100,000 Questions and Answers about Cryptocurrencies 4

What is a sharding? Sharding is a technique used to improve the scalability of a blockchain by dividing the network into smaller pieces called shards. Each shard can process transactions independently, increasing overall throughput.

What is a tokenomics? Tokenomics refers to the economic design and incentives of a cryptocurrency token, including its supply, distribution, use cases, and potential for appreciation.

What is a governance token? A governance token grants holders voting rights in the decisions made by a decentralized organization or protocol. Holders can vote on proposals to change parameters or add new features.

What is a token swap? A token swap involves converting one token to another, often as part of a project's migration to a new blockchain or token standard. Token swaps can be facilitated by decentralized exchanges or dedicated swap services.

What is a flash loan? A flash loan is a type of loan in DeFi that allows users to borrow funds without collateral, provided the loan is repaid within the same transaction. Flash loans enable complex arbitrage opportunities and other financial strategies.

What is a cryptocurrency exchange? A cryptocurrency exchange is a platform that allows users to buy, sell, and trade different cryptocurrencies. Exchanges provide liquidity and price discovery for various crypto assets.

What is a limit order? A limit order is a type of order placed on a cryptocurrency exchange that specifies the maximum or minimum price at which a buyer or seller is willing to trade. Limit orders allow traders to set their desired price.

What is a market order? A market order is an order placed on a cryptocurrency exchange that is executed immediately at the best available price. Market orders are used when traders want to buy or sell immediately.

What is slippage in trading? Slippage occurs when the price of a cryptocurrency changes between the time an order is placed and the time it is executed. This can result in a different execution price than what was expected.

What is a stop-loss order? A stop-loss order is a type of order that automatically sells a cryptocurrency when it reaches a specified price, limiting potential losses. It is used as a risk management tool.

What is fiat currency? Fiat currency is government-issued money that is not backed by a physical commodity like gold. It derives its value from the trust and credit of the issuing government.

What is a stablecoin peg? A stablecoin peg refers to the mechanism that keeps a stablecoin's value stable, often by maintaining a 1:1 ratio with a fiat currency or commodity.

What is a coin burn? A coin burn is the process of permanently removing coins from circulation, usually by sending them to an unspendable address. This reduces the total supply and can increase the value of remaining coins.

What is a token vesting schedule? A token vesting schedule determines the rate at which tokens are released to team members or investors over a period of time. It is used to align incentives and prevent dumping of tokens.

What is a blockchain explorer? A blockchain explorer is a web-based tool that allows users to search and view information about blocks, transactions, and addresses on a blockchain. It provides transparency into blockchain activity.

What is a DApp (Decentralized Application)? A DApp (Decentralized Application) is an application that runs on a blockchain and uses smart contracts to execute transactions and provide services. DApps are censorship-resistant and do not rely on a central authority.

What is an atomic swap? An atomic swap is a technique that allows users to directly exchange one cryptocurrency for another without using a centralized exchange. It is a trustless and peer-to-peer transaction.

What is a cold staking? Cold staking is a staking mechanism that allows users to earn rewards while keeping their coins securely stored offline in a cold wallet.

What is a hard cap and soft cap in an ICO? A hard cap is the maximum amount of funds that can be raised during an ICO, while a soft cap is the minimum amount needed for the project to proceed. If the soft cap is not reached, the ICO may be canceled.

What is a crypto winter? Crypto winter refers to a prolonged period of bearish market conditions in the cryptocurrency market, characterized by falling prices and decreased trading activity.