The ULTIMATE NFT Glossary: Terms you should know

In the world of NFTs, participants use a huge variety of terms and slang. Some of this came from the stock exchanges, and some of it just appeared in the last couple of years. To be in the topic of all events, to understand everyone and speak the same language with everyone, our team has developed the ultimate NFT Glossary. We have included all the terms you need to know. Also pay attention to the links, thanks to which you will be taken to thematic deep articles.

Airdrop

Free distribution of cryptocurrency, NFTs, tokens, etc., usually with certain conditions like inviting some people to the project, or completing a list of simple actions such as likes and reposts on the project’s social media.

All-Time High and All-Time Low

All-Time High (ATH) and All-Time Low (ATL) are the highest and lowest price a coin or token has ever reached, respectively.

Allocation

The distribution of limited assets, in this case NFTs. If the total allocation is 1,000 NFTs, this is the amount that will be distributed to all participants.

Alcoins

All cryptocurrencies except Bitcoin. They emerged after it entered the market in order to overcome the technical limitations that Bitcoin has and expand the potential of blockchain technology.

Blockchain

A technology of a decentralized (distributed), owned by no one and reliably encrypted storage of information. Essentially, it’s just a registry with records stored in blocks. For example, transaction lists can be stored there. When one block is full, a new block is created and linked to the previous one, thus forming a chain of blocks (blockchain). It is impossible to forge records because the registry is decentralized, that is, it is stored simultaneously on many devices. If someone has a record that does not match the others, it is considered invalid. All records are encrypted by means of high-level cryptography.

Blue-chip NFT collections

The so-called blue-chip NFT collections are those projects which have demonstrated a high and stable market value, and have a long-term value proposition. The team behind such a project is strong and respected by others in the industry, and the community around it is close-knit, broad and loyal. Blue-chips is the name for NFT collections, which are the best on the market.

Burning

This is the destruction or withdrawal of an NFT from circulation. Basically, a token is “burned” in order to reduce the supply and increase the value of the remaining tokens. The “burning” process occurs by sending the token to an address that no one owns. Although the NFT will still exist in the blockchain, it will not be accessed and is therefore considered “burned” or withdrawn from circulation.

CC0 license

Creative Commons Zero (CC0) License is the least restrictive form of license that allows anyone to upload, use, modify, display, or otherwise create any work under a CC0 license. This type of license opens opportunities for any use. CC0 is often an advantage of an NFT project.

DAO

A Decentralized Autonomous Organization is an organization that is controlled by computer code and a specific set of programs. It can work completely without human intervention and does not depend on it in any way (including the creators). There are a lot of nuances here. It’s up to the creators to define how and with what particular systems a DAO will work, from the soda machine, which monitors the products and pays the rent, to the full-scale large organizations, whose work is fully automated, and the human factor is reduced to zero (there are few examples of the latter due to the novelty and complexity of the technology that can provide such a thing). In practice, many NFT projects have their own DAOs, but in a slightly different form: each token owner has a proportional vote, which allows them to participate in the life of the project.

DAPP

This is an application that runs without a backend on a decentralized computer system, for example, on a blockchain. That is, all the necessary calculations are made with multiple computers in a blockchain rather than with hardware and software part of the application, which makes it much faster, more transparent and reliable.

DeFi

Decentralized Finance are a set of services and applications developed using blockchain, cryptocurrencies, tokens and smart contracts. These are integrated into a single network, offering users services that are usually provided by banks and other financial institutions. Simply put, this is a kind of alternative banking sector that can be used by people who are unwilling or unable to deal with traditional financial institutions and that has a good chance of replacing the aging traditional banking sphere over time.

Dutch auction

A type of auction often used during minting of collections. The idea is that a high starting price is announced first, and then the bids are lowered until all digital assets are sold out or until the set time runs out.

DYOR

Do Your Own Research. That is, to test the project yourself, to make sure of its legitimacy.

Farm

A lot of devices with multi-accounts that were created or bought to increase the chance to mint NFTs during giveaways.

Fiat

National paper currencies. They are also called symbolic or unsecured because their value is not backed by precious metals as it used to be before the Gold Standard was abolished, but is set by the state and only maintained by the belief that they can be exchanged for something valuable and will not become worthless the next day. The value of fiat money is regulated by the central bank of the state, which controls the issuing and the key rate at which it lends money to private banks (the money it prints itself). To put it simply, it’s our ordinary paper money.

Flipping

Buying and quickly selling an asset for a small income, which is usually repeated many times.

Floor price

The lowest fixed price for the items in the collection.

FOMO

The “Fear of Missing Out” syndrome is the irresistible desire to buy a certain currency/NFT when seeing its rapid growth. Usually this approach is not reasonable.

Hash

A mathematical function that converts a set of symbols with arbitrary values into an encrypted code of a given length. Every transaction has this code, and it is written in blocks on the blockchain. It is completely unique for each transaction and will never be repeated.

Hold

A long-term (a year or more) holding of a token in a wallet expecting its global growth. Holder is a slang word for the owner of such digital assets.

Gas

The unit of measure for the fee for trading operations in the Ethereum network. This fee is given to miners as a reward for providing computing power to the network, hence it is called gas or fuel.

Gem

Gem is a potentially lucrative asset that is usually undervalued and unnoticeable among all others.

Gwei

This is the denomination of Ethereum (ETH), the same as cents for the dollar, with 1 ETH equating to 1 billion gwei. This term is mostly used when referring to GAS, for example, the transaction fee can be 150 gwei.

ICO

An initial placement of tokens before they go public at a discounted price. This allows the company to attract more investment at the initial stage, and there is a probability that the price of tokens will greatly increase after going public (provided the team issuing them creates a sufficiently attractive product involving these tokens), which is very advantageous for early buyers.

IEO and IDO

Initial Exchange Offering and Initial DEX Offering, respectively. These are fundraising events that are conducted and controlled by a centralized exchange in the case of an IEO and in a decentralized exchange in the case of an IDO.

IPFS

InterPlanetary File System is a protocol for decentralized data storage and access. The network distributes the recorded files among the nodes and when requested to access a file, it builds a route to the nearest node to ensure the highest possible download speed. If a file is large and consists of some parts, IPFS works like BitTorrent and allows downloading different fragments from different nodes. IPFS is free, so NFT marketplaces use it to store NFTs.

KYC

“Know Your Customer” – User identification requirements for anti-money laundering, which are usually required by exchanges and ICOs. Such verification can vary, but usually passport information is needed.

Listing

The process of placing NFTs on a marketplace to begin trading.

M2E

Move-to-Earn is a relatively new model of earning, one of the main promoters of which was the STEPN project. Unlike P2E, in M2E the reward is not given for achievements in the game, but for the sports activity, which is tracked with the help of your phone sensors. Simply put, the more you walk or run, the more you earn.

Make X’s

When the price of an asset rises several times (for example, they say that it makes x10) from the level at which it was bought, it brings the buyers a net profit of 100%, 200%, 1,000%, etc. of their investment.

Mining

This is actually renting out computing power to calculate transactions and create new records, and consequently blocks inside a blockchain, as well as to check their matching with the old ones. That is, the network functions precisely at the expense of the miners, and they, in turn, are rewarded in the form of the currency of the network they work in. This reward is often a transfer fee.

Mint

Turning an ordinary picture, GIF, or track into an NFT. It appears in your wallet, and the first public record on the blockchain network is made about the owner of that token. To mint NFT means being the first on the web to claim the rights to a particular art object.

NFA

An abbreviation that stands for “not financial advice”; it means that the given information is solely the author’s opinion and personal investment decision, and is not a call to action.

NFT

“Non-fungible token”: While you can replace, say, the USDT token by another one and there will be no difference, it will not work like that with an NFT. This is a unique, one-of-a-kind token that has no equivalent. This is one of the main reasons for the value of such tokens. The second value is the possibility to leave an indisputable fact of ownership of an asset in the digital space forever. This can be done in the form of a record in that token about the transaction, seller, buyer and price, because it is impossible to fake any information in the blockchain network.

Node

A computer constantly running a certain program. A node is part of the functionality in the blockchain network that checks whether information in new blocks matches previous blocks to prevent the same currency transaction from being repeated several times.

OTC

“Over-the-Counter” is a secondary market with people selling their services or tokens directly, without intermediaries in the form of exchanges, as is common.

Pump and dump

A pump is a sudden, usually planned pumping of liquidity to sell an NFT at the highest possible price. A dump, on the other hand, is a deliberate dumping of value. These definitions usually refer to a scheme of manipulation with little-known and questionable projects, when their assets are bought up in large quantities. It boosts their price (pump) and attracts the attention of other investors, who pump it even higher. And then the manipulators simply sell out all of their assets making a good profit, but dropping the price down (dump) and leaving all of the other attracted investors at a loss.

However, these terms apply in general to any situation where the price of something rises or falls sharply, because it is always connected in one way or another to those who swing the price and dump it, whether planned or not.

P2E

Play-to-Earn games are projects with their own economy, which allows players to earn real money through staking, farming in-game currency or creating tokens within the game. All items and resources in these games exist inside the blockchain, making it impossible to argue about their uniqueness and belonging to a particular user.

Roadmap

Project developers’ plans about how this project will develop. It contains the tasks that the developers set for themselves and the timeline for their implementation. A roadmap is one of the main indicators of the reliability of the project, as no one will be interested in the project if they do not even know what to expect from it. But as practice shows, often large-scale and competent marketing completely replaces the roadmap.

Royalty

In the NFT world, it is a bonus given to the author for each resale of his work in the form of a certain percentage of the amount received by the seller.

Rug pull

A slang term for when developers leave a project or give it up while taking money from investors.

Scam

It is an investment project that, for whatever reason, stopped (or did not even planned) to pay out money to depositors. In a broader sense, it is generally any possible money cheating.

Shilling

Any online activity aimed at promoting projects for the sake of benefit. Shilling comes in all forms and sizes, from posts in Discord channels and small Twitter accounts with links to their projects to John McAfee and Elon Musk trying to influence the whole market.

Smart contract

A program that checks if the seller and the buyer fulfilled all conditions during the exchange of digital assets. If so, it completes the transaction; if not, it returns the assets to the owner. Inside the blockchain, smart contracts perform a lot of functions. For example, the ability to change an NFT if there is another NFT in your collection is also implemented thanks to them, but these functions are all mostly out of the sight of the average user.

With tokens and smart contracts, you can digitize anything from the real world and trade it in cryptocurrency.

Staking

A form of passive income from cryptocurrency, where the reward is accrued simply for keeping the currency in your wallet. Such a process uses Proof of Stake (PoS) algorithm, proof of ownership share, that is, the more currency in your wallet, the higher the reward.
The main risk here is the possibility of a falling price of the asset held; the lower is the exchange rate of the coin, the lower will be 10%, 20% or 100% of the reward.

Swap

An exchange of one asset for another at a certain rate between two users or between a user and an exchange.

Usability

The ease of use of an application or a site. However, in the NFT world it is the criterion that testifies the usefulness of the token for the buyer (the more common term is Utility). The question is whether a particular NFT gives access to the private chat, the exclusive right to use it or a discount in other projects, or it’s just a picture (then they say “zero Usability”).

Volatility

In traditional financial markets, volatility is a price spread of an asset over a period of time. It shows how much a security fluctuates around its average price. As a general rule, the higher the volatility, the riskier the investment in that asset. In the NFT market, the term has the same meaning.

WETH

Wrapped ETH is a wrapped version of the ETH coin. Since most of the DeFi-applications in Ethereum network work with ERC-20 tokens and ETH coin does not belong to it (it was released before this standard was accepted), they decided to release WETH. It simplifies the Ethereum exchange process.

Since Ethereum’s native blockchain currency was created before the ERC-20 standard, it cannot be a medium of exchange directly for other ERC-20 standard cryptocurrencies. And WETH can be issued in several dozen blockchains, including Polygon, Binance Smart Chain, Solana, Near, Avalanche and Fantom. Wrapping ETH has no effect on its value, and the ratio remains 1:1.

Whales

This term is used to refer to large holders of digital assets, whose actions often have a significant impact on the price of those assets.

Whitelist

A limited list of people (mostly project partners or active users who supported the project before its launch) who are guaranteed to buy the NFT of a project,as usually the number of those willing to mint exceeds the number of tokens. The conditions of getting into WL are very different, and most often even in case you meet them, it’s a matter of luck. That said, you should at least have accounts on Twitter and Discord as these are the most popular social media for NFT users, and it is there that details about WL and airdrops are
most often posted

Yield Farming

A way to earn cryptocurrency using another one you already own. In a broad sense, this is any effort to make your crypto assets work and get the maximum profit from these assets.