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Glossary
A
Airdrop
An airdrop is a distribution method that involves sending tokens or coins to wallet addresses for free. Airdrops are typically used as marketing to promote awareness and excitement of a new project or currency.Application Programming Interface (API)
An API is a set of definitions and protocols that allows different applications to communicate and share information with one another. APIs are intermediaries between software systems, and developers use APIs to incorporate features of an application into their own software.Arbitrage
Arbitrage is the simultaneous buying and selling of an asset in different markets to exploit the price difference for profit. For example, if one Ether (ETH) is sold for 2,010 USD on Exchange 2, then a trader can generate a $10 profit for every ETH they arbitrage between the exchanges. Arbitrage is often automated using code or software to take advantage of small differences in price.Automated Market Maker (AMM)
An automated market maker (AMM) is a computer program in decentralized exchanges (DEXs) that removes intermediaries by automating the liquidity process. An algorithm regulates the values and prices of tokens in the liquidity pool, removing any intermediaries in the trading of cryptocurrency and assets. Popular AMMs are Uniswap, Curve, Sushiswap, and Balancer.B
Best-Bid Offer (BBO)
The Best-Bid-Offer (BBO) is the lowest ask and highest bid available at a given time. Level-1 data typically displays the BBO.Bid-Ask Spread
A bid-ask spread is the difference between a bid (buy) price and ask (sell) price of an asset on an exchange. A large bid-ask spread indicates poor market liquidity.Bitcoin (BTC)
Bitcoin is the native cryptocurrency to the Bitcoin network and was the first cryptocurrency created. It is denoted by a lower-case b, while the Bitcoin blockchain network is upper-case.Block
A block is the record of all transactions made during a specific time frame. In a blockchain network, transactions are composed of these sequential “blocks” of data that are strung together linearly and chronologically. Blocks contain information about the date, time, and number of transactions, as well as the origin and destination of the transaction. A block records the most recent transactions not yet validated by the network. Once the data is confirmed by the network, the block is closed and the chain may continue transacting and creating new blocks.Blockchain
A blockchain is a decentralized, distributed, public ledger of transactions that exist across nodes of a computer network. This network uses a consensus mechanism to confirm data - each computer maintains its own copy of the shared record, making it nearly impossible for a malicious actor to alter or hack transactions. Blockchains are known for their role in cryptocurrency systems and guarantee trust without the need for a trusted third party.C
Candlestick
Candlesticks represent the historical and real-time price activity of an asset during a given time frame through opening prices, highs, lows, and closing prices of financial instruments on an exchange.Centralization
Centralization refers to the concentration of control of an organization under a singular authority. In crypto, centralization refers to the distribution of nodes verifying the network, as well as to the entities that govern them. A centralized blockchain structure may concentrate governance and decision-making into the hands of company founders or investors.Centralized Exchange (CEX)
A centralized crypto exchange is one that is both created and governed by a company. The company acts as an intermediary between buyers and sellers, custodies users’ funds and data, and controls the exchanges’ fees. Popular CEXs include Binance and Coinbase.Collateral
Collateral refers to an asset that a lender accepts as security for repayment of a loan. The asset is forfeited if the individual is unable to pay back the lone. In DeFi, borrowing money on a lending platform requires locking tokens as collateral.Consensus Mechanism
A consensus mechanism is a mechanism used to achieve agreement on the state of the blockchain ledger. Popular consensus algorithms include Proof of Work (PoW) and Proof of Stake (PoS).Cross-Chain
Cross-chain communication is technology that allows the exchange of information and value between different blockchain networks, creating an intertwined distributed blockchain ecosystem. Cross-chain communication is central to blockchain interoperability.Cryptocurrency
Cryptocurrency is a digital asset in which transactions are verified and maintained by a decentralized cryptography system rather than a centralized authority. Cryptocurrency uses blockchain technology, which certifies that coins and tokens are not double-spent or forged.Cryptocurrency Address
A cryptocurrency address is a unique string of characters that represent an individual wallet, an exchange, or another blockchain-specific address. All can be evaluated publicly but are also pseudonymous, as they are not necessarily linked to a user’s real-world identity.Cryptocurrency Exchange
A cryptocurrency exchange is a type of digital currency exchange where digital assets can be bought, sold, and traded. They are similar to traditional exchanges where stocks are bought and sold in the type of transactions and orders that users can execute.Custody
Custody is Defined as a safekeeping service financial institutions provide for their customers’ securities. In crypto, many institutions have the legal ability to hold and protect customers’ digital assets.D
Decentralized Application (dApp)
Decentralized applications, commonly referred to as dApps, are digital programs that run on a blockchain network to keep users’ data and information out of the hands of the organizations behind it. dApps appear similar to traditional web applications, but use distributed, peer-to-peer servers rather than centralized ones. Use cases for dApps range from investment technology and lending to insurance, gaming, and social networking. Popular examples include Uniswap, Curve, and OpenSea.Decentralized Application Programming Interface (dAPI)
Decentralized application programming interfaces (dAPIs) - an innovation of the API3 protocol - are API services that are compatible with blockchain technology.Decentralized Autonomous Organization (DAO)
A Decentralized autonomous organization (DAO) is a community-led blockchain-based organization that has no central authority. Members of a DAO own native utility tokens, and decisions are voted on by these stakeholders. Smart contracts are implemented for the DAO, and the code governing its operations is open-source and publicly disclosed.Decentralized Exchange (DEX)
A decentralized exchange (DEX) is a peer-to-peer marketplace for buying, trading, and selling digital assets. DEXs are often democratically managed and do not have a central intermediary to facilitate the transfer and custody of funds. Without a central authority charging fees for transactions and services, DEXs are often cheaper than their centralized counterparts.Decentralized Finance (DeFi)
Decentralized Finance (DeFi) refers to technology built on blockchain protocol that offers peer-to-peer (P2P) financial services such as loans, investments, trades, and derivatives. DeFi is an alternative to traditional finance (TradFi) systems and removes the centralized control banks and institutions have on money and financial services. DeFi systems are transparent and trustless, and their interoperability has led to innovations such as decentralized exchanges (DEXs), yield farming, liquidity pools, and more. For more information on DeFi, please reference the Amberdata DeFi Primer.Decentralization
Decentralization refers to the transfer of control of an activity or organization to several local authorities rather than one single one. Blockchain technology powers the concept of decentralization in finance.Delegator
Delegators are token holders who wish to participate in consensus but do not, or cannot operate a full node. Instead, they secure the network by staking their coins or tokens to validator nodes to share a portion of the block rewards.Derivative
A derivative is a type of security set between two or more parties. These financial contracts derive their value from the underlying traits of an asset. Examples of derivatives are futures and options contracts. Examples of blockchain-enabled cryptocurrency derivatives are bitcoin futures, which represent agreements to trade bitcoin (BTC) at a future date at a predetermined price.Digital Asset
Digital asset is the broad term for assets that exist in a digital form or space. The term covers a wide variety of assets, including cryptocurrencies, NFTs, digital stocks, and other collectibles.E
Epoch
An epoch is defined as the time required for the blockchain to grow by a specific number of blocks. Epochs are generally found on blockchains that use Proof of Stake (PoS), and each protocol has a different way of defining epochs (if they use them). Epochs are frequently used to distribute staking rewards or for security purposes. For example, an Ethereum epoch lasts 30,000 blocks, which is roughly 6.4 minutes.Ether (ETH)
Ether (ETH) is the native cryptocurrency of the Ethereum blockchain. Ether plays a pivotal role in the Ethereum ecosystem.Ethereum
Ethereum is a decentralized blockchain technology platform most commonly known for its native cryptocurrency Ether (ETH). It serves as an important foundation for a large ecosystem of decentralized applications (dApps) powered by self-executing smart contracts and token economies. The network uses ETH to pay transaction fees and forms the backbone of a decentralized internet.Exchange Rates
An exchange rate is the value of one currency for the purpose of conversation with another. In crypto, this may refer to a cryptocurrency’s value in a fiat currency, such as the U.S. dollar.Exchange-Traded Fund (ETF)
An ETF, or an exchange-traded fund, is a product such as a stock, commodity, or bond that is tied to the price of other financial instruments. ETFs allow investors to gain access to an asset or assets without buying or owning the asset(s) directly. A digital asset ETF would allow investment in an underlying cryptocurrency or asset without the investor needing to manage the asset itself.F
Fiat Currency
Fiat currency is any government-issued currency used by a specific nation, government, or region. Fiat currencies are backed by the government that issues them rather than by a physical commodity like gold. Fiat currencies include the U.S. dollar, the Indian rupee, and the euro.Fiat-Backed Stablecoin
Fiat-backed stablecoins are digital assets tied to the value of a fiat currency at a 1:1 ratio. This fiat currency is held off-chain reserves, serving as collateral to the stablecoin.Financial Instrument
A financial instrument is defined as any type of contract or financial asset with monetary value that can be traded or exchanged. Financial instruments include stocks, bonds, exchange-traded funds (ETFs), and derivatives.Flash Loan
A flash loan is a decentralized finance (DeFi) loan that is borrowed and settled in a single transaction without providing any collateral.Fork
A fork is when one blockchain diverges into two paths forward. On a blockchain, different parties need to use common rules to agree upon the history of the chain - when parties are not in agreement, alternative chains may emerge. Many forks are short-lived due to the difficulty of reaching a fast consensus in a distributed system, but some are permanent. In a hard fork, an update significantly alters the original blockchain protocol such that the two versions are no longer compatible, creating two unique blockchains.Fungibility
Fungibility is the quality of being mutually interchangeable and occurs when an asset or units of an asset are indistinguishable from one another. For example, one U.S. dollar is equivalent to another U.S. dollar and is fungible.Funding Rates
Funding rates are a mechanism that exchanges use to ensure that perpetual futures trade at a price that is consistent with the price of the underlying spot markets. Depending on open positions, traders will either pay or receive funding. The funding rate is calculated by considering the interest rates for both trading pair currencies and the crypto index.Futures
A future is a derivative contract to buy or sell a particular asset or security at a predetermined price at a future date. Futures are traded on exchanges and have a variety of cryptocurrency applications such as bitcoin futures.G
Gas Fees
Gas fees are payments made by users to complete a transaction on a blockchain. Gas fees act as compensation for the computing energy transactions require and are typically paid in the blockchain’s native cryptocurrency.Granularity
Granularity refers to the scale or level of detail present in a set of data. With crypto data, information needs to be as granular as possible in order to understand ecosystems, trade successfully, and monitor trends.H
Hedge Fund
A hedge fund is a pooled investment fund that caters to high-net-worth individuals, institutional investors, and other accredited investors. Hedge funds use complex combinations of investment strategies to increase their performance and returns.High-Frequency Trading (HFT)
High-frequency trading (HFT) is an automated trading method that uses algorithms to rapidly buy and sell large quantities of orders. HFT is used by large investment banks, hedge funds, and institutional investors to trade large amounts at very high speeds.I
Immutability
Immutability refers to something being unable to be changed. Blockchains are immutable, which allows data to be irreversibly codified into the shared ledger of a network after a transaction.Impermanent Loss
Impermanent loss is when the value of tokens held in an automated market maker (AMM) liquidity pool depreciates in value relative to other assets due to price volatility. The loss is ‘impermanent’ because the original value of the tokens may be restored if the liquidity pool restores its balance. Tracking impermanent loss at the event level is very difficult, but necessary when providing liquidity to a liquidity pool. For more information on how Amberdata can help investors reduce impermanent loss, please reference our /Impermanent Loss Investor Guide.Interoperability
Interoperability is the ability of software systems to exchange and make use of information. In a blockchain, interoperability refers to the ability of different blockchain protocols to work and interact with one another, such as sending crypto and data between chains.Insurance Fund
The insurance fund represents the total amount of liquidation fees maintained by each exchange. It is designed to cover losses of traders when their wallet balance is less than $0 USD after all liquidations have occurred under forced liquidation. In these cases, the Insurance Fund will be used to cover these losses. As long as the Insurance Fund is positive, realized profits can be withdrawn after the next session settlement; otherwise, if the Insurance Fund is depleted, any uncovered loss will be socialized among the winning traders at the end of the trading session.J
JSON
JSON (JavaScript Object Notation) is a lightweight data interchange format that is easy for humans to read and write and easy for machines to parse and generate. It is a text format that is often used to transmit data between a server and a web application as an alternative to XML. By default, all Amberdata responses will be returned in JSON format. Some endpoints have aformat parameter which will allow you to receive the data in CSV format instead of JSON.