Glossary

Asset ClassificationsConsensus AlgorithmsGeneralIncentivesParticipation TypesProtocol SpecificSlang & MemesStakingStakingRewards SpecificValidators

51% Attack

The ability of someone controlling a majority of network hash rate (for PoW) to revise transaction history and prevent new transactions from confirming. In PoS networks, the majority of stake (not hash rate) is required, where in some cases 30% is enough stake to fulfill an attack.

Agent Node

A combination of Masternode and Validator in the Nuls Ecosystem. Agent Nodes require a certain collateral like masternodes, but they can also receive delegations from Users.

Airdrop

Airdrops can be defined as the process whereby a cryptocurrency enterprise distributes cryptocurrency tokens to the wallets of some users free of charge. Also, established blockchain-based enterprises like cryptocurrency exchange platforms and wallet services can carry out airdrops as well. In some cases airdrops might act as a means of hostile take-over when applied aggressively.

Algorithm

A process or set of rules to be followed in calculations or other problem-solving operations.

Most proof of stake networks make use of a randomized algorithm to assign staking rights.

Most Proof of Work network make use of hashing algorithms like SHA256 or SCRYPT to assign mining rights.

Annual Issuance Rate

Please refer to “Inflation”

Annualized Staking Yield

The annualized staking yield is the estimated annual rate of return from staking, taking into account the effect of compounding interest.

Annual Percentage Rate (APR)

The lending/borrowing interest rate for a whole year.

API

Application Programming Interface. Serves as interoperability interface between software, applications and blockchains.

Application-specific Blockchains

Blockchains optimized and adapted for very specific use-case and/or industry (see also General-purpose Blockchains). Ideally these are interoperable and built with such frameworks as Substrate or CosmosSDK. An approach to scalability as no single general-purpose blockchain is hosting all Dapps.

ATOM

Native token of the Cosmos Network. The Validators of the Zones (See Cosmos Zones) must become a part of the Hub (see Cosmos Hub) by staking Atom coins. If the Zone acts maliciously, then their staked Atom gets slashed.

Avalanche

A consensus mechanism with a probabilistic safety guarantee. Every newly proposed block is broadcasted to a number of nodes, at random, and the question is posed to determine which blocks should be considered valid. The nodes then indicate their preference. Using the responses from the sample group will allow the insight to see which version the network is leaning towards before confirming and broadcasting produced blocks.

Bag Holder

An Investor who bought shitcoins at the top and keeps hodling.

Baker

The term used for “Validators” in the Tezos Ecosystem.

Baking

The term used for producing new blocks in the Tezos Ecosystem.

Bankroll Funding

A mechanism to operate a decentralised casino, where stakers provide their funds for casino bankroll funding. It usually has a certain lock up period and is very similar to cold staking.

Bear Market

A significant long duration of declining prices across a whole asset class.

Bitcoin Maximalism

A Person who solely believes in Bitcoin as the only viable Cryptocurrency. 

Blockchain

A growing list of records. Transaction data is combined in blocks and linked with cryptographic hashes.

Blockchain Analytics

Analysis and metrics that give deep insights into supplies, transaction flows and smart contract interactions of a blockchain.

Block Producer

The term used for “Validators” in the EOS Ecosystem.

Block Proposer Reward

Terminology used for the “Block Reward” in the IRISnet project.

Block Provision

Block Rewards that are not intrinsically generated through inflation of the network, but rather through additionally granted reward pools that are initially set up by the foundation to bootstrap the network with higher incentives for validators.

Block Reward

The newly issued coins or tokens that are assigned by the blockchain network to eligible cryptocurrency miners or validators for each successfully mined or produced block.

Block Reward Reduction

Reduction of block rewards, effectively decreasing the inflation rate.

Block Stealing

If a validator fails to confirm and broadcast a block in which he has the priority right to do so, another validator has the chance to do so and steal this block.

Block Time

The time between two blocks of the validated chain.

Bond

Committed and locked up of funds on the protocol-level for a certain timeframe to get specific staking rights.

Bonded Proof of Stake

A key concept in PoS networks like Cosmos Network is “Bonding” which can be translated as building up a strong “binding” relationship with a PoS network. Cosmos Network is currently utilizing Bonded Proof of Stake (bPoS).

Bonding

Expressing commitment to the network by locking a defined amount of network token for a certain timeframe. This means signalling the network that you are a trustworthy network actor and accept the rules and regulations of the network.

Borrowing

Receiving liquidity by collateralizing digital assets. Fees are paid to the lender.

BTC

The token symbol for Bitcoin. The most valued and adopted cryptocurrency to date.

Buidl

We are buidling. Referring to hodling it defines an attitude of strong, result-driven focus on buidling a project.

Bull Market

A significant long duration of increasing prices across a whole asset class.

Bull Trap

A short price increase, which seems like the start of a bull market, but actually the prices declined even further after that.

Byzantine Fault Tolerance

Byzantine Fault Tolerance is the characteristic which defines a system that tolerates the class of failures that belong to the Byzantine Generals’ Problem. Byzantine Fault Tolerance has been needed in airplane engine systems, nuclear power plants and pretty much any system whose actions depend on the results of a large amount of sensors. Proof-of-Work in Bitcoin is a probabilistic solution to the Byzantine Generals Problem (please refer to Byzantine Generals Problem) with newer approaches like Proof-of-Stake to achieve BFT gaining adoption.

Byzantine Generals Problem

The Byzantine Generals Problem is a term etched from the computer science description of a situation where involved parties must agree on a single strategy in order to avoid complete failure, but where some of the involved parties are corrupt and disseminating false information or are otherwise unreliable.

Capacity

The maximal Potential Balance, that the Staking Provider can serve for.

Censorship Resistance

The design feature that empowers the resistance against censorship in decentralized networks.

Censorship Vulnerability

The possible attack factors in which a decentralised network could become vulnerable to censorship. Censorship could be achieved by certain parties who control big parts of the network (Centralization).

Centralization

Centralization is the concentration of control of an activity or organization under a single authority. Centralized platforms require all data (communications/information/etc.) to enter into, and leave through a central hub. That is to say, you physically can’t send or receive any information without it going through that single point, which is often a private server or hub.

Coin Age

The age of coins is the time since they have been transferred to a wallet or the last time they successfully staked. The coin age is reset every time they are transferred to another wallet or have successfully staked. In some Proof of Stake networks, there are higher chances of finding a new block the higher your coin age is.

Coinbase Transaction

The initial transaction of newly minted coins to the wallet of the block finder.

Coins

Cryptocurrencies which are the native coins/tokens to their parent blockchain. They mainly act as a means of exchange, store of value and unit of account.

Coin Ticker

A unique shortcut for each digital asset to be easily recognized across different exchanges. E.g. BTC is the coin ticker of Bitcoin.

Coin Weight

The individual share of the total Staked Balance in a single wallet.

Cold Staking

Funds are sent to a smart contract. The contract keeps the funds locked for a certain time, until they can be withdrawn. Rewards are automatically assigned at the end of each cycle.

Collateral

A fixed amount of coins being locked up, to participate in the staking / consensus process or to receive a loan. Or the total balance that is under custody of a staking provider.

Commodities

Crypto Commodities are raw digital resources to access compute power, storage capacity or network bandwidth within a blockchain. E.g. Ether serves as commodity, as we use it to pay for any interaction with Ethereum’s blockchain and its applications.

Examples: Ethereum, Eos, Neo, Lisk

Community Tax

Please refer to “development subsidy

Composability

A platform is composable if its existing resources can be used as building blocks and programmed into higher order applications. Composability is important because it allows developers to do more with less, which in turn, can lead to more rapid and compounding innovation.

Compounded Returns

The compound return is the rate of return, usually expressed as a percentage, that represents the cumulative effect that a series of gains or losses has on an original amount of capital over a period of time. Compound return is viewed as a much more accurate measure of performance of an investment’s return over time than the average return.

Compounded Staking Yield

Annual staking yield taking compounding into account. In the ideal scenario this is when the staking rewards are being used as a stake for future rewards. In some cases (Cosmos), the rewards have to be re-delegated manually. Tools for automated redelegation are in development.

Cosmos Network

One of the leading blockchain interoperability protocols. Powered by Tendermint and Cosmos SDK and enables asset and application-specific blockchain (Cosmos Zones) interoperability. Provides sovereignty to the Zones.

Cryptocurrencies

A digital currency regulated and secured by encryption techniques. Mostly governed and operated in a decentralized manner, independently of a central bank.

Crypto Dividend

A profit share or reward regularly paid to holders of a digital asset (e.g. security token).

Cryptography

Cryptography is associated with the process of converting ordinary plain text into unintelligible text and vice-versa. It is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it. Cryptography not only protects data from theft or alteration, but can also be used for user authentication.

Custodian

Cryptocurrency custodians are third party providers of storage and security services for cryptocurrencies. Their services are mainly aimed at institutional investors, such as hedge funds, who hold large amounts of bitcoin or other cryptocurrencies. The solutions generally incorporate a combination of hot storage, or crypto custody with connection to the Internet, and cold storage, or crypto custody that is disconnected from the Internet.

Custodial (also non-custodial)

Staking Providers and Exchanges are custodial if they get hold of users private keys and are non-custodial if they do not have control over users funds. Non-custodial services allows to receive staking rewards or to trade without being exposed to counterparty risks.

Custody

A service in which a brokerage or other financial institution holds assets on behalf of the client. This reduces the risk of the client losing his/her assets or having them stolen. They are also available to the brokerage to sell at the client’s demand. In case of crypto-assets that would imply another party storing the private keys, which might involve additional counterparty risk (“not your keys – not your assets”).

Cypherpunks

A cypherpunk is any activist advocating widespread use of strong cryptography and privacy-enhancing technologies as a route to social and political change. Most of the early bitcoin supporters are cypherpunks. Here you can read the legendary Cypherpunk Manifesto from 1993.

Dead Coin

A cryptocurrencies which has been delisted from all exchanges and has no more liquidity on OTC markets.

Decentralization

In a decentralized system there is no single point of control or failure. Without a single authority the system is fairer and more secure. By utilizing peer to peer (p2p) transactions and innovative consensus protocols, data or records stored in decentralized blockchains become incorruptible, uncensorable and trusted.

Decentralized Application (dApp)

Blockchain-based application deployed on the blockchain, most commonly the general purpose blockchains like Ethereum. The name does not necessarily mean the application is actually decentralized. The key value proposition of a Dapp as opposed to Apps is that (with the right design and governance) these can be unstoppable and censorship resistant.

Decentralized Computation

A Network in which computational workload is assigned to and split between several individual processors. The computations are initiated by the users and then get processed by the decentralized network.

Decentralized Exchange (DEX)

A p2p crypto-asset marketplace, which does not have custody over funds. Trades are mostly settled directly on-chain.

Decentralized Finance (DEFI)

Decentralized finance describes a new decentralized financial system that is built on public blockchains like Bitcoin and Ethereum. DEFI is Permissionless, Decentralized, Trustless, Transparent, Censorship Resistant and Programmable financial system.

Decentralized Network

Blockchains are a type of decentralized network, removing any centralized form of decision making thanks to various types of consensus algorithms. The nodes involved in the network interoperate and collaborate with each other to execute these consensus algorithms without the need of any central decision-making source, thus making it a decentralized network.

Decentralized Storage

With decentralized storage, each data is distributed across a network of computers. All the workers or participating users are connected over a P2P network and store data in a secure and decentralized way. The files are broken into small data chunks, and intelligently distributed across many of the nodes which are located globally with the help of blockchain.

Delegate

A Block Validator who accepts delegations from users. The term is used in the Ark/Lisk/Shift Ecosystem.

Delegated Byzantine Fault Tolerance

Similar to dPoS, every token holder can vote for individuals to be in charge of securing the network. Within the highest ranked individuals (nodes) a new “Speaker” is randomly chosen every few seconds to create a new block. The speaker then broadcasts his version of the blockchain with the new block. If 66% of the other elected individuals agree with the information, consensus is achieved.

Delegated Proof of Stake

dPoS is a system in which a fixed number of elected entities (called block producers or witnesses) are selected to create blocks in a round-robin order. Block producers are voted into power by the users of the network, who each get a number of votes proportional to the number of tokens they own on the network (their stake).

Delegator

Delegators are token holders who cannot, or do not want to run a validator themselves. Token holders can delegate tokens to a validator and obtain a part of their revenue in exchange. Because they share revenue with their validators, delegators also share risks. Should a validator misbehave, each of their delegators will be partially slashed in proportion to their delegated stake. This is why delegators should perform due diligence on validators before delegating, as well as spreading their stake over multiple validators.

Delegators play a critical role in the system, as they are responsible for choosing validators. Being a delegator is not a passive role: Delegators should actively monitor the actions of their validators and participate in governance (if supported).

Delegating

Activity performed by the Delegator, assigning tokens to a Validator of choice.

Delegation Service

Delegation Services are entities like e.g. Validators, operating infrastructure to help token holders earn interest on their crypto assets.

Development Subsidy

A certain percentage of the block reward that is reserved for the development team to fund operations.

Digital Asset

A digital coin, token or currency and broadly seen anything of value or with a right to use something.

Dividend

A profit share or reward regularly paid to holders of a stock or digital asset.

Dividend Token

A digital asset such as a security token, which grants the right for dividends.

Dividend Yield

The Interest Rate by holding dividend-bearing assets.

DOT

Native token of the Polkadot blockchain. Their role is staking, bonding in order to add parachains and protocol governance.

Double Signing

Analogue to Double Spending in PoS Networks, proposing two blocks at the same time.

Ease of Staking

A metric considering the difficulty of set up to earn rewards via staking.

Effective Staking Yield

The actual return gained through staking rewards after 1 year.

Efficiency

The Percentage of realized rewards by a Validator. In networks with no predetermined staking rights (like in Tezos) the efficiency is equal to the uptime.

Endorsement Reward

The reward for endorsing a block on the tezos blockchain.

Endorsing

The Validators showing of public approval and support for a certain block (term used in Tezos only)

Engaged Balance

The total balance of funds that participate in the consensus of the network via staking, masternodes, delegating or voting.

ETH

A token symbol for Ether, native token of Ethereum public blockchain. Ether is also used by application developers to pay for transaction fees and services on the Ethereum network as well as users to interact with EVM Dapps.

Fake Satoshi

A person who claims to be Satoshi Nakamoto, but has never proven it.

Fake Stake Attack

The attacker connects to a victim node to broadcast invalid blocks and/or headers, which are stored in its disk or RAM without being validated, until the node crashed and slows.

Fee

The percentage of generated rewards that Staking Services keep in exchange for providing their service.

Fees Per Day

All transaction fees spent in 24h on a blockchain network. For this metric we exclude all Coinbase transactions.

Fiat Money

Traditional Money issued by central banks and endorsed by nation states.

FOMO

Fear of Missing Out. The Urge of buying Bitcoin or any other Cryptocurrency, after it gained a significant surplus in price in a short time.

Forging

The term used for Staking in the Ardor, Nxt and Metahash Ecosystem.

Fractional Reserve Banking

A banking system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal. Banks may loan out huge sums of money by only collateralizing a fraction of it.

FUD

Fear, Uncertainty, Doubt. Usually used to call out people who intentionally share fake news to manipulate markets (Fudders).

Generalized Mining

Generalized mining is defined as “any supply-side service provided by a third party to a decentralized network in exchange for compensation allocated by the network” according to Jake Brukhman. It’s a new way of combining crypto investing and mining as many protocols move towards staking-based consensus mechanisms.

General-purpose Blockchain

Blockchains targeting to become a single platform for Dapps bz scaling the TPS. Examples include Ethereum, Tezos, etc. Is aligned with a “one size fits it all” narrative, which has recently been put under scrutiny in blockchain space. See also Application-specific Blockchain.

Generator

The term used for “Validators” in the Waves Ecosystem.

Global Market Cap

Total market capitalization of all crypto-assets.

Governance

Blockchain networks, specifically public blockchains, exist as decentralized networks that need to maintain byzantine fault tolerance to retain authenticity. This is not only difficult in itself but requires novel forms of distributed governance to achieve long-term sustainability of the network as a whole, balancing human intuitions and algorithmic governance.

Governance of blockchains is one of the more fascinating and complicated topics in the space. Which blockchain networks can adapt, and how they adjust, will be vital to shaping the future landscape of the industry.

Hard Fork

A reorganization of a blockchain, where a part of the Nodes decide to to run an alternative version of the protocol. The result are two different blockchains.

Hardware Cost

The infrastructure cost for running a node or actings as a Staking Provider.

Hardware Security Module

An HSM is a device that stores private key files for a blockchain wallet. It is seen as one of the most secure ways of storing cryptocurrencies, as the keys never leave the hardware.

Hardware Wallet

Please refer to Hardware Security Module

Harvesting

Harvesting is very similar to staking. But it not only considers the Coin Weight, but also the Importance to determine who harvests the next block.

HDD Mining

The process of providing disk space to a decentralized storage network.

Hodl

I AM HODLING. A misspelling in a Bitcointalk Post written in the middle of the 2014 Bitcoin Crash, now representing an ideology of Long Term value Investing and especially strong believe in Bitcoin. https://bitcointalk.org/index.php?topic=375643.0

Hypernode

A Masternode in the Bismuth Network.

Incentives Design

Incentive design is a process of designing the system and various rewards within it so that the malicious actions, or the ones harming the other actors are disincentivized, while the positive actions are incentivized. In blockchains, the main means of incentivisation is a token, and practical science of incentive design is called cryptoeconomics. Actors within the system earn tokens for e.g. maintaining the network and are losing some if they act in malicious ways. (see Slashing).

Inflation

Annual issuance of new tokens in percentage terms of circulating supply is called inflation, which is mostly defined by the Block Time and Block Reward. Inflation is distributed to all the stakers/delegators/validators in the network. It incentivises network participation instead of pure hodling.

Initial Coin Offering (ICO)

ICOs act as fundraisers for open-source projects as a way to bootstrap the network effects. Interested investors buy in to the offering, either with fiat currency or with tokens like ETH/BTC. In exchange for their contributions, investors receive a newly issued token specific to the project. Such tokens are mostly either payment tokens or utility tokens. The company holding the ICO uses the investor funds as a means of furthering its goals, launching its product, or starting its digital currency. ICOs are used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.

Initial Exchange Offering (IEO)

IEOs are conceptually similar to ICOs, but are conducted over a crypto-exchange interface with fundraising in most cases only possible with respectively crypto-exchange token (e.g. BNB, KCS, HT, etc.). Concept was first started by Binance and was quickly adopted by other centralized exchanges. Conducting an IEO also means a quick listing on the respective exchange for the IEO project’s tokens.

Interest

Interest is essentially a rental or leasing charge to the borrower for the use of an asset on an annual basis expressed as a percentage of the principal.

Keeper

Workers who maintain blockchain networks. While operating working nodes, they provide anything beyond stake validation to the network. They could provide data, computational power, file storage or governance.

Leased Proof of Stake

The terminology used for “Liquid Proof of Stake” in the Waves Ecosystem.

Leasing

The terminology used for delegating in the Waves Ecosystem.

Lending

Providing liquidity in the form of digital assets to other people in exchange for a lending fee.

Liquid Proof of Stake

Token holders can transfer (“delegate”) validation/staking rights to other token holders without transferring ownership, which is defined as Liquid Proof-of-Stake. LPOS aims to maintain a dynamic validator set, facilitating token holder coordination and accountable governance.

Liquidity

Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price. Listen to a great podcast by Jill Carlson and Meltem Demirors about the topic of liquidity in crypto markets here.

Loan

The money volume provided via “lending”

Locked Balance

The total balance of funds that is collateralized by Validators or Masternodes.

Locked in Staking

The value of circulating tokens that are currently participating in the consensus via staking, delegating or voting.

Lock Up Period

The Time period where tokens cannot be moved out of a wallet or smart contract. Sometimes staking requires to “lock up” the funds. The Term is also used for the safety mechanism to prevent pre-sale investors from dumping on the retail investors (see also Vesting).

Long-range attack problem

A Long Range attack is a scenario where an adversary creates a branch on the blockchain starting from the Genesis block and overtakes the main chain. This branch may contain different transactions and blocks and is also referred to as Alternative History or History Revision attack.

Masternode

A Blockchain Full Node that stores an entire copy of the token ́s ledger in real time, to provide block validation services as well as additional extra features such as instant transactions, confidential transactions or other. A Crypto Masternode requires a certain amount of funds collateralized in the node to show commitment and availability.

Masternode Hosting

Masternode operators are expected to leave their system on and connected to the Internet at all times in order to earn the network’s reward for their services. Certain masternode hosting providers offer these services for a monthly fee.

Masternode Pooling

Please refer to Shared Masternode.

Masternode Yield

The annual interest percentage a single masternode generates for its owner.

Miner

A participating node that maintains the integrity of the Bitcoin system by participating in a decentralized computational process. Sometimes can be referred to a piece of physical hardware – a mining rig.

Mining

Mining is a decentralized computational process in a cryptocurrencies like Bitcoin that serves a purpose of confirming transactions on a blockchain network in trustless manner which is incentivized by receiving block rewards for it. In its classic form refers to PoW blockchains. In PoS this is usually described with a broader term Generalized Mining.

Minting

The process of new coins being created via staking. (In the PeerCoin Ecosystem minting is also referred to as staking in general.)

Network Weight

Please refer to Staked Balance

Node

The role of a node is to support the network by maintaining a copy of a blockchain and, in some cases, to process transactions. Nodes are often arranged in the structure of trees, known as binary trees. Each cryptocurrency has its own nodes, maintaining the transaction records of that particular token.

Node Distribution

Degree to which the nodes of a network are geographically distributed.

Node Hosting

An entity, usually a cloud provider, offering to host blockchain nodes.

Node Operator

An entity running and operating a blockchain node.

Non-Custodial

Please refer to Custodian.

Nothing at stake

One issue that can arise with PoS networks is the “nothing-at-stake” problem, wherein block generators/validators have nothing to lose by voting for multiple blockchain histories, thereby preventing consensus from being achieved. Because unlike in PoW systems, there is little cost to work on several chains.

On-Chain Governance

On-chain governance is a system for managing and implementing changes to cryptocurrency blockchains. In this type of governance, rules for instituting changes are encoded into the blockchain protocol. Developers propose changes through code updates and each node votes on whether to accept or reject the proposed change.

Open Finance

OpenFinance is the interchangeable term with Decentralized Finance (DeFi)

Oracle

Oracles are trusted data providers. They provide data to a blockchain interface and earn rewards in return. The data is accepted and seen as legitimate as long most of the other Oracles provide the same data.

Ouroboros

It is the first blockchain protocol based on proof of stake with rigorous security guarantees which powers the Cardano Blockchain. 

Paper Wallet

Paper wallets are an offline cold storage method of storing cryptocurrency. It includes printing out a public and private keys on a piece of paper which is then stored in a secure place. The keys are printed in the form of QR codes which one can scan in the future in order to conduct transactions.

Passive Income

Passive income is the money being earned regularly with little or no effort on the part of the person receiving it. Staking rewards earned without running a node via voting or delegating can thus be considered a form of passive income.

Polkadot Network

One of the leading blockchain interoperability protocols. Main difference from Cosmos is that it enables asset AND smart contract interoperability. Unlike Cosmos it takes some of the parachains/zones sovereignty away.

Practical Byzantine Fault Tolerance

Practical Byzantine Fault Tolerance (pBFT) aims to improve upon original BFT consensus mechanisms and has been implemented and enhanced in several modern distributed computer systems, including some popular blockchain platforms.

For the pBFT model to work, the assumption is that the amount of malicious nodes in the network cannot simultaneously equal or exceed 1/3 of the overall nodes in the system in a given window of vulnerability. One of the primary advantages of the pBFT model is its ability to provide transaction finality without the need for confirmations like in Proof-of-Work models (deterministic instead of probabilistic).

Producer

Please refer to Validator.

Producing Blocks

The term used for “staking” in the EOS Ecosystem.

Proof of Believability

Proof-of-Believability is a consensus algorithm developed by IOST, which enables higher transaction throughput speeds while ensuring nodes stay compliant, using factors including IOST token balance, reputation-based token balance, network contributions and user behaviors.

Proof of eXercise (PoX)

A sustainable alternative to PoW where an eXercise is a real world matrix-based scientific computation problem.

Proof of Importance

With the consensus algorithm of the NEM Blockchain every account is assigned with an importance score. To be eligible for harvesting blocks you need to have at least 10,000 XEM. Additional importance, which is gained via interactions with the network, increases the chance for successful harvesting.

Proof of Stake

Proof of Stake (PoS) is a class of consensus algorithms that depend on a validator’s economic stake in the network. In PoS-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e., the stake). Unlike Proof of Work, the probability of creating a block and thus getting block reward is not “security comes from burning energy”, but rather “security comes from putting up economic value-at-loss”.

Proof of Stake 3.0

In PoSv3 everybody can be a staker and there is no minimum to participate. It was introduced by Pavel Vasin and first implemented in the Blackcoin Project. It is the latest iteration for UTXO-based Proof of Stake Chains. The biggest implementation today is in the Qtum Project.

Proof of Stake Design Philosophy

Vitalik Buterin has outlined his understanding for “A Proof of Stake Design Philosophy” in a famous blog post in December 2016. The Key Take-Away is the fundamental difference to Proof of Work:

The “one-sentence philosophy” of proof of stake is thus not “security comes from burning energy”, but rather “security comes from putting up economic value-at-loss”.

Proof of Stake Velocity

The consensus algorithm of the Reddcoin Blockchain uses a coin-aging function. The longer you are holding your coins in the wallet, the higher is your chance to receive a reward. This function is linear in the first 7 days and logarithmic after. While you have a very good chance to find a block if you just close your wallet and open it after a long time, the overall reward is still higher, if you keep your wallet online and running.

Proof of Work

In Proof-of-Work the consensus algorithm rewards miners who solve mathematical problems with the goal of validating transactions and creating new blocks. Bitcoin is the first and most prominent example of a PoW protocol using the SHA256 algorithm. With PoW the probability of mining a block and thus getting block reward is a function of relative hash power in the network, share of given miner’s hash rate in total network hash rate.

Proportion

The Total Network percentage of the Staking Providers Total Balance

Protocol

A system of rules that acts as a base-layer for communication, consensus, interaction and applications.

Randomness

Randomness in a Proof of Stake Network, is a means of simulation of the randomness of the “real” world. The protocol itself is taking the role of assigning validators (“virtual miners”) the right to produce blocks on a random schedule. It is important for the randomness to be unbiased, to give all staking participants equal chances.

Recommended Minimum

The number of staking coins required to get a reward at least once a year.

Rekt

Wrecked. Being totally liquidated and having lost all life-savings trading shitcoins.

Reporting

Oracles are reporting certain data and events to the network.

Required Minimum

The number of coins required to be eligible and start staking.

Return on Investment (ROI)

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.

Risk of being Slashed

In certain PoS protocols like Cosmos and Polkadot there is a risk of being slashed, effectively losing a share of staked tokens (see Slashing). One can get slashed for double signing, downtime, not participating in governance, etc. Most of these risks depend on security set-up of a given validator, its engagement in the protocol development and governance. One has to be able to evaluate the risk of slashing for various validators in order to make an educated validator choice. 

Scalability

Each Blockchain has a limit to the size and frequency of storing records. Applied Scalability increases the throughput of Transactions Per Second (TPS).

Securenode

A Masternode (Staking Type) in the Horizen Network. 

Security Token

In comparison to utility tokens, which do not give any rights or obligations, and instead provide access to a specific network, platform or service, security tokens are actual financial securities that are backed by something tangible like the assets, profits, or revenue of the company, and which offer legal rights such as voting or revenue distribution. Tokenized traditional securities are also recognized as security tokens. Tokenizing per se does not however directly change the dynamics of risk and return of investments. 

Asset Token

Please refer to Security Token

Security Token Offering (STO)

Conceptually, an STO  is very similar to an ICO, where the object being issued is a security token. STO process is usually more demanding with regards to KYC/AML as the tokens being issued are regulated financial instruments. STOs can also be used as an IPO alternative by SMEs due to their lower costs and absence of intermediaries such as clearing houses etc.

Servinode

An active Validator in the IOST Network.

Shared Masternode

Sometimes, the required number of tokens to run a masternode is not accessible to smaller investors. With masternode sharing several smaller investors can own parts of the masternode, receiving the rewards in proportion to their token share of the masternode. Various services allow to create shared masternodes, usually these are the masternode hosting providers (see Masternode Hosting).

Shitcoin

A Cryptocurrency with no Value, use-case or whatsoever. Depending on individual point of view, almost any token can be considered a shitcoin by some.

Slashing

In case of Validator misbehaviour (defined individually within each protocol), the total stake of Validator (Own Stake/Bond and sometimes even Delegated Stake) get slashed, meaning that a certain percentage of tokens is burned or distributed party to the accuser. This is designed to incentivise security, availability and governance participation as well as prevent double spend or spam attacks.

Smart Contract

An automated and self-executing digital contract. A set of if-then functions deployed on the blockchain.

Smartnode

A Masternode in the SmartCash Network.

Soft Fork

The protocol upgrade of a public blockchain without the chain splitting.

Stablecoin

A cryptocurrency that holds a stable value, mostly pegged to or denominated in fiat currency.

Stake

The Amount of coins that is exposed via staking

Stake Authorization

The delegation process of staking power in the Ontology Network.

Stake Rate

Please refer to Stake Ratio

Stake Ratio

The percentage of circulating coins that are currently participating in the consensus via staking, delegating or voting.

Stake-Voting

One Token represents one vote in the network. Stake-Voting is used to make protocol governance decisions.

Staking

Staking in decentralized crypto networks is seen as the exposition of native digital assets to a risk/reward scenario. 

Effectively it is the process of creating new blocks and validating transactions, similar to “mining” in Proof of Work.

Staked Balance

The total balance of funds that is directly or indirectly currently staking. 

Staking Token

A Digital Asset that can be staked.

Staking Interest

Please refer to Staking Reward.

Staking Pool

Many Proof of Stake Networks have specific requirements for the number of tokens required to become a validator and/or be eligible for staking. Pooling funds together with other investors for staking is similar to the concept of pooling hashing power in mining pools. Investors can so stake amounts even under the minimum requirements and achieve a higher reward frequency. Validators who accept delegations/votes can be seen as Staking Pools.

Staking Provider

An entity maintaining the necessary staking infrastructure (e.g. Validator), offering token holders to stake with it and taking a fee for that in order to pay for the infrastructure.

Staking Rate

Please refer to Stake Ratio

Staking Ratio

Please refer to Stake Ratio

Staking Returns

Returns on staking activity (see Staking Yield)

Staking Rewards

Earnings generated via staking.

Inflation Rewards

Earnings generated via network inflation to the governing parties

Staking Score

The Staking Score is a metric that Stakingrewards.com has developed to benchmark staking assets. It is considering the ease of Staking, Risk and Reward Rates.

Staking Service

Staking Services are Validators who accept delegations or votes from users.

The additional rewards generated through these user commitments are usually shared after deducting a certain fee.

Staking Type

Some coins offer several options or tiers for staking. Each of them is a Staking Type by itself.

Staking Yield

Percentage of annualized earnings generated via staking or delegating.

Supernode

A Masternode (Staking Type) in the Horizen Network.

Super Representative

An active Validator in the Tron Network with at least the 27th most votes.

Surveillance Capitalism

Surveillance capitalism is a novel market form and a specific logic of capitalist accumulation, in which big corporations use (digital) surveillance mechanisms to predict and control our behavior. 

Tendermint

Tendermint is a low-level protocol comprised of two main pieces: a blockchain consensus engine and a generic application interface. Tendermint Core, the blockchain consensus engine, facilitates the peer-to-peer network and provides a proof-of-stake (PoS) consensus. The Application BlockChain Interface (ABCI), on the other hand, acts as a tool for blockchains to link onto the Tendermint Core protocol.

The purpose of Tendermint is to be a blockchain engine. It’s meant to be a tool that developers can use to skip the nasty and technical cryptography and jump into the higher level blockchain and application development.

Token Curated Registry (TCR)

A TCR is a registry of listings generated by token holders. A token holder stakes a portion of tokens to perform an action, i.e. adding a listing. Other token holders can vote on whether to accept or reject the action using their tokens. A majority wins the vote and the action is accepted or rejected. The list is updated and should become more valuable given the improved listings and staked tokens are now out of circulation. 

Tokens

Crypto Tokens are build on top of an existing blockchain network.

Representing finished digital goods and services, they can serve as a utility, security or infrastructure within the protocol, service or product. Categorized in three main classes are Utility Tokens (e.g. BRD), Governance Tokens (e.g. XRZ) and Security Tokens (e.g. KCS).

Total Returns

The return including price appreciation as well as staking rewards.

Token Symbol

Please refer to Coin Ticker

Total Value Locked

The value of coins or tokens that are in any way participating in the consensus or are otherwise collateralized. Usually nominated in USD.

Transactions per second (TPS)

The number of transactions a blockchain network can facilitate within one second.

Transcoder

The “Keepers” of the Livepeer Network, who also take input video streams and convert them into many different formats in a timely manner for low latency distribution.

Uptime

The Percentage of Time that the Staking Provider has been online since its inception.

Users

The number of current users/delegators with a Staking Provider.

UTXO

Unspent Transaction Model, which is used in Bitcoin and many other Cryptocurrencies as a model of blockchain internal accounting.

Validating

Processing, confirming and writing transactions into a new block.

Validator

A Node in charge of processing, confirming and writing transactions into a new block.

Validator Cartels

In some cases Validators collude with one another, effectively forming a cartel. This might take their cumulative stake to over 30% (which depending on protocol is approximate amount of stake needed to be able to vero or single handedly approve decisions). A Cartel is often formed to dictate fee policies and reward shares for delegators as well as network governance decisions.

Virtual Private Server (VPS)

A virtual computing machine provided by a web hosting company. It is like a Personal Computer (PC) but virtually created within a bunch of servers and remotely accessible. A VPS runs its own operating system (OS) so that you can install any software.

Voting

Voting is either referred to as delegating, where validators are voted/elected to utilize staking and governance rights. Or voting describes the process of participating in the protocol on-chain governance. Various proposals can be submitted and based on the voting outcome can be accepted or rejected. Each coin of a blockchain protocol has the same voting power.

Voted Balance

The total number of coins that have used the voting right to indicate preference for a Blockchain Keeper or Validator.

Voting Service Provider

A Validator in the Decred Network, who accepts votes/delegations from users.

Voting Supply

Please refer to Voted Balance

Voting Weight

Please refer to Voted Balance

Voting Yield

Percentage of annualized earnings generated via voting only.

Wealth Distribution

Wealth distribution describes how evenly (or unevenly) are the tokens distributed across various wallets or entities. In context of PoS, uneven wealth distribution can cause issues with centralization and lead to one token holder (or a cartel thereof) can sensor transactions, veto proposals, etc. 

Web 3.0

WEB3 is the vision of the serverless internet, the decentralised web powered by blockchain. This is the internet where users are in control of their own data, identity and destiny. With Web 2.0, it was mostly traditional business models which were made accessible to a broader customer base, whereas with Web 3.0, new ways of collaboration and business models are made possible via an trustless environment for value transfer.

Witness

Validators in the Bitshares Network are called Witnesses.

Whale

An Investor holding a significant high number of coins. Be careful, if you spot a whale. They like to dump on you.