Terms and Definitions - Sheet1 Flashcards
1
Q
Term
A
Definition
2
Q
ABI
A
Application binary interface - interface between two binary program modules at the level of machine code, not source code. Two computers/machines speaking to each other
3
Q
API
A
Application programming interface - allows information to pass between computers and programs
4
Q
Aribtrage
A
Arbitrage in web3 is made possible by the value of assets within different web3 ecosystems. Consider a situation where the price of Ethereum is $2000 on Uniswap, but at the same time, it is $1990 on Sushiswap. An arbitrager can take advantage of this gap by buying ETH on Sushi to resell on Uniswap, instantly pocketing $10 per ETH (minus gas fees). Arbitrage is a key factor in MEV.
5
Q
Aribitrum
A
Ethereum layer 2 scaling solution that reduces fees and network congestion by computing transactions outside of Ethereum Mainnet
6
Q
Archival Nodes
A
A full node in the blockchain that keeps history of transactions between address state changes
7
Q
Base Fee
A
Algorithm determined fee that users on Ethereum must pay to complete a transaction
8
Q
Block Gas Estimator Feed
A
estimates gas prices based on in-flight transactions taking place in the mempool (pre-chain)
9
Q
Blockchain
A
distributed database that is shared among the nodes of a computer network
10
Q
Bridge
A
An app that connects two or more blockchains
11
Q
Bulletproofs
A
Short, non-interactive zero-knowledge proofs that require no trusted setup
12
Q
Cancel Transactions
A
replacement transaction where a user submits an identical transaction with a higher gas limit so it is mined before the previous transaction
13
Q
Censorship
A
Manipulating blocks to exclude specific transactions for a number of blocks
14
Q
Confirmed Transaction
A
Transaction that has been included in a block and permanently added to the block chain
15
Q
Cross-Chain Arbitrage
A
Leveraging the same asset on different chains to arbitrage
16
Q
Dapp
A
Decentralized application - app built on a decentralizd block chain netwrok using smart contracts. ie Web3 wallets or nft marketplaces
17
Q
DeFI
A
Decentralized finance - conduct financial activities without a central authority regulating
18
Q
DEX
A
Decentralized exchange - enables users to transact in a peer to peer manner
19
Q
Dropped Transaction
A
Transaction that was not mined and confirmed on the blockchain
20
Q
EIP-1559
A
Ethereum improvement proposal - introduced a base fee which is paid by users and is eventually burned / removed from circulation - and it replaced the current gas limit
21
Q
EOA Transaction
A
Transaction between one or more externally owned accounts which do not include transactions between smart contracts
22
Q
Ethereum
A
Decentralized open source block chain
23
Q
Ethereum 2.0
A
Deprecated term that was used to describe the consensus layer of Ethereum as part of it’s migration
24
Q
Ethereum Virtual Machine
A
Software application that blockchain developers use to deploy Dapp on the ethereum blockchain
25
Failed Transaction
Transaction on Ethereum blockchain that does not succeed, cannot be reversed canceled or refunded
26
Full Nodes
Computer or server that downloads the entire Ethereum blockchain address states, and validates new blocks
27
Front-running
Inserting transactions before a subsequent transaction with the sole intent of making a profit from the subsequent transaction
28
Gas
Unit of measurement represents the computational effort required to complete a transaction
29
Gas Fees
Fees users must pay in Ethereums native currency ETH to complete a transaction
30
Gas Limit
Maximum amount of gas miners are authorized to consume to complete a transaction
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Gas Price
Amount of ETH a user is willing to pay for every unit of gas required to complete a transaction
32
Goerli
Cross-client, community-based, proof-of-authority Ethereum testnet where web devs can test contracts in a sandbox
33
Gwei
one of the smallest denominations of ETH (1/1,000,000,000)
34
Internal Transaction
A transaction between a smart contract and another smart contract
35
JIT Arbitrage
Just in time arbitrage - when a searcher sees a large swap in the mempool and then sandiches the trade with liquidity in the underlying pool
36
Kovan
Proof of authority publicly accessible Ethereum testnet. It is now deprecated.
37
Layer 1
Main blockchain in a multi-level blockchain network
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Layer 2
Refers to a secondary framework or protocol that is built on top of an existing layer of blockchain. ie Polygon
39
Light Nodes
A computer that connects to full nodes as a gateway to the blockchain
40
Liquidations
When the collateral used for a loan by a borrower no longer covers the value of their debt
41
Liquidity
How quickly and easily an asset can be converted into cash
42
Loopring
Ethereum layer 2 non-customdial exchange protocol. Lower gas fees on trades and utilizes ZK-rollups
43
Max Fee Per Gas
Absolute max a user is willing to pay per unit of gas
44
Max Priority Fee
An optional additional fee that is paid directly to miners
45
Mempool
The transaction pool or transaction queue or pre-chain: is a set of in-memory data structures propogated across Ethereum nodes to store pending transactions
46
Mempool Explorer
tool built to monito the mempool
47
Merkle Root
A sinlge top hash of a merkle tree. It verifies all transaction within a block
48
Merkle Tree
Merkle tree or hash tree is a data structure used by blockchains to securely validate and summarize large data sets
49
Miner Extractable Value (MEV)
Value derived from controlling transactions
50
NFT Sniping
MEV searchers utilize front-running or censoring to monitor and outbid transactions on specific sales
51
Non-Fungible Token (NFT)
Digital asset based on Ethereum token stadard that can be used to represent ownership of a variety of digital assets
52
Nonce
number associated with Ethereum transactions that increases by one with every transaction
53
Notify
Javascript library that enables blockchain developers to deliver real-time in flight notifications for blockchain transactions
54
Off-chain
Transaction or data that exists outside the blockchain
55
On-chain
Any transaction or data that is available on the blockchain and visible to all nodes to the blockchain
56
Onboard
most powerful connect wallet button. Onboard is an open source javascript library that helps blockchain developers onboard users to EThereum Dapps
57
Optimism
Ethereum layer 2 scaling solution
58
Optimistic Rollups
Process transactions on a separate blocklchain and use fraud proofs to validate correctness
59
Pending Pool
The pending pool is a group of transactions in the mempool that are ready to be processed.
60
Pending Simulation Transaction
A pending simulation transaction gives you access to all of the real-time mempool information of a pending transaction as if it were submitted on-chain
61
Pending Transaction
Pending is a transaction status used to describe in-flight, pre-consensus transactions that are in the mempool and have not yet been confirmed on the blockchain.
62
Pre-chain
Pre-chain is another way to describe transactions that are currently in progress. Pre-chain transactions are also known as pre-consensus transactions, and are transactions that are currently in the mempool.
63
Pre-Consensus
Pre-consensus is another way to describe transactions that are currently in flight and not yet confirmed on the blockchain. Pre-consensus transactions are also known as pending transactions and pre-chain transactions.
64
Proof of Stake
Proof of Stake (PoS) is a decentralized consensus mechanism where selected validators stake the blockchain’s native currency in exchange for rewards they earn from validating transactions. PoS consensus economically incentivizes participants to behave correctly.
65
Proof of Work
Proof of Work (PoW) is a decentralized consensus mechanism that requires network participants to spend computational power and energy to generate new valid blocks.
66
Pool Imbalance Sandwiching
This is an alternate type of sandwiching. The searcher swaps the relative sizes of distributed exchange liquidity pools during the front-run and resets them in the back-run.
67
Queued Pool
The queued pool is a pool of transactions in the mempool that are not yet ready to be processed because they are 'out of order.'
68
Rebase Arbitrage
There is a class of MEV focused on taking advantage of oracle updates and rebases. The idea is to sandwich transactions around an oracle update or rebase to take advantage of this new EVM state.
69
Replacement Transaction
Replacement transactions include 'Speed up' and 'Cancel' transactions. Blocknative's transaction monitoring tools provide replacement transaction support for Ethereum, all Ethereum testnets, and Polygon.
70
Rinkeby
Rinkeby was a Proof-of-Authority testnet for Ethereum where smart contract developers could test code before deploying it to Ethereum's mainnet. Rinkeby is now deprecated.
71
Ropsten
Ropsten was an primary Ethereum testnet (test network) where blockchain developers could test their smart contract code in a live setting without spending actual money. It is now deprecated.
72
Sandwiching
Sandwiching is a form of web3 market manipulation prevalent within DeFi ecosystems. It occurs when a searcher attempts to profit from an asset's price volatility. The searcher will jump ahead of the target's large purchase order, which raises the price. They will then place a sell order following the confirmation of the victim's order.
73
SDK
A software development kit (SDK), also known as a devkit, is a collection of software tools and programs developers can use to quickly deploy an application in their development environment.
74
Searcher
Searchers are people who identify opportunities to extract value for miners, create executable packages of transactions, and submit them to miners.
75
Sidechain
A side chain is a blockchain that allows tokens from one blockchain to be securely used within a completely separate blockchain, but still move back to the original chain if necessary. Sidechains like xDai are popular because they offer distinct advantages to developers including cost savings and greater transaction speed.
76
Smart Contracts
A smart contract is a piece of code that executes according to it's instructions exactly like a traditional contract between two people would be executed. Smart contracts are used by developers to build decentralized applications on blockchain networks like Ethereum to enable users to permissionlessly transact in a secure way.
77
Speed up Transactions
Speed Up transactions are a type of replacement transaction that attempts to overwrite a currently pending transaction with a new transaction. A Speed Up transaction could be used by traders trying to exploit an arbitrage opportunity before their competitors.
78
State Channel
A state channel is a layer 2 scaling solution. It allows off-chain transactions between users while only submitting the opening and closing transactions within the channel on-chain. This process significantly reduces costs and increases network throughput without compromising security
79
Stuck Transactions
A stuck transaction is when transactions cannot be mined. Many stuck Ethereum transactions are caused by nonce gaps, and until the nonce gap has been resolved, wallets cannot process new transactions.
80
Testnet
A testnet (test network) is where developers can test protocol upgrades and smart contracts before deploying them on mainnet.
81
Tip
A tip is an 'optional' additional fee that is paid directly to miners by users to incentivize miners to include their transaction in the next block.
82
Tokenomics
A portmanteau of the words 'token' and 'economics,' tokenomics refers to all the aspects of a cryptocurrency that can impact the price such as total supply, vesting, and utility.
83
Total Value Locked (TVL)
Total Value Locked (TVL) is the total value of assets locked (i.e. being used) in a specific protocol. DeFi lending protocols like Compound Finance and decentralized exchanges like Uniswap use liquidity pools which lock assets in a vault, and therefore have a TVL.
84
Transaction Event Stream
A transaction event stream is a real-time stream of transaction events that are happening in the mempool.
85
Transaction Settlement
When the entire block is accepted, or 'hashed,' by a miner the transaction is considered settled. As the new block propagates across the network, each node executes the transactions in the block and updates its current state. At this point, the transaction is confirmed on the blockchain.
86
Transaction Status
The transaction status is the current state of your transaction in the blockchain. Transaction statuses include: confirmed, failed, dropped, and stuck.
87
Type 0 Transactions
Type 0 transactions are legacy transaction types from before the London hard fork in August 2021 which included the deployment of EIP-1559.
88
Type 2 Transactions
Type 2 transactions are based on the EIP-1559 upgrades and include Base Fee, Max Priority Fee, and Max Fee Per Gas fields instead of the Gas Price field.
89
UX
UX is an abbreviation for User Experience, and is the design discipline for optimizing how users interact with and perceive an application, interface, or system.
90
Wallet
A wallet stores a user's private keys and allows them to transact digital assets and connect with decentralized applications. A wallet does not store digital assets, rather it stores the keys which prove ownership of assets that are recorded on the blockchain's digital asset ledger. Wallets come in two main varieties: software and hardware (physical) wallets.
91
Web3
Web3 is the current evolution of the internet characterized by decentralization and digital ownership, unlike Web 1.0 and Web 2.0 which were characterized by users being able to read (Web 1.0) and write (Web 2.0) content.
92
Wrapped Ethereum
Wrapped Ethereum (wETH) is a tokenized version of Ether on the ERC-20 standard. wETH can always be redeemed 1:1 for ETH. It enables functionality with Dapps on Ethereum and other blockchains.
93
Wrapped Token
Wrapped tokens allow users to transact with cryptocurrencies via blockchains or token standards outside their original design scope. Wrapped tokens are usually created by holding the original asset in a digital vault, then issuing a "wrapped" token representing the vault assets. They allow for greater interoperability between previously non-compatible digital assets.
94
Wei
Wei is the smallest denomination of ETH that is equivalent to 1/1,000,000,000,000,000,000
95
xDAI Chain
xDai Chain (xDai or Gnosis Chain) is a proof-of-stake (PoS) Ethereum sidechain that offers faster and cheaper transactions compared to Ethereum. The native token of xDai Chain is DAI which is pegged to the U.S. dollar and was created by MakerDAO.
96
Zero-Knowledge Proof
A zero-knowledge proof is a method of verification in which a "prover" shows possession of secretive knowledge to a "verifier" without revealing the sensitive information itself. This encryption scheme can ensure data privacy and confidentiality on a public blockchain.
97
ZK-Rollup
A ZK or "zero-knowledge" rollup is an Ethereum layer 2 scaling solution that bundles transactions off-chain into a single cryptographic proof. This transaction is then submitted back to the main chain for validation. ZK-rollups utilize validity proofs to confirm transaction legitimacy.
98
zk-SNARK
Zero-Knowledge Succinct Non-interactive Arguments of Knowledge (zk-SNARKs) are a form of cryptographic proof that maintains the privacy of a transaction while validating it on a blockchain's consensus algorithm.
99
zkSYNC
zkSync is an Ethereum layer 2 scaling solution. It utilizes ZK rollups to offer lower gas fees and faster transaction finality without making security compromises.
