Let’s get straight to it
1. FDV- Fully Diluted Valuation:
It’s the total market value of a cryptocurrency if all its tokens or coins were in circulation
Here is how to get the FDV= Current Price×Total Supply
For example, if a token is priced at $10
And its total supply is $1billion tokens, the FDV would be FDV=CurrentPrice×TotalSupply
$10 × 1,000,000,000 = $10 billion
Note: some projects do not have FDV because there is no total supply e.g. Eth
2. Market Cap:
or market capitalization, is the number of tokens currently available and traded in the market.
For instance, if a project has 100 million tokens in circulation, the market cap would be:
Market Cap = Current Price × Circulating Supply
$10×100,000,000=$1 billion
3. TVL — Total Value Locked:
TVL refers to the total amount of assets locked in a decentralized finance (DeFi) protocol, such as a lending platform, staking pool, or decentralized exchange (DEX)
A high TVL often indicates greater trust and usage.
4. APY — Annual Percentage Yield
APY represents the annualized return on an investment, taking into account compound interest. It’s commonly used in staking, yield farming, and savings protocols.
APY helps investors compare the potential returns of different crypto investments.
5. ROI — Return on Investment
ROI measures the profitability of an investment, calculated as a percentage of the initial investment.
ROI is a universal metric used to evaluate the success of an investment, whether in crypto or traditional finance.
6. ATH — All-Time High
ATL is the lowest price a cryptocurrency has ever reached.
ATL can be a psychological benchmark for investors looking for bargain-buying opportunities.
7. CEX — Centralized Exchange
A CEX is a cryptocurrency exchange operated by a centralized entity (e.g., Binance, Coinbase). Users trade on these platforms, but they don’t have full control over their funds.
CEXs are user-friendly and often have high liquidity, but they come with risks like hacking or regulatory issues.
8. DEX — Decentralized Exchange
A DEX is a peer-to-peer exchange that operates without a central authority (e.g., Uniswap, PancakeSwap). Users retain control of their funds through self-custody wallets.
DEXs align with the decentralized ethos of crypto but may have lower liquidity and a steeper learning curve.
9. NFT — Non-Fungible Token
NFTs are unique digital assets that represent ownership of items like art, collectibles, or virtual real estate.
NFTs have revolutionized digital ownership and created new opportunities for creators and investors.
10. DAO — Decentralized Autonomous Organization
A DAO is an organization governed by smart contracts and community voting, rather than a central authority.
DAOs empower communities to make collective decisions, often in DeFi or NFT projects.
11. KYC — Know Your Customer
KYC refers to the process of verifying the identity of users, typically required by centralized exchanges and financial institutions.
KYC helps prevent fraud and money laundering but can conflict with the privacy-focused ethos of crypto.
12. AML — Anti-Money Laundering
AML refers to regulations and practices designed to prevent illegal activities like money laundering through crypto.
AML compliance is crucial for exchanges and projects to operate legally and avoid penalties.
13. PoW — Proof of Work
PoW is a consensus mechanism used by blockchains like Bitcoin, where miners solve complex mathematical problems to validate transactions.
PoW is secure but energy-intensive, leading to debates about sustainability.
14. PoS — Proof of Stake
PoS is a consensus mechanism where validators are chosen based on the number of tokens they “stake” or lock up as collateral.
PoS is more energy-efficient than PoW and is used by blockchains like Ethereum 2.0 and Cardano.
15. DeFi — Decentralized Finance
DeFi refers to financial services (e.g., lending, borrowing, trading) built on blockchain technology, operating without intermediaries.
DeFi aims to democratize finance but comes with risks like smart contract vulnerabilities.
16. CeFi — Centralized Finance
CeFi refers to traditional financial services offered by centralized entities in the crypto space
CeFi bridges the gap between traditional finance and crypto but carries counterparty risk.
17. IL — Impermanent Loss
IL occurs when providing liquidity to a decentralized exchange (DEX) and the value of the deposited assets changes compared to holding them.
IL is a key risk for liquidity providers in DeFi.
18. TPS — Transactions Per Second
A measure of a blockchain’s scalability, indicating how many transactions it can process per second.
Higher TPS means faster and more efficient networks.
19. L1 — Layer 1
Refers to the base layer of a blockchain (e.g., Bitcoin, Ethereum).
L1 blockchains are the foundation for building decentralized applications (dApps).
20. L2 — Layer 2
Refers to scaling solutions built on top of Layer 1 blockchains (e.g., Lightning Network for Bitcoin, Base for Ethereum).
L2 solutions improve scalability and reduce transaction costs.
That’s a wrap.
Hope you find this useful.
From FDV to IL, learn 20 useful crypto acronyms and terms was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.