Glossary
Account
An object containing an address, balance, nonce and optional storage and code. An account can be a contract account or an EOA (externally owned account).
Address
Most generally, this represents an EOA or contract that can receive (destination address) or send (source address) transactions on the blockchain. More specifically, it is the right-most 160 bits of a Keccak hash of an ECDSA public key.
Arbitrage
Making buy and sell transactions of the same asset at the same time and profiting from a difference in prices. Typically done across different markets, it is also possible to do by manipulating transaction ordering within the same block.
Assert
In Solidity, assert(false) compiles to 0xfe, an invalid opcode, which uses up all remaining gas and reverts all changes. When an assert() statement fails, something very wrong and unexpected should be happening, and you will need to fix your code. You should use assert to avoid conditions which should never, ever occur.
Back running
The act of monitoring the transaction pool for a particular type of transaction (such as an oracle updating token price), then submitting a new transaction to take advantage of the previous one immediately afterwards (such as executing a liquidation of an on-chain loan after the oracle price update).
Block
A block is a collection of required information (a block header) about the comprised transactions, and a set of other block headers known as ommers. It is added to the Ethereum network by miners.
Blockchain
In Ethereum, a sequence of blocks validated by the proof-of-work system, each linking to its predecessor all the way to the genesis block. This varies from the Bitcoin protocol in that it does not have a block size limit; it instead uses varying gas limits.
Bytecode
Abstract instruction set designed for efficient execution by a software interpreter or a virtual machine. Unlike human readable source code, bytecode is expressed in numeric format.
Byzantium fork
Byzantium is the first of two hard forks for the Metropolis development stage. It included EIP-649: Metropolis Difficulty Bomb Delay and Block Reward Reduction, where the Ice Age (see below) was delayed by 1 year, and the block reward was reduced from 5 to 3 ether.
Compiling
Converting code written in a high-level programming language (e.g. Solidity) into a lower level language (e.g. EVM bytecode).
Consensus
When numerous nodes, usually most nodes on the network, all have the same blocks in their locally validated best block chain. Not to be confused with "consensus rules".
Consensus rules
The block validation rules that full nodes follow to stay in consensus with other nodes. Not to be confused with "consensus".
Constantinople
The second part of the Metropolis stage, planned for mid-2018. Expected to include a switch to hybrid Proof-of-Work/Proof-of-Stake consensus algorithm, among other changes.
Contract account
An account containing code that executes whenever it receives a transaction from another account (EOA or contract).
Contract creation transaction
A special transaction, with the "zero address" as the recipient, that is used to register a contract and record it on the Ethereum blockchain (see "zero address").
DAO
Decentralized Autonomous Organization. Companies and other organizations which operate without hierarchical management. Also may refer to a contract named "The DAO" launched on 30th April 2016, which was then hacked in June 2016 and ultimately motivated a hard fork (codenamed DAO) at block #1,192,000 which reversed the hacked DAO contract, and caused Ethereum and Ethereum Classic to split into two competing systems.
DApp
Decentralized Application. At a minimum, it is a smart contract and a web user-interface. More broadly, a DApp is a web application that is built on top of open, decentralized, peer-to-peer infrastructure services. In addition, many DApps include decentralized storage and/or message protocol and platform.
Deed
Non-fungible token (NFT) standard introduced by the ERC721 proposal. Unlike ERC20 tokens, deeds prove ownership and are not interchangeable, though they are not recognized as legal documents in any jurisdiction, at least not currently (see also "NFT").
DEFI
Short for Decentralized Finance referring to financial smart contracts, protocols, and decentralized applications built on Ethereum.
DEX
Decentralized Exchange
Difficulty
A network-wide setting that controls how much computation is required to produce a proof of work.
Digital signature
A digital signing algorithm is a process by which a user can produce a short string of data called a "signature" of a document using a private key such that anyone with the corresponding public key, the signature, and the document can verify that (1) the document was "signed" by the owner of that particular private key, and (2) the document was not changed after it was signed.
ECDSA
Elliptic Curve Digital Signature Algorithm, or ECDSA, is a cryptographic algorithm used by Ethereum to ensure that funds can only be spent by their owners.
EIP
Ethereum Improvement Proposals describe proposed standards for the Ethereum platform. An EIP is a design document providing information to the Ethereum community, describing a new feature or its processes or environment. For more information, see https://github.com/ethereum/EIPs (see also "ERC").
Entropy
In the context of cryptography, lack of predictability, or level of randomness. When generating secret information, such as private keys, algorithms usually rely on a source of high entropy to ensure the output is unpredictable.
ENS
Ethereum Name Service. For more information, see https://github.com/ethereum/ens/ .
EOA
Externally Owned Account. Accounts created by or for human users of the Ethereum network.
ERC
Ethereum Request for Comments, a label given to some EIPs which attempt to define a specific standard of Ethereum usage.
Ethash
A Proof-of-Work algorithm for Ethereum 1.0. For more information, see https://github.com/ethereum/wiki/wiki/Ethash .
Ethereum 2.0 (Eth2)
Ethereum 2.0 (Eth2) is the next phase of Ethereum shifting from a Proof of Work to Proof of Stake consensus algorithm. Eth2 will improve issues from scalability, security, and usability for the network. Phase 0 is the first phase for Eth2.
Ether
Ether is the native cryptocurrency used by the Ethereum ecosystem, which covers gas costs when executing Smart Contracts. Its symbol is Ξ, the Greek uppercase Xi character.
Event
An event allows the use of EVM logging facilities. DApps can listen for events and use them to trigger JavaScript callbacks in the user interface. For more information, see http://solidity.readthedocs.io/en/develop/contracts.html#events .
EVM
Ethereum Virtual Machine, a stack-based virtual machine which executes bytecode. In Ethereum, the execution model specifies how the system state is altered given a series of bytecode instructions and a small tuple of environmental data. This is specified through a formal model of a virtual state machine.
EVM assembly language
A human-readable form of EVM bytecode.
Fallback function
A default function called in the absence of data or a declared function name.
Faucet
A service that dispenses funds in the form of free test ether that can be used on a testnet.
Finney
A denomination of ether. 10 ** 15 finney = 1 ether.
Flash loan
A loan that is borrowed and repaid in the same transaction. Flash loans allow users to borrow tokens without any collateral and use them for DeFi activities such as arbitrage and liquidation.
Fork
This term assumes two main meanings: a change in protocol causing the creation of an alternative chain, or a temporal divergence in two potential block paths during mining.
Frontier
The initial test development stage of Ethereum, which lasted from July 2015 to March 2016.
Front running
The act of monitoring the transaction pool for a particular type of transaction (such as purchasing an Ethereum domain name), then submitting the same transaction with a higher gas fee to ensure it goes through instead of the targeted transaction.
Futures
Derivative financial contracts which require transacting parties to transact at a predetermined future date and price. Upon expiration of the contract, both buyer and seller must exchange the underlying asset at the set price regardless of its market price.
Ganache
Personal Ethereum blockchain which you can use to run tests, execute commands, and inspect state while controlling how the chain operates.
Gas
A virtual fuel used in Ethereum to execute smart contracts. The Ethereum Virtual Machine uses an accounting mechanism to measure the consumption of gas and limit the consumption of computing resources (see "Turing complete").
Gas limit
The maximum amount of gas a transaction or block may consume.
Genesis block
The first block in a blockchain, used to initialize a particular network and its cryptocurrency.
Geth
Go Ethereum. One of the most prominent implementations of the Ethereum protocol, written in Go.
Hard fork
A hard fork, also known as a Hard-Forking Change, is a permanent divergence in the blockchain; one commonly occurs when non-upgraded nodes can’t validate blocks created by upgraded nodes that follow newer consensus rules. Not to be confused with fork, soft fork, software fork or Git fork.
Hash
fixed-length fingerprint of variable-size input, produced by a hash function.
HD wallet
A wallet using the Hierarchical Deterministic (HD Protocol) key creation and transfer protocol (BIP32).
HD wallet seed
An HD wallet seed, or seed, is a value used to generate the master private key and master chain code for an HD wallet. The wallet seed can be represented by mnemonic words, making it easier for humans to copy, backup and restore private keys.
Homestead
The second development stage of Ethereum, launched in March 2016 at block #1,150,000.
Ice Age
A hard fork of Ethereum at block #200,000 to introduce an exponential difficulty increase (aka Difficulty Bomb), motivating a transition to Proof-of-Stake.
IDE
Short for Integrated Development Environment, an integrated user interface that typically combines a code editor, compiler, runtime, and debugger.
Immutable Deployed Code Problem
Once a contract’s (or library’s) code is deployed it becomes immutable. Standard software development practices rely on being able to fix possible bugs and add new features, so this represents a challenge for smart contract development.
Internal transaction (also "message")
A transaction sent from a contract account to another contract account or an EOA.
IPFS
The Inter Planetary File System is a protocol, a network and an open-source project designed to create a content-addressable, peer-to-peer method of storing and sharing hypermedia in a distributed file system.
Istanbul
The eight development stage of Ethereum, launched at block #9,069,000
Keccak256
Cryptographic hash function used in Ethereum. Keccak256 was standardized as SHA-3.
Keystore File
A JSON-encoded file that contains a single (randomly generated) private key, encrypted by a passphrase for extra security.
Layer 2 (L2)
Layer 2 refers to several approaches to handle transactions off the main Ethereum chain. These allow for higher scalability of the network and reduced transaction fees. Some examples include Optimistic and Zero-Knowledge (ZK) Rollups, Validium, Plasma and State Channels.
Library
A library in Ethereum is a special type of contract that has no payable functions, no fallback function, and no data storage. Therefore, it cannot receive or hold ether, or store data. A library serves as previously deployed code that other contracts can call for read-only computation.
Lightweight client
A lightweight client is an Ethereum client that does not store a local copy of the blockchain, or validate blocks and transactions. It offers the functions of a wallet and can create and broadcast transactions.
Liquidation
In Defi, it refers to the process of selling assets off from an under-collateralized loan.
Merkle Patricia Tree
A data structure used in Ethereum to efficiently store key-value pairs.
Message
An internal transaction that is never serialized and only sent within the EVM.
Message Call
The act of passing a message from one Account to another. If the destination account is associated with EVM Code, then the VM will be started with the state of said Object and the Message acted upon.
Metropolis
Metropolis is the third development stage of Ethereum, launched in October 2017.
MEV
Short for Maximal Extractable Value (previously Miner Extractable Value), it refers to the value that a miner or validator are able to obtain from reordering transactions within the blocks they produce, on top of the block reward and transaction fees they normally benefit from. Transactions leading to MEV include arbitrage and liquidations.
Miner
A network node that finds valid proof of work for new blocks, by repeated hashing.
Mist
The first Ethereum-enabled browser, built by the Ethereum Foundation. It contains a browser based wallet that was the first implementation of the ERC20 token standard (Fabian Vogelsteller, author of ERC20, was also the main developer of Mist). Mist was also the first wallet to introduce the camelCase checksum (EIP-55). Mist runs a full node, and offers a full DApp browser with support for Swarm-based storage and ENS addresses.
Network
Referring to the Ethereum network, a peer-to-peer network that propagates transactions and blocks to every Ethereum node (network participant).
NFT
A non-fungible token (also known as a "deed"). This is a token standard introduced by the ERC721 proposal. NFTs can be tracked and traded, but each token is unique and distinct; they are not interchangeable like ERC20 tokens. NFTs can represent ownership of digital or physical assets.
Node
A software client that participates in the network.
Nonce
In cryptography, a value that can only be used once. There are two types of nonce used in Ethereum. (1) An account nonce: A transaction counter in each account, which is used to prevent replay attacks. (2) Proof of work nonce: The random value in a block that was used to satisfy the proof of work.
Private key
The secret number that allows Ethereum users to prove ownership of an account or contracts, by producing a digital signature (see public key, address, ECDSA).
Private transaction
A transaction that bypassed the Ethereum transaction pool and was sent directly to miners.
Proof-of-Stake (PoS)
Proof-of-Stake is a method by which a cryptocurrency blockchain protocol aims to achieve distributed consensus. Proof-of-Stake asks users to prove ownership of a certain amount of cryptocurrency (their "stake" in the network) in order to be able to participate in the validation of transactions.
Proof-of-Work (PoW)
A piece of data (the proof) that requires significant computation to find. In Ethereum, miners must find a numeric solution to the Ethash algorithm that meets a network-wide difficulty target.
Public key
A number, derived via a one-way function from a private key, which can be shared publicly and used by anyone to verify a digital signature made with the corresponding private key.
Receipt
Data returned by an Ethereum client to represent the result of a particular transaction, including a hash of the transaction, its block number, the amount of gas used and, in case of deployment of a Smart Contract, the address of the Contract.
Re-entrancy attack
An attack that consists of an Attacker contract calling a Victim contract function in such a way that during execution the Victim calls the Attacker contract again, recursively. This can result, for example, in the theft of funds by skipping parts of the Victim contract that update balances or count withdrawal amounts.
Reward
An amount of ether included in each new block as a reward by the network to the miner who found the Proof-of-Work solution.
Sandwich attack
The act of monitoring the transaction pool for a sufficiently valuable transaction (such as a large trade on a decentralized exchange), then submitting two transactions 'sandwiching' the target transaction. The first one immediately before the target pushes price in one direction, while the second one immediately after the target does the opposite. The attacker profits from the arbitrage between their two transactions.
Satoshi Nakamoto
The name used by the person or people who designed Bitcoin, created its original reference implementation, and were the first to solve the double-spend problem for digital currency. Their real identity remains unknown.
SHA
The Secure Hash Algorithm (SHA) is a family of cryptographic hash functions published by the National Institute of Standards and Technology (NIST).
Serenity
The fourth and final development stage of Ethereum. Serenity does not yet have a planned release date.
Smart contract
A program which executes on the Ethereum computing infrastructure.
Solidity
A procedural (imperative) programming language with syntax that is similar to JavaScript, C++ or Java. The most popular and most frequently used language for Ethereum smart contracts. Created by Gavin Wood (co-author of this book).
Solidity inline assembly
EVM assembly language in a Solidity program. Solidity’s support for inline assembly makes it easier to write certain operations.
Spurious Dragon
A hard fork of the Ethereum blockchain, which occurred at block #2,675,000 to address more denial of service attack vectors, and another state clearing; see "Tangerine Whistle". Also, a replay attack protection mechanism.
Stablecoin
Tokens that are pegged to the price of a separate stable asset, most commonly with the US Dollar. Different approaches exist including centralized reserves and algorithmic collateral.
Swarm
A decentralized (P2P) storage network, used along with Web3 and Whisper to build DApps.
Szabo
A denomination of ether. 10^12 szabo = 1 ether.
Tangerine Whistle
A hard fork of the Ethereum blockchain, which occurred at block #2,463,000 to change the gas calculation for certain I/O-intensive operations and to clear the accumulated state from a denial of service attack, which exploited the low gas cost of those operations.
Testnet
Short for "test network", a network used to simulate the behavior of the main Ethereum network.
TradFi
Short for Traditional Finance, referring to the mainstream non-blockchain finance industry.
Transaction
Data committed to the Ethereum Blockchain signed by an originating account, targeting a specific address. The transaction contains metadata such as the gas limit for the transaction.
Transaction Pool
Also known as Mempool, the transaction pool refers to the collection of pending transactions that have been created by users and are pending confirmation by miners.
Truffle
One of the most commonly used Ethereum Development Frameworks.
Turing complete
A system of data-manipulation rules (such as a computer’s instruction set, a programming language, or a cellular automaton) is said to be "Turing complete" or "computationally universal" if it can be used to simulate any Turing machine. The concept is named after English mathematician and computer scientist Alan Turing.
Vitalik Buterin
Vitalik Buterin is a Russian–Canadian programmer and writer primarily known as the co-founder of Ethereum and as the co-founder of Bitcoin Magazine.
Vyper
A high-level programming language, similar to Serpent, with Python-like syntax. Intended to get closer to a pure-functional language. Created by Vitalik Buterin.
Wallet
Software that holds private keys. Used to access and control Ethereum accounts and interact with Smart Contracts. Keys need not be stored in a wallet, and can instead be retrieved from an offline storage (e.g. a memory card or paper) for improved security. Despite the name, wallets never store the actual coins or tokens.
Web3
The third version of the web. First proposed by Gavin Wood, Web3 represents a new vision and focus for web applications: from centrally owned and managed applications, to applications built on decentralized protocols.
Wei
The smallest denomination of ether. 10^18 wei = 1 ether.
Whisper
A decentralized (P2P) messaging service. It is used along with Web3 and Swarm to build DApps.
Zero address
A special Ethereum address, composed entirely of zeros, that is specified as the destination address of a contract creation transaction.