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.
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 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 $2,000 USD on Exchange 1 and $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.
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.
The Best-Bid-Offer (BBO) is the lowest ask and highest bid available at a given time. Level-1 data typically displays the BBO.
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 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.
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.
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.
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 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.
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 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.
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 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 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.
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.
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 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.
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 interfaces (dAPIs) - an innovation of the API3 protocol - are API services that are compatible with blockchain technology.
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.
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) 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 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.
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.
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, options, and swaps 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 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.
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) is the native cryptocurrency of the Ethereum blockchain. Ether plays a pivotal role in the Ethereum ecosystem.
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.
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.
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.
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 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.
The Financial Information eXchange (FIX), also called FIX protocol, is an open electronic communications protocol designed to provide direct access to data of real-time transactions.
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.
A flash loan is a decentralized finance (DeFi) loan that is borrowed and settled in a single transaction without providing any collateral.
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 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 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.
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.
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 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.
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) 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.
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 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 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.
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.
format parameter which will allow you to receive the data in CSV format instead of JSON.
A cryptographic key is a string of bits used by an algorithm that converts plain text into cipher text or vice versa as part of a paired key access system. Like a physical key, it locks data so only someone with the correct string of bits can unlock, or decrypt it.
In trading, latency refers to the time interval between an order being placed and the execution of that order. Low latency is desirable as it means there is minimal lag and a trader has a high possibility of securing the displayed price before the market changes.
A ledger is record keeping system for tracking financial transactions. A blockchain is a form of a public, distributed ledger.
Lending is the action allowing a person or business the sum of money under an agreement to pay it back later. Lending protocols are popular in crypto and are a staple of decentralized finance (DeFi).
A lending pool is a smart contract that allows users to deposit and borrow money in a peer-to-peer (P2P) way. To borrow from a lending pool, users provide collateral in the form of assets - in cryptocurrency, this is usually in the form of tokens.
Liquidation refers to a process where non-liquid assets are converted to liquid assets by being sold on the open market. Asset holders can voluntarily liquidate assets or can be forced to liquidate assets. For example, if a trader has an open leveraged position (usually via a futures contract) that goes against their intended goal, they would lose their entire position.
For assets, liquidity refers to the ease with which an asset or security can be converted into ready cash without affecting its market price. The easier the asset is able to be converted to cash, the more liquid the asset is.
Liquidity in the market refers to the amount of trading activity - the higher the trading volume, the more liquid the market is.
Liquidity mining is a term used in decentralized finance (DeFi) applications where users supply assets or liquidity) to a specific pool, lock their assets in the pool, and earn interest in the form of a token. Liquidity mining provides incentives for users to increase the liquidity of the assets they hold and to earn rewards from doing so.
A liquidity pool is a digital collection of funds locked in a smart contract. Liquidity pools are usually crowdsourced pools of coins or tokens and are used to facilitate decentralized trading, lending, and other decentralized exchange (DEX) functions.
A liquidity provider (LP), also known as a market maker, is a user who deposits their crypto assets into a liquidity pool to help with decentralized trading. In return for supplying liquidity, users are typically awarded a percentage of fees generated by platform trades, which are paid out in LP tokens. Liquidity providers are incentivized to hold LP tokens to receive their passive income from trading fees and other rewards.
The long/short ratio in crypto represents the amount of an asset that is currently available for short sale compared to the amount that has actually been shorted. This is a comparison between an exchange’s active buying and selling volumes - if the ratio is low, this indicates that more users are holding shorts. The long-short ratio can be used as an indicator for a specific asset, but can also be used to show the value of short sales taking place for a basket of securities or for the market as a whole
In cryptocurrency, market capitalization (market cap) refers to the total market value of a cryptocurrency. It is calculated by taking the market price of a token or coin and multiplying it by the total number of tokens or coins in circulation.
A mempool is a small ‘waiting room’ of verified but unconfirmed transactions that every node keeps. When a pending transaction is confirmed by being included in a block, it is removed from the mempool. Many transactions pending in a mempool congest network traffic and increase average transaction confirmation time.
Broadly, a metaverse is a shared and integrated network of virtual reality worlds. The metaverse is a key concept in decentralized finance and falls under the Web3.0 umbrella.
Mining is the process that verifies and records new transactions to the blockchain for a cryptocurrency that uses proof-of-work (PoW) methods. It also describes the process for the computational work that nodes in a blockchain network undertake in hopes of earning new tokens.
A mining pool is a group of miners who pool or share their computational resources, such as processing power, over a blockchain network to increase their rate of return on mining rewards.
Minting is the process of generating new coins or tokens for a blockchain network by authenticating data, creating blocks, or recording information through a proof-of-stake (PoS) protocol. Minting in crypto is similar to the minting of fiat currencies within traditional finance, in that there is no set limit on the amount of currency that can be printed, except that printing must be controlled to prevent inflation or devaluation. Minting requires no resources and is often carried out by validator nodes, and both cryptocurrency and non-fungible tokens (NFTs) can be minted this way.
Network latency, also called lag, is the time it takes for data to be captured, transmitted, and processed from its source to its destination. Low network latency indicates there are very fast transmission times and this is a critical characteristic of a high-performance blockchain.
In blockchain technology, a node is a computer that runs the blockchain’s software and serves a number of essential functions to the distributed system network. Nodes can validate transactions and store complete histories of transactions on a network. The distributed structure of nodes keeps blockchains secure.
A non-fungible token (NFT) is a cryptographic asset that represents a unique digital asset. These cannot be exchanged or traded equivalently like other cryptographic assets like Bitcoin and Ethereum, making them non-fungible. NFTs are created via smart contracts and are classified with token standards that vary based on the blockchain protocol they use. NFTs are commonly used to represent ownership of art or digital collectibles, verify records and identity, or create decentralized marketplaces
In blockchain technology, off-chain is a classification that refers to any type of transaction which occurs outside of the blockchain protocol. Off-chain transactions can include governance, tokenized asset creation, consensus design, or fund transfers through exchanging private keys.
On-chain refers to any type of transaction which occurs within the blockchain network protocol. On-chain mechanisms are usually automatically executed through cryptographic and algorithmic codes that underline a blockchain.
Open High Low Close Volume (OHLCV) is an aggregated form of market data that includes five data points during a specific period. The open and close information represents the first and last price level, high and low represent the highest and lowest price reached, and volume represents the total amount traded during the specified period. OHLCV is frequently represented in a candlestick chart.
In crypto, open interest refers to the number of contracts outstanding in futures and options that are trading on a cryptocurrency exchange at a given time.
Options are a type of derivative contract that allows investors to buy or sell instruments like securities, ETFs, or index funds at a predetermined price over a specified period of time. In cryptocurrency, options markets allow investors to bet on the potential direction of an asset either as a leveraged bet on the potential increase in the price of a token or coin or as a call option with the hope of profiting from price depreciation in the future.
A blockchain oracle is a piece of software that extracts real-world, or off-chain information, and provides it on the blockchain. Smart contracts automatically execute transactions on a blockchain when certain pre-specified conditions are met, but blockchains cannot make API calls to connect with data outside their network. Oracles are the layer that queries external data sources from APIs or feeds and then transmits the requested data back to the blockchain.
For an in-depth summary of the types and benefits of different blockchain oracles, please see our /Demystifying Blockchain Oracles Paper.
An order book is an electronic list of buy and sell orders for a security or other financial instrument (in cryptocurrency, a specific cryptocurrency asset) organized by price level. Order books are composed of the number of shares or assets being bought and sold at specific prices in the order in which they are executed. Order books provide critical trading and investment data to improve market transparency.
Amberdata provides minutely snapshots for all exchanges and assets we cover, including historical order book data.
A permissioned blockchain is a distributed ledger that is only accessible by certain users, meaning that certain tasks can be carried out by only specific network participants. Accessing permissioned networks often requires a suitable identity verification process as well as a specialized security key or password.
In a blockchain context, permissionless refers to blockchains that are open networks available for everyone to participate in a consensus process that blockchains use to validate data and transactions. Permissionless is also referred to as trustless or public blockchains. Ethereum and Bitcoin networks are examples of permissionless systems.
Proof-of-stake (PoS) is a blockchain consensus mechanism used to validate transactions by incentivizing users to stake native coins in validator node networks. Nodes are randomly chosen to validate block data and earn native coins as a reward, and validators generally are able to contribute democratically to decentralized protocol governance through voting on key decisions. Proof of stake offers increased network security, energy efficiency, and computational power and is emerging as one of the most widely used blockchain consensus mechanisms.
Proof-of-Work (PoW) describes the process of blockchain consensus mechanisms that rely on mining to maintain the network. Miners use electricity and computing power to solve the complex cryptographic puzzles required to confirm network transactions and are rewarded with the network’s coin or token. PoW blockchain systems are more secure and distributed than most networks but are criticized for their high energy intensity.
A blockchain protocol refers to a particular blockchain platform or network, such as the Bitcoin protocol. Protocols can also refer to the network rules that define interactions such as consensus and transaction validation.
Quantitative trading, also called algorithmic trading, refers to trading strategies that rely on computations and complicated algorithms to identify trading opportunities and quantify risk.
A query is a request to retrieve information using a database or computer system.
Real-time refers to a level of computer responsiveness that can deliver information through a system as close to the speed of experience as possible. Real-time is usually measured in milliseconds and is important in cryptocurrency, as having real-time prices is crucial to trading.
A smart contract is a self-executing code or protocol stored on a blockchain that carries out specific instructions when predetermined conditions are met. Smart contracts are trustless, decentralized, and transparent. They have many use cases in finance and are popular for loans, derivatives, and trading, as well as for financial security. Outside of finance, they are used for legal contracts, mortgage systems, supply chain management, and even healthcare.
The spot market is where financial instruments such as commodities, currencies, securities, or assets are immediately settled and delivered. Contrasting to futures markets, spot market purchases are settled at the price fixed at the point of purchase.
A stablecoin is a cryptocurrency with the intention of holding some stable value. The value of most stablecoins is pegged to a fiat currency like the U.S. dollar or a tangible commodity like the value of gold. Stablecoins can also achieve stability through collateralization against other cryptocurrencies or by automatic token supply management. Popular stablecoins include USDC and DAI.
Staking is the process by which a blockchain network user locks their assets for a period of time to ensure the security, liquidity, and functionality of the network. In exchange for this, stakers can earn rewards such as additional coins or tokens. Staking is integral to proof-of-stake (PoS) blockchain protocols.
A staking pool allows multiple stakeholders to combine their tokens or coins into a collective pool to increase their chance of receiving network rewards. Staking pools occur on proof-of-stake networks.
A swap is a derivative contract in which one party exchanges or swaps the values or cash flows of one asset for another. Generally, the amount does not change hands during a swap, and often one cash flow exchange is fixed while the other(s) are variable based on floating exchange rates, specific interest rates, or index prices. Swaps are typically carried out by large institutions and take place over the counter (OTC).
Tickers represent trade bids or asks from an order book. The bid price represents the maximum price that a buyer is willing to pay for an asset. The ask price represents the minimum price that a seller is willing to take for that same asset.
The time-weighted average price (TWAP) is the average price of a security over a specified time. TWAP is used as a strategy to minimize large orders’ impact on the market, and high-volume traders use TWAP to execute orders over a specific time to keep the price close to what reflects the true market price.
A crypto token is a unit of value for a programmable asset that is managed by a smart contract and a blockchain network. Tokens are the primary way of transferring and storing value on a blockchain network and can be fungible or non-fungible.
Total value locked (TVL) measures the value of all crypto assets deposited in a decentralized finance (DeFi) protocol. TVL can also be used to reference the amount locked on a specific DeFi protocol, such as Aave or Uniswap.
Trading volume refers to the total number of shares or contracts traded over a given time frame or during trading hours in a day.
Traditional finance (TradFi) refers to the bureaucratic financial system that includes banks and large financial enterprises. These legacy institutions operate using a centralized model.
A validator is an entity responsible for verifying transactions within a blockchain. Blockchain protocols each have their own guidelines for how validators operate within their network.
Volume-Weighted Average Price (VWAP) is the average price of an asset across all exchanges available over a time interval, based on both volume and price. VWAP is an aggregated form of price data and provides traders with insight into both the trend and value of an asset.
A cryptocurrency wallet is a program or device that stores users’ cryptocurrency keys and allows them access to the tokens or coins they hold. Each wallet has a specific address that enables users to interact with blockchains and send and receive crypto assets. Wallets may be custodial or controlled by a centralized third-party entity, or non-custodial, where the user controls their keys themselves.
Web 3.0 refers to the third generation of the evolution of web and computer technologies with the goal to allow users to own and control their data. This new wave anticipates that technologies like blockchain will decentralize financial interactions and the internet. Web 3.0’s core tenants rest upon using peer-to-peer (P2P) model for websites, applications, and the internet as a whole. Many believe blockchain and crypto technologies are central to the realization of this open, public, and borderless system.
A whale in crypto refers to a high net worth individual (HNWI) or organization that holds a very large amount of a cryptocurrency. There is no set monetary threshold to be considered a whale, but when converted to USD, coins or tokens typically exceed $10M.
Wrapped tokens are assets that are pegged directly to the value of another cryptocurrency. Users lock their original asset in a digital vault and receive the wrapped token to be used on another blockchain protocol. Wrapped tokens offer a way to use cryptocurrencies such as Ether or Bitcoin on blockchains other than the one they were built on.
Yield farming is the process of lending or staking cryptocurrencies within a blockchain protocol to generate interest and tokenized rewards. Many decentralized finance (DeFi) projects and protocols use yield farming to incentivize users to contribute to the network’s liquidity.
Updated about 1 year ago