// GLOSSARY
Web3 fundamentals
Core building blocks of blockchains, tokens and decentralized finance.
Blockchain
A blockchain is a shared database maintained by many independent computers, where records are grouped into blocks cryptographically linked in sequence. Once data is recorded, changing it without everyone noticing is practically impossible.
Cross-Chain Bridge
A cross-chain bridge moves tokens or data between two blockchains, usually by locking the asset on the source chain and minting a representative version on the destination chain.
Crypto Wallet
A crypto wallet stores the private keys that control tokens on a blockchain. It does not hold the assets themselves — the blockchain does — but whoever controls the keys controls the assets.
DAO
A DAO (decentralized autonomous organization) is an organization whose rules are encoded in smart contracts and whose members vote with tokens on proposals, such as treasury spending or protocol changes.
DeFi
DeFi (decentralized finance) is a set of financial services — trading, lending, savings — built as smart contracts on public blockchains, so users interact with protocols directly instead of through banks or brokers.
Gas Fees
Gas fees are the payments users make to have their transactions processed on a blockchain, compensating validators for computation and storage and preventing spam by making every action cost something.
Layer 1
A layer 1 is a base blockchain that processes and finalizes its own transactions, such as Bitcoin, Ethereum or Solana. Everything built on top of it — tokens, smart contracts, layer 2s — depends on its security.
Layer 2
A layer 2 is a network built on top of a layer 1 that processes transactions cheaper and faster, then posts compressed data or proofs back to the base chain so it inherits the layer 1's security.
Liquidity Pool
A liquidity pool is a smart contract that holds two or more assets so traders can swap against it at prices set by a formula, instead of matching with another trader in an order book.
Multisig Wallet
A multisig wallet is a blockchain account that requires multiple private keys to approve a transaction, such as 3 of 5 signers, so that no single person or compromised key can move the funds alone.
Oracle
An oracle is a service that brings verified off-chain data — prices, interest rates, asset valuations, event outcomes — onto a blockchain so smart contracts can react to the real world.
Smart Contract
A smart contract is a program stored on a blockchain that runs automatically when its conditions are met, holding and moving assets according to code rather than through a human intermediary.
Stablecoin
A stablecoin is a digital token designed to keep a steady value relative to a reference asset, most often the US dollar, by holding reserves, using over-collateralized crypto, or relying on algorithmic supply rules.
Staking
Staking means locking a blockchain's native tokens to help secure and validate the network, in exchange for rewards, or more broadly depositing tokens in a protocol to earn yield.
Token
A token is a unit of value recorded on a blockchain, representing anything from a currency and a utility credit to a share in an asset. Tokens are created and transferred according to rules set by a smart contract or protocol.