From A to Z: Ethereum Glossary
- Prime Stake Pool
- Apr 10, 2023
- 4 min read
Updated: Apr 2
Basic knowledge of terms related to Ethereum you must have. Along with the brief explanation, we have added external links from reliable resources available on the internet to make you understand better and effortlessly. We will keep updating the glossary list periodically until we have the complete one. Let us know if we have missed any term you would find helpful.
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0x is an Ethereum-based open-source platform for exchanging cryptocurrencies. It allows for the creation of features in a decentralized exchange (DEX), a wallet or a marketplace.
A type of attack on a decentralized network where a group gains control of the majority of nodes. This would allow them to defraud the blockchain by reversing transactions and double spending ether and other tokens.
A
A claim made by an entity that something is true. In context of Ethereum, consensus validators must make a claim as to what they believe the state of the chain to be. At designated times, each validator is responsible for publishing different attestations that formally declare this validator's view of the chain, including the last finalized checkpoint and the current head of the chain.
B
A blockchain is a type of Distributed Ledger Technology (DLT) where transactions are recorded in linked blocks in chronological order. Each block contains a list of transactions and a reference (hash) to the previous block, making the ledger secure, transparent, and immutable. Each block references the previous block. No central authority; multiple nodes maintain the ledger. Once recorded, data is immutable. Network participants agree on the validity of transactions.
Ethereum’s blockchain is a decentralized, tamper-proof ledger of transactions and smart contracts maintained across all network nodes.
C
A consensus mechanism is a process used in blockchain networks to achieve agreement among all participants (nodes) on the current state of the ledger. It ensures that all copies of the blockchain are identical, secure, and trustworthy without requiring a central authority.
All participants agree on which transactions are valid. Prevents fraud, double spending, and tampering. Determines how quickly new transactions are confirmed. Proof of Work (PoW), Proof of Stake (PoS), Practical Byzantine Fault Tolerance (PBFT) are examples of various consensus mechanisms.
A consensus mechanism in Ethereum is the process by which validators agree on the state of the blockchain, ensuring all transactions and blocks are secure and valid.
D
Decentralized Applications (DApps) on Ethereum are applications that run on the Ethereum blockchain instead of a centralized server. They use smart contracts to execute code in a trustless, transparent, and immutable way. Users interact with DApps through a blockchain wallet, and all transactions or state changes are recorded on Ethereum, ensuring security, censorship-resistance, and decentralization.
Decentralized Finance (DeFi) on Ethereum refers to a system of financial applications built on the Ethereum blockchain that enables users to lend, borrow, trade, and earn interest without relying on traditional banks or intermediaries. DeFi uses smart contracts to automate financial transactions in a trustless, transparent, and permissionless way, allowing anyone with an Ethereum wallet to access services globally.
Distributed Ledger Technology (DLT) is a digital system for recording transactions where the data is shared, synchronized, and maintained across multiple computers (nodes) instead of being stored in a single central location. No single central authority controls the data. Every participant (node) has a copy of the ledger. Uses cryptography to protect data. Once recorded, data is immutable. All participants agree before updates are added. Blockchain is a type of DLT. Platforms like Ethereum and Bitcoin use DLT to maintain their transaction records.
L
A liquidity pool is group of tokens that are locked in a smart contract and used for trading between assets on a decentralized exchange (DEX) like Uniswap.
P
Proof of Work (PoW) is a consensus mechanism where participants (called miners) must solve complex mathematical problems using computational power to verify transactions and add new blocks to a blockchain.
The cryptocurrency Bitcoin uses Proof of Work to maintain its network. Proof of Work (PoW) was originally a core part of how Ethereum operated—but that has changed. When Ethereum was launched (2015), it used Proof of Work just like Bitcoin. Ethereum’s PoW algorithm was called Ethash, designed to be more resistant to specialized mining hardware. In September 2022, Ethereum underwent a major upgrade called The Merge. Ethereum stopped using PoW. It switched to Proof of Stake (PoS).
Proof of Stake (PoS) is a consensus mechanism used in blockchain technology where participants validate transactions and create new blocks based on the amount of cryptocurrency they lock up (stake) as collateral.
PoS allows the network to agree on transaction validity without mining. It uses validators who stake ETH instead of miners. Validators are responsible for proposing and verifying blocks.
S
Self-Sovereign Identity (SSI) is a digital identity model where individuals and organizations fully own and control their identity data, enabling them to securely share verifiable credentials without relying on a central authority.
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