Website Specific Acronyms

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• AiON360

• Generative AI​

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• BMU

• Base Money Unit​​

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• DvP

• Delivery v Payment 

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• FTS

• Fixed Total Supply

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• GCU

• Global Currency Unit

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• GOMO

• Global Open Market Operations​

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• IFSC

• Intelligent Financial Service Contract​

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• IO

• Interest Only Repayment Loan

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• IQSM

• Intelligent Quantitative System Management

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• L1VM

• Layer 1 Virtual Machine

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• LCR

• Liquidity Coverage Ratio

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• NSFR

• Net Stable Funding Ratio

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• P&I

• Principal and Interest Repayment Loan

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• PO

• Principal Only Repayment Loan

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• RWA

• Real World Asset​

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• S1360

• Sign Once Globally

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• TVL

• Total Value Locked

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• UDiD

• Universal Digital Identity

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• VM

• Virtual Machine

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• ZKVM

• Zero Knowledge Virtual Machine

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Anchor currency:

 

An important measure for an international currency is as a unit of account, and an important measure on this dimension is its use as an “anchor currency” against which other countries may attempt to limit their exchange rate movements. The dollar’s usage as an anchor currency has increased somewhat over the past two decades. Not including the U.S., economies anchored to the dollar accounted for roughly 50 percent of world gross domestic product (GDP) by 2015. By contrast, the share of world GDP anchored to the euro was only 5 percent (not counting the euro area itself)

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API:

 

Short for “application programming interface”, a software connection that enables applications to interoperate. Corporate networks often change their API policies to extract rents, thwart competition, and consolidate power. 

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Attestations:

 

Claims backed up by cryptographic digital signatures that can vouch for the authenticity, validity, and provenance of information. For attestations to gain trust, attesters often must put something at stake, such as funds or reputation.

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Authentication:

 

Using digital signatures to prove the authenticity, validity, or identity of information and its sources. One of the main value propositions of cryptography.

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Blockchain networks:

 

Networks built on the technology of blockchains that combine the societal benefits of the earliest internet protocol networks (open access, democratic governance, user ownership rights) with the sustainable competitive use advantages - of corporate networks. 

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“Can’t be evil”:

 

Unlike corporate networks, blockchain networks can make strong commitments about their future behavior, including restraining anyone’s ability to change the system’s rules.

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Clients:

 

Software defined applications, that enable people to access and participate in underlying account service protocols and networks.

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Composability:

 

A property describing software in which library components can be reassembled into larger, more complex service compositions. Because components can be remixed and reused a component only ever has to be developed once. Composabile client service contracts underwrite - exponential - growth similar to compound interest, in general finance and Moore’s law for semiconductors.

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Consensus mechanism:

 

The rules and procedures enabling blockchain network validators to reach agreement on a common, valid version of history as well as the next state of the virtual computer (see VM). 

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Corporate networks:

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Networks that companies own and control - which tend to have advanced features and more sustainable funding compared to the early internet-era protocol networks - but they are effectively centralised, controlled from the top down and their management can change the rules of the network, at any time, for any reason.

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Cryptocurrency:

 

One use of blockchain-like networks. Many industry practitioners prefer the term “tokens” because it more aptly communicates the abstract, generalisable nature of the technology.

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Cryptography:

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The science of secure communication. Blockchain networks are termed - “crypto” - because they use cryptographic key pairs to enable authentication and attestations through digital signatures. 

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DAO:

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An acronym for "decentralised autonomous organisation" a self-governing, blockchain-based community that uses self-executing code, token voting, or some other programmatic mechanism for coordination. Many DAOs control treasuries the financial core of any blockchain network which can be used to fund development and network growth.

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Decentralisation:

 

When a network is community-owned and operated as opposed to being controlled by - central - gatekeepers and intermediaries.

 

DeFi:

 

Short for “decentralised finance” a category of blockchain-based financial applications, and financial market infrastructure - that is designed to replace financial intermediaries with software. 

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Disruptive vs. sustaining technology:

 

A theory that distinguishes between the technology that creates entirely new markets or significantly reshapes existing ones - so much so that it eventually displaces incumbents (disruptive) and technology that improves - the performance of existing products along dimensions - people already know, and value (sustaining). 

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Encapsulation:

 

A computer programming technique that creates - client-defined interfaces for units of code and other systems, thereby reducing complexity. The client does not have to understand, the internal operations of the underlying virtual machine and/or it's software to interact with their reserve account. Encapsulation makes it so much simpler to use pre-coded components - as building blocks. 

 

Federated network:

 

A variety of protocol network that doesn’t use - centralised - data centers (read "Cloud") to host people’s private data but relies on peer nodes to run their own software instances, called “servers”, to host network data. 

 

Fungible tokens:

 

Tokens that are interchangeable, meaning one can be swapped for any other in the same set. Analogous to how one $10 bill can be exchanged for any other $10 bill. Some applications include cryptocurrency, representations of national currencies (as in fiat pegged stable-coins) and as a means of payment within specific  blockchain networks (such as native tokens).

 

Hash:

 

A unique fixed-length cryptographic code - or digitalised identifier representing a piece of data. Hashes are essential to all modern cryptography and blockchain networks which use them to ensure digital security and data integrity.

 

Howey test:

 

A three-pronged legal assessment for deciding what constitutes an “investment contract”, otherwise known as a security. Based on a 1946 U.S. Supreme Court case, the Howey test looks at whether an offer or sale of assets involves - (1) an investment of money (2) within a common enterprise and (3) with a reasonable expectation of profit to be derived from the efforts of others. All three characteristics must be met for the offer to be considered a security.

 

Inside-out technologies:

 

Technologies that start inside established institutions - like tech companies. Their development tends to need significant capital and formal training, which raises their barrier to entry. Examples include mobile and cloud computing, which started inside big technology based corporations, like Apple, Google and Amazon. 

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Internet protocol:

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An open protocol that defines how to format, address, and route packets of data/information between machines on the internet. Internet protocol, or IP, comprises the networking layer of the internet tech stack, which sits above the physical device layer. 

 

Key pairs:

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Two strings of data represented by a public key and private key that are central to modern cryptographic applications. A mathematical relationship ties together each key pair such that it is easy to derive the public key from the private key but takes vast amounts of computing power to derive the private key from the public key. Key pairs are the basis for digital signatures and authentication and they are foundational to blockchain networks. 

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Killer app:

 

A software application that is so compelling it drives the adoption of a new technology or platform. Email was a killer app of the early internet. Social networks were a killer app for mobile phones. Often, killer apps exploit a new technology or platform’s unique capabilities. 

 

Layer two or L2:

 

A second-layer network designed to improve the performance of an underlying blockchain network. One implementation - called “rollups” - shifts all heavier computations off-chain - to traditional computers to process and then sends the direct results back, to the blockchain network so that it can then verify their correctness. Important for legacy blockchain network scaling.

 

Mining:

 

Performing energy-intensive computational work in exchange for token rewards to secure a blockchain network. Mining no longer applies to newer blockchain networks like Ethereum that have adopted more modern systems such as proof of stake. 

 

Moore’s law:

 

An observation that the number of transistors that can fit on computer chips roughly doubles every two years. Named after Gordon Moore, a founder of the chip company Intel, who famously articulated the concept.

 

Multiplayer vs. single-player technology:

 

A way to categorize technologies based on how much their utility depends on social context. Money and computer networks are useful only when other people are also using them (multiplayer), whereas hammers or cash registers are useful purely by themselves (single-player). Network effects are common among multiplayer technologies. 

 

Native vs. skeuomorphic:

 

A distinction between technologies that improve upon existing activities (skeuomorphic) and technologies that do what was not possible before their introduction (native). Websites on the early internet were essentially facsimiles of print brochures (skeuomorphic), only later developing more creative experiences like social networking (native). Apple popularized the term “skeuomorphic” during the Steve Jobs-era to describe computer graphics that resemble familiar objects, like a trash can icon representing deleted files. The term has evolved to mean any design thinking that is overly beholden to what came before.

 

Network:

 

At its most basic level, a list of connections - between people or things. The structure of a network - the way the nodes connect and interact - determines outcomes on the internet, including how power and money flow. There are three basic types of internet networks: protocol networks, corporate networks, and blockchain networks. 

 

Network effects:

 

An economic phenomenon whereby the value of a network grows with the addition of each new node. Whereas corporations accrued power, through new economies of scale in the industrial era, power primarily accrues through network effects on the internet. Metcalfe’s law and Reed’s law are two popular mathematical formulations of the idea.

 

Network governance:

 

How decisions get made in a network. Whereas corporate networks are tightly managed from the top down by a central planner, protocol and blockchain networks are designed to be democratic and controlled by users. 

 

NFTs:

 

Short for “non-fungible tokens”, meaning each token is unique and not interchangeable with any other. Applications include representing ownership of physical goods, digital media, intellectual property, royalty rights, in-game items, or network identifiers akin to DNS names. 

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Nodes:

 

Points of connection in a network. Nodes can be telephones, transportation hubs, connection-oriented technologies like computers or even people as in a social network. Generally, the more nodes, the more valuable the network. 

 

“Off-chain” vs. “on-chain”:

 

A distinction denoting whether a given activity takes place on a blockchain network or not. Blockchain network governance can, for instance, run either “off-chain”, meaning a coalition of community members steers it in a manner similar to protocol networks, or “on-chain”, meaning through mechanisms such as token voting, self-executing code, or a combination.

 

Open source:

 

Software that can be freely accessed, modified, distributed, and remixed by anyone. Started as a fringe political movement in the 1980s in response to the development of proprietary software -  especially by companies like Microsoft. Most code running today is now open source. 

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Permissionless:

 

An open system in which anyone can participate freely. Conversely, centralised gatekeepers use permission in business as a pretense to extract rents, thwart competition, and consolidate market power. 

 

Platform-app feedback loop:

 

A virtuous cycle whereby a platform enables new applications and those new applications make the platform more valuable. This back-and-forth creates a positive feedback loop of compounding improvements. Examples include the PC (platform) developing along with word process processors and spreadsheet software (apps), or the internet (platform) developing along with search engines, e-commerce, and social networking (apps).

 

Platform risk:

 

The hazard of building on a network that can easily take away your power, profits, and audience. A characteristic of corporate networks. Examples include when Facebook and Twitter curtailed their APIs to choke off third party software developers in the early 2010s, or when a creator builds a large audience on a social network and cannot exit the system without losing their network connections. 

 

Proof of stake (PoS):

 

A system that underlies the consensus mechanisms for many blockchain networks. Proof of stake requires blockchain network validators to “stake” collateral, or put money at risk in escrow. This cost is designed to prevent any single entity from being able to control a dominant share of the network. Contrast this with proof of work systems, which require validators to spend money on electricity. Many modern blockchain networks have adopted proof of stake over proof of work for its lower cost, higher speed, and energy efficiency. 

 

Proof of work (PoW):

 

The original system underlying the consensus mechanisms for many blockchain networks. Proof of work requires validators - often called miners - to perform computational work, which costs energy. This cost is designed to prevent any single entity from being able to control a dominant share of the network. Bitcoin still uses proof of work, but many projects, have since switched to proof of stake, which is more efficient and less environmentally impactful. 

 

Protocol:

 

Technical standards for software that enable computers to communicate with one another. Think of protocols as analogous to natural languages,which enable people to communicate. 

 

Protocol coup:

 

When the strongest nodes in a protocol network overtake it and effectively transform it into a corporate network. The threat of protocol coups is a structural weakness of federated networks. 

 

Protocol networks:

 

The original internet network type, exemplified by email and the web, known more technically as the protocols SMTP and HTTP. Protocol networks are open, permissionless systems that are controlled by communities of software developers and other network stakeholders. As the internet has evolved, attempts to build new protocol networks have mostly stalled out as they lack the features and funding to compete with corporate networks.

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Read era:

 

The first phase - of the commercial internet - circa 1990–2005. During this period early protocol networks democratised access to information through tools such as the web browser, enabling anyone to read about almost any topic through websites. While people could send email, most information flowed one way: from website to user. 

 

Read write era:

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The second phase of the commercial internet, circa 2006–2020. During this period corporate networks democratized publishing through tools such as posts on social networks, enabling anyone to write and publish to mass audiences. Corporate networks like Facebook and Twitter famously outcompeted newer attempts at protocol networks, like RSS, during this era.

 

Read write own era:

 

The third phase of the commercial internet, circa present day. During this period blockchain networks are democratizing ownership through tools such as tokens, which grant economic, governance and other rights to holders and enable internet services to be community-owned and -operated. Unlike protocol networks, blockchain networks have features and funding that can compete with read write era corporate networks.

 

RSS:

 

Short for “really simple syndication”, an open source publishing protocol that failed to compete with corporate social networks like Facebook and Twitter during the internet’s read write era. RSS’s decline directly correlated with the consolidation of network power among a few internet giants.

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S-curve:

 

A growth-over-time chart that many new technologies follow as they go from minimal to mainstream adoption. Resembles the letter “S”.

 

SMTP:

 

Short for “simple mail transfer protocol”, the open protocol that enables transmission of email. Created by Jon Postel, a researcher at the University of Southern California, in 1981, SMTP is one of the internet’s original protocol networks along with HTTP, commonly known as the web. 

 

Sinks:

 

Conduits for token outflow and tools for keeping prices balanced in a virtual economy. When sinks are too strong, they can lead to undersupply, intensified demand, and upward price pressure. When they are too weak, they can have the opposite effects. One of the best sink designs is the “access” or “fee” sink, which charges fees for network access or usage, thus aligning token prices with network demand and utility. 

 

Slashing:

 

A punishment that confiscates a validator’s staked collateral in some proof of stake blockchain networks, like Ethereum. Slashing can occur if a validator gets caught lying, such as by voting for contradictory state transitions or proposing multiple conflicting state transitions simultaneously. Slashing is a kind of “security” sink in tokenomics.

 

Stable-coins:

 

Tokens designed to maintain a stable price - usually pegged to currencies - like the U.S. dollar - or regulated algorithmically by automated market-making processes.

 

Staking:

 

The process by which validators lock tokens in code-enforced escrow accounts to help secure a proof of stake blockchain network. Staking is a kind of “security” sink in that it takes tokens out of circulation. In most systems, validators also earn token rewards for behaving honestly, meaning that staking often also entails a “security” faucet.

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State machine:

 

Computer scientist lingo for “computer”. The concept traces back to a 1936 paper by the British computer scientist Alan Turing who defined such machines as consisting of two parts: a place to store information (memory) and a means to modify that information (a processor). 

 

State transition:

 

The essence of computation. A state transition is what happens when a machine modifies its internal state, or memory, according to the logic of a processor. Blockchains are virtual computers that undergo state transitions according to their consensus mechanisms.

 

Substitutes vs. complements:

 

See “Complements vs. substitutes”.

 

Take rate:

 

The percentage of revenue passing through a network that is claimed by the network owner rather than by network users. Protocol and blockchain networks feature persistently low or no take rates while corporate networks tend to have high ones. For example, the web has zero take rate whereas the most popular social networks - Facebook, TikTok, Twitter (since rebranded X) - have take rates of 99% or higher. In comparison, most blockchain networks have low take rates in the single-digit or sub-one percent range.

 

Tech stack:

 

A set of technologies that build atop one another and work together as layers, like a computer, operating system, and software applications. A popular model of the internet, called the Open Systems Interconnection (OSI) model, identifies a seven-layer internet tech stack, including a device layer at bottom, a networking layer above that, and an application layer at the very top.

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Thick vs. thin networks:

 

Thick networks claim more profits for the center of a network, such as a corporate intermediary, and less for complementary layers, like creators, developers, and other network participants. Conversely, thin networks generate less profit for the network core and more for complements. 

 

“Tokenomics”:

 

Short for “token economics”,  a field concerning the design of incentive systems for virtual economies, as in blockchain networks. Healthy systems should balance sources of market supply and demand - such as faucets and sinks - to maintain equilibrium. 

 

Tokens:

 

Units of ownership in blockchain networks. Often thought of as digital assets or currencies, but more accurately defined as data structures that can track quantities, permissions, and other metadata for users. Tokens can be fungible, like bitcoin, or non-fungible, like NFTs. 

 

Trustlessness:

 

The state of a system in which there’s no need for a higher authority, such as an intermediary or central entity, to oversee transactions. Instead, trustless systems, like blockchain networks, can securely verify the validity of transactions all by themselves using cryptography and consensus mechanisms. In a trustless system, no one computer or network node has the power to alter the rules.

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Validators:

 

Computers that maintain the security of a blockchain network by verifying the validity of proposed transactions. Validators reach agreement on state transitions according to the rules prescribed by their consensus mechanisms. Well-designed blockchains use tokenomic incentives to ensure validators behave honestly. 

 

Wallets:

 

Software based on cryptographic key pairs that enables blockchain network interactions, such as holding and controlling tokens. In blockchain networks, wallets play a role akin to the role web browsers play for web users.

 

Web 2.0:

 

Another name for the second phase of the commercial internet, circa 2006–2020. Also known as the read write era. (See “Read write era”.)

 

Web3:

 

Another name for the third phase of the commercial internet, circa present day. Powered by blockchain networks and also known as the read write own era. 

 

Zero knowledge proofs:

 

Cryptographic techniques that can prove a claim is true while revealing no other information other than that the claim is true. Zero knowledge proofs can compress and control access to information, which has useful applications for blockchain network scalability, privacy, and regulatory compliance.

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