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Getting started with Web3 wallets can feel overwhelming. Here’s a quick glossary of essential terms to help you understand the basics.
1. Decentralization
No single party controls the network. Power is distributed worldwide, making systems more secure, transparent, and resistant to censorship.
2. Decentralized Application (DApp)
An app that runs on a blockchain using smart contracts, with no third-party control. All activities are fully transparent.
3. Decentralized Autonomous Organization (DAO)
A community-led organization with no central authority. Token holders vote, and decisions are enforced by code.
4. Decentralized Finance (DeFi)
A blockchain-based financial system without banks. You can lend, borrow, earn interest, and trade directly with smart contracts.
5. Initial DEX Offering (IDO)
The first launch of a token on a decentralized exchange is commonly used to raise funds for new projects.
6. ERC-20 Token
The most widely used Ethereum token standard for fungible tokens. Each unit has the same value, and these tokens are common in DeFi and trading.
7. ERC-721 Token
The Ethereum standard for NFTs (non-fungible tokens). Each token is unique and used in art, collectibles, and games.
8. Total Value Locked (TVL)
Measures how much crypto is locked in a DeFi protocol (staking, lending, liquidity). A higher TVL shows greater trust and adoption.
9. Distributed Ledger
Data is stored across many nodes worldwide, not a single server—ensuring transparency and tamper resistance.
10. Wallet Address
A unique string of characters, like a bank account number for crypto, is used to receive, store, and send assets.
11. Private Key
Like a PIN to your bank account, but more sensitive. It gives full control of your funds. Keep it secret and offline.
12. Public Key
An address you can share publicly to receive crypto. It does not give access to your wallet.
13. Gwei
A small unit of Ethereum gas fees. 1 ETH = 1 billion Gwei. For example, a transaction might cost 30 Gwei.
14. Ethereum Name Service (ENS)
A naming system that turns long Ethereum addresses into short, human-readable names like abc.eth.
15. Seed Phrase (Mnemonic Phrase)
A 12–24 word recovery phrase that serves as your wallet’s master key. If lost, your assets are gone forever. Always store it securely offline.