Cryptocurrency Glossary
Explore key cryptocurrency, tax and investing terms and definitions
Layer 2
Layer 2 (L2) refers to a secondary framework or protocol built on top of an existing blockchain (Layer 1) to enhance its scalability, efficiency, and functionality.
Layer 3
Layer 3 in crypto refers to an application-focused layer built on top of Layer 2 networks, offering custom environments, improved interoperability, and optimized performance for specific use cases like gaming and DeFi.
Ledger
A ledger in blockchain is a decentralized, immutable record-keeping system that tracks all transactions in a transparent and secure manner. It serves as the backbone of blockchain networks, ensuring trustless and tamper-proof data management across various applications.
Ledger in crypto
In crypto, a ledger is a digital record of all transactions on a blockchain, maintained across a decentralized network of nodes. It ensures transparency, security, and immutability of transaction history.
Lido
Lido is a liquid staking protocol that lets users stake cryptocurrencies like Ethereum without locking their tokens or running their own validator. In return, users receive a liquid token (e.g., stETH) representing their staked assets and rewards.
LIFO
LIFO (Last In, First Out) is a crypto accounting method that assumes your most recently purchased assets are sold first, often lowering taxable gains during a bull market.
Lightning Network
The Lightning Network is a Layer 2 scaling solution for Bitcoin that enables instant, low-cost transactions. By processing payments off-chain, it reduces congestion and makes Bitcoin viable for micropayments and everyday use.
Limit order
A limit order lets you set the exact price you want to buy or sell crypto. It offers more control over trades — but may not execute if the market doesn't meet your price.
Liquidity Pool
A liquidity pool is a smart contract-based collection of funds used to facilitate trading, lending, and more in DeFi. It ensures continuous liquidity, allows users to earn rewards, and underpins decentralized exchanges and financial protocols.
Litecoin
A fast, low-cost cryptocurrency designed for everyday transactions. Created in 2011, it offers quicker block times and lower fees than Bitcoin, making it a popular choice for payments and cross-border transfers.
Lockup Period
A lockup period is a set time during which crypto tokens cannot be sold or transferred, preventing early investor dumps and price crashes. Common in ICOs, team allocations, and staking, lockups ensure long-term commitment and market stability.
Margin trading
Margin trading lets you borrow funds to trade with more capital than you own. It can amplify gains — but also increases the risk of losses and liquidation.
Margin trading in crypto
Margin trading in crypto lets you borrow funds to trade with more capital than you own. It can amplify gains — but also increases the risk of heavy losses and liquidation.
Market Capitalization
Market capitalization (market cap) is the total value of a cryptocurrency, calculated by multiplying price × circulating supply. It helps rank cryptos, measure stability, and compare projects beyond just price.
Maximal Extractable Value
Maximal Extractable Value (MEV) is the profit that validators or miners can make by reordering, inserting, or censoring blockchain transactions. MEV impacts Ethereum, DeFi, and DEX users, leading to higher costs, front-running, and arbitrage opportunities.