting from price differences for the same asset across different markets or protocols. Arbitrageurs help keep prices consistent across DEXs by buying where prices are low and selling where they are high.

A professional review of a smart contract's code to identify vulnerabilities, logic errors, and security risks. Multiple independent audits from reputable firms increase confidence but do not guarantee the absence of bugs.

A batch of transactions grouped together and added to the blockchain. Each block contains a hash of the previous block, a timestamp, and transaction data.

The average time between the creation of consecutive blocks. Solana targets approximately 400 milliseconds per block, compared to roughly 12 seconds for Ethereum.

A distributed, append-only ledger that records transactions across a network of computers. Each block contains a cryptographic reference to the previous block, making the history tamper-resistant.

The trade-off between decentralization, security, and scalability. The concept suggests that a blockchain can optimize for at most two of these three properties simultaneously.

A protocol that enables transferring assets between different blockchain networks. Bridges lock tokens on the source chain and mint equivalent wrapped tokens on the destination chain, but they introduce additional smart contract risk.

A reward program where protocols pay security researchers for responsibly disclosing vulnerabilities. Bug bounties complement audits by incentivizing ongoing security review from the broader community.

The permanent removal of tokens from circulation, typically by sending them to an address from which they can never be retrieved. Burning reduces total supply and is used by some protocols to create deflationary pressure.

The ability of a distributed system to reach consensus even when some participants are faulty or malicious. A BFT system can tolerate up to one-third of nodes acting dishonestly.

The number of tokens currently available in the market, excluding locked, vesting, or burned tokens. Circulating supply multiplied by price gives the market capitalization.

A wallet that stores private keys completely offline, such as a hardware wallet or paper backup. Cold wallets provide the highest level of security for long-term storage.

Assets deposited as security when borrowing from a lending protocol. If the collateral's value drops below a required threshold, the position can be liquidated to repay the loan.

The percentage of staking rewards that a validator keeps before distributing the remainder to delegators. Lower commission rates mean higher returns for delegators, but very low rates may indicate an unsustainable validator.

The ability of different protocols and smart contracts to interact with each other seamlessly, like building blocks. Composability allows developers to combine existing protocols to create new financial products.

An NFT created using Solana's state compression technology, which stores data in Merkle trees instead of individual accounts. cNFTs cost a fraction of a cent to mint, enabling collections of millions of items.

A liquidity provision model where LPs allocate capital within a specific price range rather than across the entire price spectrum. This improves capital efficiency but requires active management.

The process by which nodes in a blockchain network agree on which transactions are valid and the order in which they are added to the ledger. Different mechanisms make different trade-offs between speed, security, and energy use.

The mathematical rule (x * y = k) used by basic AMMs to determine prices. As one token is bought from the pool, its price rises and the other token's price falls, maintaining a constant product of the two reserves.

An organization governed by smart contracts and token-holder voting rather than traditional management. DAOs manage protocol treasuries, parameter changes, and strategic decisions through on-chain proposals.

An application that runs on a blockchain network using smart contracts for its core logic. DApps have a traditional frontend but interact with on-chain programs instead of centralized servers.

The distribution of control and decision-making across a network rather than concentrating it in a single entity. In blockchain, decentralization means no single party can unilaterally alter the ledger or censor transactions.

Financial services built on blockchain technology that operate without traditional intermediaries like banks or brokerages. DeFi protocols use smart contracts to enable lending, trading, and other financial activities in a permissionless way.

The act of assigning your staked tokens to a validator without transferring ownership. The validator uses your stake to increase their voting power, and you receive a share of the rewards they earn.

When a token that should maintain a stable price ratio (such as a stablecoin or LST) deviates significantly from its expected value. Depegs can trigger cascading liquidations across protocols that depend on the pegged price.

A platform for trading tokens directly on-chain without a central operator or order matching service. DEXs use liquidity pools or on-chain order books to facilitate trades.

A cryptographic proof that a transaction was authorized by the holder of a specific private key. It lets anyone verify the signer's identity without revealing the private key itself.

A database that is shared and synchronized across multiple nodes in a network. No single entity controls it, and all participants can verify the data independently.

A malicious program or website designed to steal tokens from a user's wallet by tricking them into signing a transaction that transfers their assets to the attacker. Always review transaction details before signing.

The principle of independently investigating a project before investing or participating. DYOR involves analyzing tokenomics, reviewing audits, checking team credibility, and evaluating on-chain metrics rather than relying on others' opinions.

A fixed period of time (approximately 2-3 days on Solana) during which the validator set and leader schedule remain constant. Staking rewards are distributed at the end of each epoch.

The runtime environment that executes smart contracts on Ethereum and EVM-compatible chains. Solana uses a different execution model based on the BPF virtual machine and Sealevel runtime.

The mechanism by which a portion of transaction fees on Solana is permanently destroyed rather than paid to validators. Fee burning creates deflationary pressure that partially offsets inflation from staking rewards.

The point at which a transaction is considered irreversible and permanently recorded on the blockchain. Different consensus mechanisms achieve finality at different speeds.

An uncollateralized loan that must be borrowed and repaid within a single transaction. If the borrower cannot repay by the end of the transaction, the entire transaction is reverted as if it never happened.

An asset where each unit is identical and interchangeable with any other unit. One SOL is the same as any other SOL, just like one dollar bill is the same as any other.

The system by which a protocol's rules and parameters are changed. On-chain governance uses token-weighted voting on proposals, while some protocols retain admin controls for emergency situations.

A token that grants holders voting rights over a protocol's decisions, such as fee changes, treasury spending, or parameter updates. Governance tokens align protocol development with community interests.

Solana's mempool-less transaction forwarding protocol. Instead of holding transactions in a mempool, Gulf Stream pushes them directly to the expected leader validator, reducing confirmation times.

A physical device that stores private keys offline, protecting them from malware and online attacks. Transactions must be physically confirmed on the device before being broadcast.

A fixed-length string produced by a cryptographic function from any input data. Even a tiny change in the input produces a completely different hash, which is how blockchains detect tampering.

A numeric indicator of how close a borrowing position is to liquidation. A health factor above 1.0 means the position is safe; at or below 1.0, it becomes eligible for liquidation.

A wallet that is connected to the internet, such as a browser extension or mobile app. Hot wallets are convenient for frequent transactions but more vulnerable to attacks than cold storage.

The difference in value between holding tokens in a liquidity pool versus simply holding them in your wallet. It occurs when the price ratio of the paired tokens changes. The loss becomes permanent only when you withdraw your liquidity.

The rate at which new SOL tokens are created to fund staking rewards. Solana's inflation rate started at 8% and decreases by 15% annually (disinflationary model), approaching a long-term rate of 1.5%.

A decentralized file storage network where content is addressed by its hash rather than its location. NFT images and metadata are often stored on IPFS to ensure they remain available even if the original server goes offline.

The base blockchain network itself, such as Solana or Ethereum. Layer 1 refers to the main chain that provides consensus and settlement, as opposed to Layer 2 solutions built on top.

A secondary protocol built on top of a Layer 1 blockchain to improve scalability. L2 solutions process transactions off the main chain and periodically settle results back to L1.

The predetermined order in which validators take turns producing blocks on Solana. The schedule is determined at the start of each epoch, weighted by each validator's stake.

The use of borrowed funds to amplify a position's exposure. Leverage multiplies both potential gains and potential losses, and introduces liquidation risk if the position moves against the borrower.

An order to buy or sell a token at a specific price or better. Unlike market orders that execute immediately at current prices, limit orders wait until the market reaches the desired price.

A mechanism that lets you stake tokens and receive a tradable derivative token (LST) in return. This preserves liquidity: you earn staking rewards while still being able to use the LST in DeFi.

The forced sale of a borrower's collateral when its value falls below the required threshold. Liquidations protect lenders by ensuring loans remain adequately backed, but they result in losses for the borrower.

A smart contract holding paired token reserves that enables trading on a DEX. Liquidity providers deposit tokens into the pool and earn a share of trading fees in return.

Someone who deposits tokens into a liquidity pool to facilitate trading. LPs earn fees from every trade that occurs in the pool but are exposed to impermanent loss.

The ratio of borrowed value to collateral value, expressed as a percentage. A 75% LTV means you can borrow up to 75% of your collateral's value. Exceeding the maximum LTV triggers liquidation.

A leveraged DeFi strategy where you deposit an asset as collateral, borrow against it, and re-deposit the borrowed amount to amplify yield. Each loop increases both the effective position and the liquidation risk.

A token received when you deposit assets into a liquidity pool, representing your share of the pool. LP tokens can be redeemed to withdraw your proportional share of the pool's assets plus earned fees.

A token representing staked assets in a liquid staking protocol. LSTs like JSOL, mSOL, and JitoSOL accrue staking rewards automatically, so their value relative to SOL increases over time.

The total market value of a token's circulating supply, calculated as price multiplied by circulating supply. Market cap is a rough measure of a project's size but does not account for liquidity or token concentration.

A tree-shaped data structure where every leaf node contains a hash of a data block, and every non-leaf node contains a hash of its children. It allows efficient verification that a specific piece of data is part of a large set.

Descriptive data attached to an NFT that defines its properties, such as name, image URL, description, and attributes (traits). On Solana, metadata is stored in a dedicated on-chain account following the Metaplex standard.

Profit that can be extracted by reordering, including, or excluding transactions within a block. MEV strategies include front-running, sandwich attacks, and arbitrage. On Solana, Jito provides infrastructure for efficient MEV extraction.

The process of creating new tokens or NFTs on a blockchain. On Solana, each token type has a mint account that defines its properties and tracks total supply.

A wallet or authorization scheme that requires multiple private key signatures to approve a transaction. Protocols use multisig to prevent any single individual from unilaterally executing sensitive operations like upgrades or treasury withdrawals.

The minimum number of independent entities (such as validators) that would need to collude to compromise a blockchain network. A higher Nakamoto coefficient indicates greater decentralization.

A unique digital asset on a blockchain that represents ownership of a specific item, such as artwork, music, game items, or membership passes. Unlike fungible tokens, each NFT is distinct and not interchangeable.

A computer that participates in a blockchain network by storing a copy of the ledger, validating transactions, or relaying data to other nodes.

Data or activity that is recorded directly on the blockchain and is publicly verifiable. Contrast with off-chain, which refers to data stored or processed outside the blockchain.

A service that feeds external data (such as asset prices) to smart contracts on-chain. Lending protocols rely on oracles for accurate pricing to determine collateral values and trigger liquidations.

A list of buy and sell orders organized by price. On-chain order books, as used on some Solana DEXs, match buyers and sellers directly without requiring liquidity pools.

A loan where the collateral's value exceeds the borrowed amount. DeFi lending is typically over-collateralized because there are no credit checks or legal enforcement mechanisms.

A network architecture where participants communicate directly with each other without relying on a central server. Blockchain networks use peer-to-peer communication to distribute transactions and blocks.

A system that anyone can participate in without needing approval from a central authority. Public blockchains are permissionless: anyone can send transactions, run a node, or build applications.

Derivative contracts that let traders speculate on an asset's price with leverage and no expiration date. On-chain perpetuals use funding rates to keep the contract price aligned with the spot price.

A social engineering attack where scammers impersonate legitimate services to trick users into revealing private keys, seed phrases, or signing malicious transactions. Always verify URLs and never share your seed phrase.

An optional additional fee a user can attach to a Solana transaction to increase its priority during periods of high network demand. Higher priority fees make it more likely that validators will include the transaction sooner.

A secret cryptographic key that proves ownership of a blockchain address and authorizes transactions. It must never be shared. Anyone with access to your private key has full control over your assets.

Solana's term for a smart contract. Programs are stateless executable code deployed on-chain. They read and write data to separate account structures, which is different from the EVM model where code and state live together.

Solana's cryptographic clock that creates a verifiable sequence of timestamps using a chain of SHA-256 hashes. PoH lets validators agree on the order of events without waiting for messages from other nodes, enabling high throughput.

A consensus mechanism where validators lock up (stake) tokens as collateral to earn the right to validate transactions and produce blocks. Misbehaving validators risk losing their stake through slashing.

A consensus mechanism where miners compete to solve computationally difficult puzzles. The first to find a valid solution earns the right to add the next block and receive a reward. PoW is energy-intensive but battle-tested.

A cryptographic key derived from your private key that serves as your blockchain address. It can be freely shared so others can send you tokens or verify your signatures.

An account on Solana that holds enough SOL to be exempt from rent charges. If an account's balance falls below the rent-exempt minimum, the network may eventually reclaim it.

A Layer 2 scaling solution that executes transactions off-chain and posts compressed proofs back to the main chain. Rollups are primarily used in the Ethereum ecosystem to increase throughput.

An interface that allows applications to communicate with the Solana network by sending requests to an RPC node. Wallets and dApps use RPC endpoints to submit transactions and read on-chain data.

A scam where a project's creators abandon it after collecting user funds, typically by draining liquidity pools or selling large token holdings. Warning signs include anonymous teams, locked liquidity absence, and unrealistic promises.

Solana's parallel transaction processing engine. Sealevel analyzes which transactions touch different accounts and runs them simultaneously across multiple cores, enabling high throughput.

A sequence of 12 or 24 words that serves as a human-readable backup of your private key. From a seed phrase, all of your keys and accounts can be regenerated. If you lose it, you lose access permanently.

The practice of holding your own private keys rather than entrusting them to a third party like an exchange. Self-custody gives you full control over your assets but also full responsibility for their security.

The percentage of assigned slots in which a validator fails to produce a block. A high skip rate indicates reliability issues and can reduce rewards for the validator's delegators.

A penalty mechanism in Proof of Stake networks that destroys a portion of a validator's staked tokens if they behave maliciously or fail to perform their duties. Slashing discourages attacks and incentivizes reliable operation.

The difference between the expected price of a trade and the actual execution price. Slippage increases with larger trade sizes relative to pool liquidity and during periods of high volatility.

The basic time unit on Solana, during which a leader validator can produce a block. Each slot lasts approximately 400 milliseconds, and an epoch contains 432,000 slots.

A self-executing program stored on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met. On Solana, smart contracts are called programs.

Manipulation techniques that exploit human psychology rather than technical vulnerabilities to gain access to sensitive information. In crypto, this often involves fake support messages, urgency tactics, or impersonation.

A non-transferable NFT permanently bound to a specific wallet. SBTs are used for credentials, certifications, and reputation that should not be bought or sold.

The standard for fungible and non-fungible tokens on Solana, defined by the SPL Token program. It is analogous to Ethereum's ERC-20 standard but uses Solana's account model.

A token designed to maintain a stable value relative to a reference asset, usually the US dollar. Common stablecoins on Solana include USDC and USDT.

A dedicated Solana account that holds tokens delegated to a specific validator. Each delegation requires its own stake account, which tracks the delegation's status, rewards, and activation state.

A program that aggregates SOL from multiple delegators and distributes it across a set of validators. Stake pools like JPool improve decentralization by spreading stake across the network rather than concentrating it.

The process of locking tokens to support a blockchain network's operations, typically by delegating to a validator. Stakers earn rewards in exchange for helping secure the network.

A Solana technology that stores data in Merkle trees using the ledger as a log, rather than creating individual on-chain accounts. This dramatically reduces costs for applications that need many on-chain records, such as large NFT collections.

The exchange of one token for another on a DEX. Unlike traditional exchanges, swaps on AMMs are executed against liquidity pools using mathematical pricing formulas.

A mechanism that enforces a delay between when a change is proposed and when it takes effect. Timelocks give users time to review proposed upgrades and exit the protocol if they disagree with the changes.

A digital asset created and managed by a smart contract on a blockchain. Tokens can represent currencies, governance rights, ownership stakes, or access privileges.

Using token or NFT ownership to control access to content, communities, or features. A user proves they hold a specific token by connecting their wallet, and the application verifies ownership on-chain.

The economic design of a token, including its supply schedule, distribution, utility, and incentive mechanisms. Understanding tokenomics helps evaluate whether a project's economic model is sustainable.

Solana's consensus algorithm, a PoS-based BFT mechanism that uses Proof of History as a clock. Tower BFT reduces the messaging overhead of traditional BFT protocols by leveraging PoH's verifiable timestamps.

A measure of how many transactions a blockchain can process per second. Solana is designed for high TPS through parallel processing and Proof of History.

An individual attribute of an NFT, such as background color, clothing, or accessory. The combination and rarity of traits can affect an NFT's perceived value within a collection.

An instruction submitted to a blockchain, such as transferring tokens, interacting with a smart contract, or updating on-chain data. Each transaction must be signed by the sender's private key.

The process of using your private key to authorize a blockchain transaction. Always review what a transaction does before signing, as signed transactions are irreversible.

A system where participants do not need to trust each other or a third party to interact securely. Trust is replaced by cryptographic proofs and consensus rules enforced by the network.

Solana's block propagation protocol that breaks blocks into smaller packets and distributes them across the network using a structured relay tree. Turbine reduces bandwidth requirements for validators.

The total value of assets deposited in a DeFi protocol, measured in USD. TVL is a common metric for comparing protocol adoption, though it does not indicate profitability or security.

The time required to withdraw staked tokens after initiating an unstake. On Solana, native unstaking takes until the end of the current epoch. Liquid staking tokens can be swapped instantly on DEXs, bypassing this wait.

The account authorized to modify a deployed Solana program. Checking who holds the upgrade authority (and whether it is controlled by a multisig or has been revoked entirely) is a key part of evaluating a protocol's security.

The percentage of time a validator is operational and participating in consensus. Validators with higher uptime generate more rewards for their delegators.

A token that provides access to a specific product or service within a protocol's ecosystem. Unlike governance tokens, utility tokens are primarily used for functional purposes rather than voting.

The percentage of a lending pool's assets that are currently borrowed. Higher utilization means higher interest rates for both borrowers and lenders, as supply becomes scarcer.

A node that participates in consensus by verifying transactions and producing blocks. Validators stake tokens as collateral and earn rewards for honest participation.

A confirmation that the bytecode deployed on-chain matches the publicly available source code. Verified builds let users and auditors confirm that the running program is exactly the code that was reviewed.

An NFT collection whose authenticity has been confirmed through on-chain verification. On Solana, the Metaplex standard allows collection-level verification to help users distinguish genuine NFTs from counterfeits.

A schedule that gradually releases tokens to their owners over time, rather than all at once. Vesting prevents large token holders (founders, investors) from dumping their entire allocation immediately.

The percentage of consensus votes that a validator successfully submits on time. Higher vote success rates indicate a well-maintained validator with good network connectivity.

Software or hardware that stores your private keys and lets you sign transactions on a blockchain. Wallets do not actually hold tokens; they hold the keys that prove ownership of on-chain assets.

A token on one blockchain that represents an asset from another blockchain. The original asset is locked in a bridge contract, and an equivalent wrapped version is minted on the destination chain.

The practice of deploying crypto assets across DeFi protocols to maximize returns. Yield farming strategies may involve providing liquidity, lending, or staking in various combinations.