Nakamoto Consensus is the method used by Bitcoin and similar cryptocurrencies to agree on the transaction history of the network. It combines a process called proof-of-work, where computers solve complex puzzles, with rules that help the network decide which version of the blockchain is correct. This ensures that everyone on the network can trust the…
Crypto staking is a process where you lock up your cryptocurrency in a blockchain network to help support its operations, such as validating transactions. In return, you can earn rewards, typically in the form of additional coins. Staking is often available on blockchains that use a consensus method called Proof of Stake, which relies on…
Slippage tolerance is a setting used when making financial transactions, especially in cryptocurrency trading. It represents the maximum difference you are willing to accept between the expected price of a trade and the actual price at which it is executed. This helps prevent unexpected losses if market prices change quickly during the transaction process.
An Initial Coin Offering (ICO) is a way for new cryptocurrency projects to raise money by selling their own digital tokens to investors. These tokens are usually bought with established cryptocurrencies like Bitcoin or Ethereum. The funds collected help the project team develop their product or service. ICOs are somewhat similar to crowdfunding, but instead…
A rug pull is a type of scam often seen in cryptocurrency and decentralised finance projects. It occurs when the creators of a project suddenly withdraw all their funds from the liquidity pool or treasury, leaving investors with worthless tokens. These scams usually happen after a project has attracted significant investment, making it difficult for…
An Automated Market Maker (AMM) is a type of technology used in cryptocurrency trading that allows people to buy and sell digital assets without needing a traditional exchange or a central authority. Instead of matching buyers and sellers directly, AMMs use computer programmes called smart contracts to set prices and manage trades automatically. These smart…
A liquidity pool is a collection of funds locked in a smart contract that allows users to trade cryptocurrencies or tokens automatically. Instead of relying on a traditional buyer and seller, these pools use algorithms to set prices and enable instant transactions. Liquidity pools are an important part of decentralised finance, making it easier for…
Impermanent loss is a temporary reduction in the value of funds provided to a decentralised finance (DeFi) liquidity pool, compared to simply holding the assets in a wallet. This happens when the prices of the pooled tokens change after you deposit them. The bigger the price shift, the larger the impermanent loss. If the token…
A Centralised Exchange (CEX) is an online platform where people can buy, sell, or trade cryptocurrencies using a central authority or company to manage transactions. These exchanges handle all user funds and transactions, providing an easy way to access digital assets. Users typically create an account, deposit funds, and trade through the exchange’s website or…
A Decentralised Exchange, often called a DEX, is a platform that allows people to trade cryptocurrencies directly with each other without using a central authority or intermediary. Instead of relying on a company or organisation to manage trades, DEXs use smart contracts and blockchain technology to automate transactions. This means users have control over their…