Appendix A: Glossary

Address: A unique string of letters and numbers on the blockchain used to receive and send crypto assets. It is similar to a bank account number or email address, typically generated from a public key.

Automated Market Maker (AMM): An algorithm used by decentralized exchanges (DEXs) that automatically provides trading quotes through user-provided liquidity pools, based on preset mathematical formulas (such as x*y=k), without requiring traditional order books.

Bitcoin: The first decentralized, peer-to-peer electronic cash system proposed by Satoshi Nakamoto in 2008. It is also the name of the network's native cryptocurrency.

Blockchain: A distributed, immutable digital ledger composed of blocks linked together in chronological order. Each block contains a batch of transaction records and is cryptographically linked to the previous block.

Block Reward: In PoW networks, the reward received by miners who successfully create new blocks, typically consisting of newly issued cryptocurrency and transaction fees from that block. This is the primary mechanism for incentivizing miners to maintain network security.

Cold Wallet: An offline cryptocurrency wallet where private keys are stored on physical devices (such as hardware wallets or paper wallets) not connected to the internet, providing extremely high security and suitable for long-term storage of large amounts of assets.

Consensus Mechanism: The rules and protocols by which nodes in a blockchain network reach agreement on the ledger state. The most common are Proof-of-Work (PoW) and Proof-of-Stake (PoS).

Decentralized Application (DApp): Applications running on decentralized networks (such as Ethereum) with backend logic driven by smart contracts and not controlled by any single entity.

Decentralized Autonomous Organization (DAO): An organization managed by code (smart contracts) where rules and decisions are determined collectively by members through voting, and fund management is also controlled by the community.

Decentralized Finance (DeFi): A comprehensive ecosystem aimed at rebuilding traditional financial services (such as lending, trading, insurance) on blockchain through open-source software and decentralized networks.

Decentralized Identifier (DID): A new type of digital identity that users can completely own and control their identity information without relying on any centralized identity providers (such as governments or companies).

Ethereum: An open-source, global, programmable blockchain platform launched by Vitalik Buterin and others in 2014. It introduced smart contract functionality and is known as the "World Computer."

Ethereum Virtual Machine (EVM): The runtime environment in the Ethereum network that executes smart contract code. The standardization of EVM allows any developer to run their programs on Ethereum, making it a core component of Ethereum.

51% Attack: When a single entity or organization controls more than 50% of the network's computing power (in PoW) or staked tokens (in PoS), theoretically allowing them to prevent new transaction confirmations or even reverse completed transactions. This is one of the most fundamental threats to blockchain network security.

Fork: When members of a blockchain community disagree on protocol updates or rules, it may cause the blockchain to split. A soft fork is a backward-compatible update; a hard fork is an incompatible update that causes the blockchain to split into two independent chains.

Gas / Gas Fee: A unit of measurement for the computational work required to execute transactions or operations on smart contract platforms like Ethereum. Users must pay gas fees (usually in the network's native token ETH) to compensate validators for processing their transactions.

Hash: The process of converting input data of any length into a fixed-length, unique output string (hash value) through a hash function. It is widely used to verify data integrity and link blocks.

Initial Coin Offering (ICO): A method of fundraising for new cryptocurrency projects where project teams issue their own tokens in exchange for mainstream cryptocurrencies like Bitcoin and Ethereum.

Layer 1 (L1): Refers to the foundational, base-layer blockchain protocols such as Bitcoin and Ethereum. They are the security and consensus foundation of the entire ecosystem.

Layer 2 (L2): Protocols or networks built on top of Layer 1, aimed at improving scalability and efficiency. They move most transaction processing off-chain and only submit final results to Layer 1 for settlement. Common L2 solutions include Rollups (Optimistic and ZK).

Liquidity Mining: An incentive mechanism in DeFi protocols. Users can earn governance tokens of the protocol as rewards by providing liquidity to the protocol (for example, depositing tokens in DEX liquidity pools).

Mainnet: A blockchain network that has officially launched, operates independently, and has real economic value. This is contrasted with testnets used for testing purposes.

Metaverse: A persistent, shared, three-dimensional virtual space where people can socialize, work, entertain, and create. Web3 is considered the ideal technological foundation for building an open metaverse.

Miner: In PoW networks, participants who run specialized computing equipment to solve complex mathematical puzzles, thereby verifying transactions, creating new blocks, and maintaining network security.

Node: Computers that run blockchain software and store complete or partial copies of the blockchain ledger. Nodes collectively maintain the network's security and decentralization.

Non-Fungible Token (NFT): A unique, indivisible crypto token that represents ownership of specific assets (such as digital artwork, collectibles, virtual land). Each NFT is one-of-a-kind.

Oracle: Middleware services that securely and reliably provide external world (off-chain) data to blockchain (on-chain) smart contracts. They serve as bridges connecting blockchain with the real world.

Private Key: In cryptography, this is a secret, complex string of data that allows users to access and manage their assets on the blockchain. Private keys must be kept absolutely confidential; losing a private key means losing assets.

Proof-of-Stake (PoS): Another mainstream consensus mechanism where participants (validators) gain the right to create new blocks by locking or "staking" a certain amount of the network's native tokens. Ethereum has transitioned to PoS.

Proof-of-Work (PoW): A consensus mechanism that requires participants (miners) to perform substantial computational work to compete for accounting rights. Bitcoin uses PoW.

Public Key: A string of data paired with a private key that can be safely shared with others. Public keys are used to generate addresses for receiving crypto assets.

Satoshi Nakamoto: The pseudonym of the individual or group who published the Bitcoin whitepaper and created the first Bitcoin software. Their true identity remains a mystery to this day.

Smart Contract: Self-executing code deployed on the blockchain that processes transactions and executes tasks according to preset rules and conditions, without requiring any intermediaries.

Stablecoin: A cryptocurrency designed to peg its market value to an external asset (usually the US dollar). It provides a relatively stable store of value and medium of exchange for the volatile crypto market.

Token: A digital asset created on existing blockchains (such as Ethereum). It can represent various rights or values, such as utility rights for certain applications (utility tokens), company shares (security tokens), or community voting rights (governance tokens).

Total Value Locked (TVL): In DeFi protocols, the total value of all crypto assets deposited or staked by users. This is a core metric for measuring the scale and health of a DeFi protocol or the entire DeFi ecosystem.

Wallet: Software or hardware used to store, manage, and interact with crypto assets. Wallets store your private keys, not the tokens themselves (tokens exist on the blockchain).

Web3: A vision for the next generation of the internet that aims to use blockchain technology to build a decentralized, user-owned and controlled, value-native network.