CuBit™ Glossary
January 2024
Author: Sudato M. O’Benshee
About the Author: Sudato M. O’Benshee is the principal architect of CuBit™ and a founder of Universal Real Estate Wealth Protection Solutions, LLC™.
©2024 Universal Real Estate Wealth Protection Solutions, LLC™ All Rights Reserved.
CuBit™ Dictionary are lists of key terms that are important to the development and understanding of crypto in general and CuBit™ specifically. You may also find our FAQs (frequently asked questions) page helpful as you learn more about CuBit™.
CuBit™ Dictionary
This section contains the CuBit™ Dictionary. These are key terms related to both crypto in general and CuBit™ specifically.
Term | Definition | Source |
Accredited Investor | An accredited investor is an individual who has a net worth higher than $1 million, excluding the value of their primary residence. You may also qualify if you have an annual income in the previous two years greater than $200,000 or, if married, $300,000 in combined spousal income, and expect to maintain that level for the following year. A director, executive officer or general partner of the company issuing the securities is also considered an accredited investor. | (Bank, 2022) |
Address | The identifier where a transaction is sent. Derived from a user’s public key, which originates from the private key by asymmetric key cryptography. In Ethereum, the public key is 512 bits, or 128 hexadecimal characters, and is hashed (i.e., uniquely represented) with a Keccak-256 algorithm, which transforms it into 256 bits or 64 hexadecimal characters. The last 40 hexadecimal characters are the public address, which usually carries the pre x “Ox.” After-repair value (ARV) is an estimate of the value of a property after it’s repaired. This serves as a proxy for the market value of the price. The most common use of ARV is in flipping. After Repair Value (ARV) house flipping, when an investor buys a distressed house, fixes it up then sells it, typically within a year. ARV is the sum of the purchase price plus the value of the renovations. If the property hasn’t traded recently, an appraiser can still estimate a market value by benchmarking it against peers with similar locations, structures and lot characteristics. | (Harvey, Rmachandran, & Sandoro, 2021)
(Sharestates.com, 2022) |
Airdrop | The free distribution of tokens into wallets. For example, Uniswap governance airdropped 400 tokens into every Ethereum address that had used its platform. | (Harvey, Rmachandran, & Sandoro, 2021) |
Anti-Money Laundering (AML) | A common compliance regulation designed to detect and report suspicious activity related to illegally concealing the origins of money. | (Harvey, Rmachandran, & Sandoro, 2021) |
Appreciation | An increase in value of an asset over time. Appreciation may be driven by changes in the market or may be forced by improving the underlying asset. | (Streetman, 2021) |
As-is, where-is | The “as is where is” clause stems from an English legal doctrine known as the “caveat emptor” rule which is now part of Singapore law. In Latin, “caveat emptor” means “let the buyer beware”.
This principle puts the risks and burdens of a transaction on the buyer, and it is the buyer’s duty to do his due diligence and checks when deciding whether to go ahead with the transaction. Therefore, if a property is being sold on an “as is where is” basis, this means that it is being sold in its current condition, whatever this condition happens to be.
As the buyer, you are deemed to have checked the property for defects of quality (even if you haven’t done so) and have found it acceptable. | (Ying, 2018) |
Asymmetric Key Cryptography | A means to secure communication.
Cryptocurrencies have two keys: Public (everyone can see) and private (secret and only for the owner). The two keys are connected mathematically in that the private key is used to derive the public key: With current technology, it is not feasible to derive the private key from the public key (hence, the description “asymmetric”). Users can receive a payment to their public address and spend it with their private key. Also see symmetric key cryptography. | (Harvey, Rmachandran, & Sandoro, 2021) |
Atomic | A provision that causes contract terms to revert as if tokens never left the starting point, if any contract condition is not met. An important feature of a smart contract. | (Harvey, Rmachandran, & Sandoro, 2021) |
Automated Market Maker (AMM) | A smart contract that holds assets on both sides of a trading pair and continuously quotes a price for buying and for selling. Based on executed purchases and sales, the contract updates the asset size behind both the bid and the ask and uses this ratio to de ne a pricing function. | (Harvey, Rmachandran, & Sandoro, 2021) |
Bad Debt Buying | Debts which someone holds, and they are unable, or unwilling to collect as they are usually purchased at a fraction of the face value. The buyer then attempts collection through all lawful means and approaches the debtor with a willingness to initiate a payment plan, settle for less than the face value, or both. Although some debts purchased this way will be uncollectable, those which do collect usually yield anywhere from two to ten times the amount invested. | |
Bargain and Sale Deed | This type of real estate deed is used in the sale or transfer of residential real estate; however, it offers no guarantee that the property is free of debts or liens. It only states that the grantor is the titleholder, and little else. As with a quitclaim deed, the grantee would acquire any liens in place against the property along with the title. | (Freer, 2022) |
Barter | A peer-to-peer exchange mechanism in which two parties are exactly matched. For example, A has two pigs and needs a cow. B has a cow and needs two pigs.
There is some debate as to whether barter was the first method of exchange. For example, David Graeber argues that the earliest form of trade was debit credit. People living in the same village gave each other “gifts,” which by social consensus had to be returned in future by another gift that is usually a little more valuable (interest).
People kept track of exchanges in their minds as it was only natural and convenient to do so since there is only a handful sharing the same village. Coinage comes into play many, many years later with the rise of migration and war, with war tax being one of the very first use cases. | (Harvey, Rmachandran, & Sandoro, 2021) |
Barter currency / Barter | A unique type of cryptocurrency focused on trading for assets rather than exchanging on a cryptocurrency exchange. The first barter cryptocurrency currency was TROPTIONS, but there are several related tokens currently available. | (Streetman, 2021) |
Basis | The cost of acquiring and/or developing an asset. The basis is used as your original cost of an asset when assessing taxable gains. | (Streetman, 2021) |
Basis Point | One basis point is one tenth of 1% or .0001 | |
Bitcoin | The original and most popular cryptocurrency. It has by far the greatest market value and the best liquidity of any cryptocurrency. | (Streetman, 2021) |
Blockchain | A decentralized ledger invented in 1991 by Haber and Stornetta, in which every node has a copy. Can be added to through consensus protocol, but its history is immutable. Also visible to anyone. | (Harvey, Rmachandran, & Sandoro, 2021) |
Blockchain | A blockchain is a distributed database shared among computer network nodes. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions.
The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.
One key difference between a typical database and a blockchain is how the data is structured. A blockchain collects information together in groups, known as blocks, that hold sets of information. Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain. All new information that follows that freshly added block is compiled into a newly formed block that will then also be added to the chain once filled. | (Hayes, Blockchain Facts: What Is It, How It Works, and How It Can Be Used, 2022) |
Blockchain | A growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. The blockchain is where records of cryptocurrency transactions are stored. When properly implemented and independently maintained, the records on the blockchain are immutable. | (Streetman, 2021) |
Bonding Curve | A smart contract that allows users to buy or sell a token using a fixed mathematical model. For example, consider a simple linear function in which the token equals supply: In this case, the first token would cost 1 ETH and the second token 2 ETH, thereby rewarding early participants. It is possible to have different bonding curves for buying and selling. A common functional form is a logistic curve. | (Harvey, Rmachandran, & Sandoro, 2021) |
Bricked Funds | Funds trapped in a smart contract due to a bug in the contract. | (Harvey, Rmachandran, & Sandoro, 2021) |
Bridge Loan | A bridge loan is a short-term loan used until a person or company secures permanent financing or removes an existing obligation. Bridge loans are short term, up to one year, have relatively high interest rates, and are usually backed by some form of collateral, such as real estate or inventory. | (Kagan, 2022) |
Burn | The removal of a token from circulation, which thereby reduces the supply of the token.
Achieved by sending the token to an unowned Ethereum address or to a contract that is incapable of spending. An important part of many smart contracts, for example, occurs when someone exits a pool and redeems the underlying assets.
A type of return from an asset that represents the actual cash received within a year.
Cash flow is usually measured as the amount | (Harvey, Rmachandran, & Sandoro, 2021) |
Coin | For this document’s purposes, coin refers to a cryptocurrency. | |
Collateralized Currency | Paper currency is backed by collateral such as gold, silver, or other assets. | (Harvey, Rmachandran, & Sandoro, 2021) |
Collateralized Debt Obligation | In traditional finance, a debt instrument such as a mortgage. In DeFi, an example would be a stablecoin overcollateralized with a crypto asset. | (Harvey, Rmachandran, & Sandoro, 2021) |
Consensus Protocol | The mechanism whereby parties agree to add a new block to the existing blockchain. Both Ethereum and Bitcoin use proof of work, but many other mechanisms exist, such as proof of stake. | (Harvey, Rmachandran, & Sandoro, 2021) |
Contract Account | A type of account in Ethereum controlled by a smart contract. | (Harvey, Rmachandran, & Sandoro, 2021) |
Control | For the purposes of this book XXX, the method by which an investor ‘owns’ an asset. Types of control are through a deed (also known as fee simple control), a lease, an option, or a contract. | (Streetman, 2021) |
Credit delegation | A feature whereby users can allocate collateral to potential borrowers who can use the collateral to borrow the desired asset. | (Harvey, Rmachandran, & Sandoro, 2021) |
Cryptocurrency | A digital token that is cryptographically secured and transferred using blockchain technology. Leading examples are Bitcoin and Ethereum. Many different types of cryptocurrencies exist, such as stablecoin and tokens that represent digital and non-digital assets. | (Harvey, Rmachandran, & Sandoro, 2021) |
Cryptocurrency | A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation. | (Franken eld, Cryptocurrency Explained with Pros and Cons for Investment, 2022) |
Cryptocurrency/ Crypto/ Crypto asset | A digital asset design to work as medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. | (Streetman, 2021) |
Cryptographic Hash | A one-way function that uniquely represents the input data. Can be thought of as a unique digital fingerprint. The output is a fixed size even though the input can be arbitrarily large. Not encryption because it does not allow recovery of the original message. A popular hashing algorithm is the SHA-256, which returns 256 bits or 64 hexadecimal characters.
The Bitcoin blockchain uses the SHA-256. Ethereum uses the Keccak-256. Also known as a hash or message digest | (Harvey, Rmachandran, & Sandoro, 2021) |
Crypto exchange | A website where cryptocurrency can be exchanged for other cryptocurrency or for at currency. In the future there may be exchanges where cryptocurrency can be exchanged for other products or assets. | (Streetman, 2021) |
The value of a property in its current condition, without any improvements, relocation, or alteration. This is implied with contracts that stipulate a property is offered or purchased “as-is, where-is.” | ||
dApp | A decentralized application that allows direct interactions between peers (i.e., removing the central clearing). Permissionless and censorship resistant, anyone can use them, and no central organization controls them. | (Harvey, Rmachandran, & Sandoro, 2021) |
Debt | Refers to loans that are secured by an asset and must be repaid to a lender. | (Streetman, 2021) |
Decentralized Autonomous | An algorithmic organization with a set of rules encoded in a smart contract that stipulates who can execute what behavior or upgrade. Commonly includes a governance token. | (Harvey, Rmachandran, & Sandoro, 2021) |
Decentralized Autonomous | A decentralized autonomous organization (DAO), sometimes called a decentralized autonomous corporation (DAC), is an organization represented by rules encoded as a computer program that is transparent, controlled by the organization members and not influenced by a central government. A DAO’s financial transaction record and program rules are maintained on a blockchain. The precise legal status of this type of business organization is unclear | (Wikipedia.org, 2022) |
A platform that facilitates token swaps in a non-custodial fashion. The two mechanisms for DEX liquidity are order book matching and automated market maker. | (Harvey, Rmachandran, & Sandoro, 2021) | |
A financial infrastructure that does not rely on a centralized institution such as a bank Exchange, lending, borrowing, and trading are conducted on a peer-to-peer basis using blockchain technology and smart contracts. | (Harvey, Rmachandran, & Sandoro, 2021) | |
Deed | A deed is a signed legal document that transfers ownership of an asset to a new owner. Deeds are commonly used to transfer ownership of property or vehicles between two parties. The purpose of a deed is to transfer a title, the legal ownership of a property or asset, from one person or company to another. | (Liberto, 2021) |
A Deed of Trust is a type of secured real-estate transaction that some states use instead of mortgages. A deed of trust involves three parties: a lender, a borrower, and a trustee. The lender gives the borrower money. In exchange, the borrower gives the lender one or more promissory notes.
As security for the promissory notes, the borrower transfers a real property interest to a third-party trustee. Should the borrower default on the terms of her loan, the trustee may take full control of the property to correct the borrower’s default. 2022)
Usually, the trustee is a title company. In most states, the borrower transfers legal title to the trustee, who holds the property in trust for the borrower’s use and benefit. In other states, the trustee merely holds a lien on the property.
Deeds of trust almost always include a power-of-sale clause, which allows the trustee to conduct a non-judicial foreclosure – that is, sell the property without first getting a court order. | (Cornell Law School, | |
In this framework peers interact with peers via a common ledger not controlled by any centralized organization. | (Harvey Rmachandran, & Sandoro, 2021) | |
DeFi Legos | The idea that combining protocols to build a new protocol is possible. This is sometimes referred to as DeFi money legos or composability. | (Harvey, Rmachandran, & Sandoro, 2021) |
Depreciation | A tax concept where the cost of an asset is deducted from income over time. Depreciation refers to phantom losses that allow an investor to offset income for calculating income taxes. | (Streetman, 2021) |
Digest | Also known as message digest. See cryptographic hash. | (Harvey, Rmachandran, & Sandoro, 2021) |
Direct Incentive | A payment or fee associated with a specific user action intended to be a reward for positive behavior. For example, suppose a collateralized debt obligation becomes Direct Incentive undercollateralized. The condition does not automatically trigger liquidation; rather, an externally owned account must trigger it, and then a reward (direct incentive) is given | (Harvey, Rmachandran, & Sandoro, 2021) |
Double Spend | A problem that plagued digital currency initiatives in the 1980s and 1990s: perfect copies can be made of a digital asset, so it can be spent multiple times. The Satoshi Nakamoto white paper in 2008 solved this problem using a combination of blockchain technology and proof of work. | (Harvey, Rmachandran, & Sandoro, 2021) |
Due Diligence | Reasonable steps taken by a person to satisfy a legal requirement, especially in buying or selling something. | (Oxford Languages, 2022) |
Dutch Auction | A Dutch auction is a market structure in which the price of something offered is determined after taking in all bids to arrive at the highest price at which the total offering can be sold. In this type of auction, investors place a bid for the amount they are willing to buy in terms of quantity and price.
A Dutch auction also refers to a type of auction in which the price of an item is lowered until it gets a bid. The first bid is the winning bid and results in a sale, assuming the price is above the reserve price.
This contrasts with typical auction markets, where the price starts low and then rises as bidders compete to be the successful buyer. | (Chen, Dutch Auction, 2021) |
Equity | The value of the owned portion of an asset. Equity is usually calculated as market value minus debt. Equity is the portion of a real estate exchange that is in complete control of the seller and/or buyer for the assets they are exchanging. | (Streetman, 2021) |
Equity token | A type of cryptocurrency that represents ownership of an underlying asset or a pool of assets. | (Harvey, Rmachandran, & Sandoro, 2021) |
ERC-1155 | Ethereum Request for Comments (ERC) related to defining a multi-token model, in which a contract can hold balances of a number of tokens, either fungible or non-fungible. | (Harvey, Rmachandran, & Sandoro, 2021) |
ERC-20 | Ethereum Request for Comments (ERC) related to defining the interface for fungible tokens, which are identical in utility and functionality. The U.S. dollar is fungible currency in that all $20 bills are identical in value and 20 $1 bills are equal in value to the $20 bill. | (Harvey, Rmachandran, & Sandoro, 2021) |
ERC-721 | Ethereum Request for Comments (ERC) related to defining the interface for non-fungible tokens, which are unique and are often used for collectibles or specific assets, such as a loan. | (Harvey. Rmachandran, & Sandoro, 2021) |
.Escrow | Escrow is a legal arrangement in which a third party temporarily holds large sums of money or property until a particular condition has been met (such as the fulfillment of a purchase agreement). It is used in real estate transactions to protect both the buyer and the seller throughout the home buying process. | (Dehan, 2022) |
Ethereum | The second most popular cryptocurrency. Ethereum was the genesis of smart contracts and digital applications. | (Streetman, 2021) |
Ethereum (ETH) | In existence since 2015, the second largest cryptocurrency or blockchain. Its native cryptocurrency is known as ether (ETH).
Ethereum’s blockchain can run computer programs known as smart contracts. It is considered a distributed computational platform and sometimes referred to as the Ethereum Virtual Machine. | (Harvey, Rmachandran, & Sandoro, 2021) |
Ethereum 2.0 | A proposed improvement on the Ethereum blockchain that uses horizontal scaling, proof of-stake consensus and other enhancements. | (Harvey, Rmachandran, & Sandoro, 2021) |
An Ethereum account controlled by a specific user. | (Harvey, Rmachandran, & Sandoro, 2021) | |
Factoring | A form of asset-based lending against accounts receivable. | |
Fair Market Value (FVM) | Price an arm’s-length buyer would pay in the open market for an asset. FMV is often used by government organizations and financial institutions to value assets to be used as collateral or taxed. | |
Fiat Currency | Uncollateralized paper currency, which is essentially an IOU issued by a government. | (Harvey, Rmachandran, & Sandoro, 2021) |
Fiat Currency | Money issued by nations (for example, dollars, euros) is called fiat currency. The currency has value because the nations say it does (fiat). The term is usually used to distinguish from cryptocurrency. | (Streetman, 2021) |
Fintech | Abbreviation for financial technology; a general term that refers to technological advances in nance. Broadly includes technologies in the payments, trading, burrowing, and lending spaces, and often big data and machine learning applications. | (Harvey, Rmachandran, & Sandoro, 2021) |
Flash Loan | An uncollateralized loan with zero counterparty risk and zero duration. Used to facilitate arbitrage or to re nance a loan without pledging collateral. Has no counterparty risk because in a single transaction (a) the loan is cleared, (b) all buying and selling using the loan funding is completed, and (c) the loan is paid in full. | (Harvey, Rmachandran, & Sandoro, 2021) |
Flash swap | Feature of some DeFi protocols whereby a contract sends tokens before the user pays for them with assets on the other side of the pair. Allows for near-instantaneous arbitrage. Allows for flexibility of repaying with a different asset, which is different from a flash loan, which must be repaid with the same asset. A key feature is that all trades occur within a single Ethereum transaction | (Harvey, Rmachandran, & Sandoro, 2021) |
Fork | In the context of open-source code, an upgrade or enhancement to an existing protocol that connects to the protocol’s history. A user has the choice of using the old or the new protocol. If the new protocol is better and attracts sufficient mining power, it will win. Forking is a key mechanism to assure efficiency in DeFi . | (Harvey, Rmachandran, & Sandoro, 2021) |
Able to replace or be replaced by another identical item; mutually interchangeable. | (Dictionary.com, 2022) | |
A cryptocurrency is fungible if any two tokens are identical. Bitcoin and TROPTIONS are fungible. Smart contracts generally are not (they are unique tokens that represent a specific transaction). In regular currency, dollars are fungible. But a 1933 Saint-Gaudens Double Eagle (of which there are only a few in existence) is non-fungible. Any two may have different values based on their conditions. Fungibility is important for exchange or trading. | (Streetman, 2021) | |
Gas | A fee required to execute a transaction and to execute a smart contract. The mechanism that allows Ethereum to deal with the halting problem. | (Harvey, Rmachandran, & Sandoro, 2021) |
Geoblock | Technology that blocks users from certain countries bound by regulation that precludes the application.
A governance token is a cryptocurrency that gives its holders a right to vote on proposed changes to a blockchain network. This innovation is seen as a necessary step toward keeping certain crypto projects, particularly those within the decentralized nance (DeFi) | (Harvey, Rmachandran, & Sandoro, 2021) |
Ecosystem, decentralized Some DAOs employ governance tokens, which are permissionless, mint able tokens that holders can trade on decentralized exchanges (DEXs). Other protocols issue governance tokens when users provide market liquidity or participate in network security — such as Proof-of-Work (PoW) consensus mechanisms. | (Nibley, 2022) | |
The right of an owner to vote on changes to the protocol. Examples include the MakerDAO MKR token and the Compound COMP token. | (Harvey, Rmachandran, & Sandoro, 2021) | |
Grant Deed | A grant deed is a specific deed type that transfers the interest in a property from the seller to the buyer in exchange for a previously agreed upon price. While the grant deed guarantees that the seller owns the property entirely, it doesn’t offer the buyer legal protection against any title defects such as an: error in public records improper signature undisclosed lien boundary dispute | (Freer, 2022) |
Halting Problem | A computer program in an infinite loop. Ethereum solves this problem by requiring a fee for a certain amount of computing. If the gas is exhausted, the program stops. | (Harvey, Rmachandran, & Sandoro, 2021) |
Hash | See cryptographic hash. | (Harvey, Rmachandran, & Sandoro, 2021) |
Hexadecimal | A counting system in base-16 that includes the first 10 numbers 0 through 9 plus the first six letters of the alphabet, a through f. Each hexadecimal character represents 4 bits, where 0 is 0000 and the 16th (f) is 1111. | (Harvey, Rmachandran, & Sandoro, 2021) |
Horizontal Scaling | An approach that divides the work of the system into multiple pieces, retaining decentralization but increasing the throughput of the system through parallelization. Also known as “sharding.” Ethereum 2.0 takes this approach in combination with a proof-of-stake consensus algorithm. | (Harvey, Rmachandran, & Sandoro, 2021) |
Impermanent Loss | Applies to automated market makers (AMM), where a contract holds assets on both sides of a trading pair. Suppose the AMM imposes a fixed exchange ratio between the two assets, and both assets appreciate in market value. The first asset appreciates more than the second asset. Users drain the first asset, and the contract is left holding only the second asset. The impermanent loss is the value of the contract if no exchange took place (value of both tokens) minus the value of the contract after it was drained (value of second token). | (Harvey, Rmachandran, & Sandoro, 2021) |
Incentive | A broad term used to reward productive behavior. Examples include direct incentives and stake incentives. | (Harvey, Rmachandran, & Sandoro, 2021) |
A method of setting an initial exchange rate for a new token. A user can be the first liquidity provider on a pair, such as the new token and a stablecoin such as USDC. Essentially, the user establishes an artificial offer for the price of the new token. | (Harvey, Rmachandran, & Sandoro, 2021) | |
Invariant | The result of a constant product rule. For example, invariant = SA x SB, where SA is the supply of asset A, and SB is the supply of asset B. Suppose the instantaneous exchange rate is 1A:1B. The supply of asset A = 4 and the supply of asset B= 4. The invariant = 16. Suppose the investor wants to exchange some A for some B. The investor deposits 4 of A so that the contract has 8 A (SA = 4 + 4 = 8). The investor can withdraw only 2 of asset B as defined by the invariant. The new supply of B is therefore 2 (SB = 4-2=2). The invariant does not change, remaining at 16=2×8. The exchange rate does change, however, and is no w 2A:1B | (Harvey, Rmachandran, & Sandoro, 2021) |
Keeper | A class of externally owned accounts that is an incentive no perform an action in a DeFi protocol of a dApp (distributed application). The Keeper receives a reward of a fiat fee or a percentage of the incented action. For example, the keeper receives a fee for liquidating a collateralized debt obligation when it becomes undercollateralized. | (Harvey, Rmachandran, & Sandoro, 2021) |
Know Your Business (KYB) process is not so different from the most widely known and standardized Know Your Customer (KYC) process. The difference lies in the purpose and intentionality of the process, focused on identifying companies and suppliers in the first case and consumers or customers in the second one. | (Electronic IDentification, 2021) | |
Know Your Customer (KYC) | A provision of U.S. regulation common to financial services regulation requiring that users must identify themselves. This regulation has led to geo-blocking of U.S. customers from certain decentralized exchange functionalities | (Harvey, Rmachandran, & Sandoro, 2021) |
Know Your Customer (KYC | KYC means Know Your Customer and sometimes Know Your Client. KYC or KYC) check is the mandatory process of identifying and verifying the client’s identity when opening an account and periodically over time. In other words, banks must make sure that their clients are genuinely who they claim to be. | (Thales Group, 2022) |
Layer2 | A scaling solution built on top of a blockchain that uses cryptography and economic guarantees to maintain desired levels of security. For example, small transactions can occur using a multi-signature payment channel. A blockchain is used only when funds are added to the channel or withdrawn | (Harvey, Rmachandran, & Sandoro, 2021) |
Leasehold | A type of control of a property where it is rented from the owner for a limited time. | (Streetman, 2021) |
Liquidity | The ability to sell cryptocurrency for fiat. Today, most cryptocurrencies are non-liquid or minimally liquid (they can only be sold in small amounts). | (Streetman, 2021) |
A user that earns a return by depositing assets into a pool or a smart contract. | (Harvey, Rmachandran, & Sandoro, 2021) | |
Mainnet | The fully operational, production blockchain behind a token, such as the Bitcoin blockchain or the Ethereum blockchain. Often used to contrast with testnet. | (Harvey, Rmachandran, & Sandoro, 2021) |
Mezzanine Debt | Mezzanine debt bridges the gap between debt and equity financing and is one of the highest risk forms of debt—being subordinate to pure debt but senior to pure equity. | (Hayes, Mezzanine Debt, 2020) |
Miner | Cycles through various values of a piece of data called a nonce to try to find a rare cryptographic hash value in a proof-of-work blockchain. Gathers and validates candidate transactions for a new block, adds a nonce, and executes a cryptographic hashing function. The nonce is varied, and the hashing continues. If miners “win” by finding a hash value that is very small, they receive a direct reward in newly minted cryptocurrency. The miner also earns an indirect reward, collecting fees for the transactions included in their block. | (Harvey, Rmachandran, & Sandoro, 2021) |
Miner Extractable Value | The profit derived by a miner. For example, miners could front run a pending transaction they believe will increase the price of the cryptocurrency (e.g., a large buy). Also known as maximum extractable value. | (Harvey, Rmachandran, & Sandoro, 2021) |
Mint | An action that increases the supply of tokens and is the opposite of burn. It often occurs when a user enters a pool and acquires an ownership share. Minting and burning are essential parts of non-collateralized stablecoin models (i.e., when stablecoin gets too expensive more are minted, which increases supply and reduces prices). Minting is also a means to reward user behavior. | (Harvey, Rmachandran, & Sandoro, 2021) |
Mortgage Deed | A mortgage deed is a document signed between a homeowner and a bank or lending institution, allowing said institution to put a lien on the property if the loan isn’t repaid.
This deed secures property as collateral for a loan — meaning a “mortgage payment” is paid towards a loan debt, with the house serving as security in the event of a default. When a mortgage deed is in effect, the legal title to the property is held by the financial institution for the duration of the loan repayment period. | (Freer, 2022) |
MFH typically, is characterized by housing developments with more than four (4) dwellings. | ||
Networked Liquidity | The idea that any exchange application can lever the liquidity and rates of any other exchange on the same blockchain. | (Harvey, Rmachandran, & Sandoro, 2021) |
Non-fungible tokens, or NFTs, are pieces of digital content linked to the blockchain, the digital database underpinning cryptocurrencies such as bitcoin and Ethereum. Unlike NFTs, those assets are fungible, meaning they can be replaced or exchanged with another identical one of the same value, much like a dollar bill. NFTs, on the other hand, are unique and not mutually interchangeable, which means no two NFTs are the same. | Goodwin, 2021) | |
Node | A computer on a network that has a full copy of a blockchain. | (Harvey, Rmachandran, & Sandoro, 2021) |
Non-fungible | Not mutually interchangeable | (Goodwin, 2021) |
Non-recourse loan | A non-recourse loan is one where the collateral for the debt is the sole recourse for repayment in the event of default. In contrast, recourse loans require the borrower to pledge their personal income and assets to repay the loan if they default.
Most homeowner loans have recourse to the personal income and assets of the borrower. This is why credit scores and the assets and liabilities of the borrower play such an important role in most bank loan underwriting. For non-recourse loans the due diligence on the property is paramount and the property will be promptly foreclosed if the loan goes into default. | |
Nonce | A counter mechanism for miners as they cycle through various values when trying to discover a rare cryptographic hash value. Nonce is derived from “number only once.” | (Harvey, Rmachandran, & Sandoro, 2021) |
Note Brokering / Buying | Note brokering is finding someone who is carrying some form of promissory note and finding a note buyer or note investor who wants to purchase the note. You get paid a commission or a spread from negotiating with the note seller and selling to a note buyer. | (NoteBrokering.com, 2022) |
Optimistic Rollup | A scaling solution whereby transactions are aggregated o-chain into a single digest submitted to the chain periodically. | (Harvey, Rmachandran, & Sandoro, 2021) |
Option | A type of control where the buyer prevents others from buying the property while assessing the viability of the property for purchase without owning the property. Usually, an agreed purchase price is a part of an option. | (Streetman, 2021) |
Oracle | A method whereby information is gathered outside of a blockchain. Parties must agree on the source of the information. | (Harvey, Rmachandran, & Sandoro, 2021) |
Order Book Matching | A process in which all parties must agree on the swap exchange rate. Market makers can post bids and asks to a decentralized exchange (DEX) and allow takers to fill the quotes at the pre-agreed price. Until the o er is taken, the market maker has the right to withdraw the o er or update the exchange rate. | (Harvey, Rmachandran, & Sandoro, 2021) |
Perpetual futures contract | Like a traditional futures contract but without an expiration date. | (Harvey, Rmachandran, & Sandoro, 2021) |
Points | One point is equal to 1%. | |
Private Offering | Also known as private stocks. Private stock is issued under Regulation D of the Securities Act of 1933, which requires all offerings of stock to be registered with the SEC or be offered in compliance with Regulation D requirements. Reg D has three exemption levels known as Rules 504, 505 and 506. They primarily apply to the amount of the offering. Most private offerings are made under Rule 506. … Reg D requires that you receive a private placement memorandum disclosing the company business and potential negatives associated with the company and the value of the investment. Also required is a subscription agreement and an accredited investor questionnaire. | (Du , 2022) |
Proof of Stake | Proof-of-stake is a cryptocurrency consensus mechanism for processing transactions and creating new blocks in a blockchain. A consensus mechanism is a method for validating entries into a distributed database and keeping the database secure. In the case of cryptocurrency, the database is called a blockchain—so the consensus mechanism secures the blockchain. An alternative consensus mechanism, and a key feature of Ethereum 2.0, in which the staking of an asset on the next block replaces the mining of blocks as in proof of work (PoW). | (Franken eld, Proof of-Stake (PoS), 2022) |
Proof of Stake (PoS) | In PoW, miners need to spend on electricity and equipment to win a block. In proof of stake, validators commit some capital (the stake) to attest that the block is valid. Validators make themselves available by staking their cryptocurrency, and then they are randomly selected to propose a block. The proposed block must be attested by most other validators. Validators pro t by both proposing a block and attesting to the validity of others’ proposed blocks. If validators act maliciously, there is a penalty mechanism whereby their stake is slashed. | (Harvey, Rmachandran, & Sandoro, 2021) |
Proof of Work (PoW) | Originally advocated by Back in 2002, the consensus mechanism for the two leading blockchains: Bitcoin and Ethereum. Miners compete to find a rare cryptographic hash, which is hard to find but easy to verify. Miners are rewarded for finding the cryptographic hash and using it to add a block to the blockchain. The computing di consensus mechanism for the two leading blockchains: Bitcoin and Ethereum. Miners compete to find a rare cryptographic hash, which is hard to find but easy to verify. Miners are rewarded for finding the cryptographic hash and using it to add a block to the blockchain. The computing difficulty of finding the hash makes it impractical to go backward to rewrite the history of a leading blockchain. Proof of work (PoW) is a form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational e ort has been expended. Verifiers can subsequently con rm this expenditure with minimal e ort on their part. | (Harvey, Rmachandran, & Sandoro, 2021) (Wikipedia.org, 2022 |
Quitclaim Deed | A quitclaim deed is used to transfer property between familiar parties, such as family members or even divorced spouses. A quitclaim deed offers little legal protection to the grantee (the recipient of the transfer).
If the grantor turns out not to legally own the property outlined in the deed, the grantee can’t take legal action. In addition, there are no legal protections against liens or other encumbrances that might exist on the property.
Quitclaim deeds involve a high degree of trust and as a result are preferred by people who know each other well. This type of deed can also be used if the grantor isn’t entirely sure of the title’s status and has any defects. | (Freer, 2022) |
Real estate owned (REO) is the term for a property owned by a lender because it failed to sell in a foreclosure auction after the borrower defaulted on their mortgage. … REOs are often sold at a discount by banks and other lenders. However, they are usually sold “as is” and are often in disrepair. | ||
Router Contracts | In the context of decentralized exchange, a contract that determines the most efficient path of swaps to get the lowest slippage, if no direct trading pair is available on, for example, Uniswap. | (Harvey, Rmachandran, & Sandoro, 2021 |
REXNET | Real Estate eXchange NETwork. A type of barter currency that uses proof of use as its valuation approach. The network includes several sub-tokens (for example, REXNET. Panama) that can be traded for each other as well as for assets. | (Streetman, 2021) |
Scaling Risk | The limited ability of most current blockchains to handle a larger number of transactions per second. See vertical scaling and horizontal scaling. | (Harvey, Rmachandran, & Sandoro, 2021) |
Schelling-Point Oracle | A type of oracle that relies on the owners of a fixed supply of tokens to vote on the outcome of an event or report the price of an asset. | (Harvey, Rmachandran, & Sandoro, 2021) |
As the term implies this is financing offered by the owner (seller) of a property. Seller financing regulation is much less restrictive and regulated than bank financing. The seller can originate loans without having to register and be regulated like a lending institution. | ||
Sharding | A process of horizontally splitting a database, in the context of a blockchain. Also known as horizontal scaling. Divides the system’s work into multiple pieces, retaining decentralization but increasing its throughput through parallelization.
Ethereum 2.0 takes this approach with the goal of reducing network congestion and increasing the number of transactions per second. | (Harvey, Rmachandran, & Sandoro, 2021) |
Residence/Housing (SFR / SFH) | SFR, sometimes referred to as SFH, typically is characterized by housing developments with four (4) or fewer dwellings. Single family homes, duplexes, triplexes, and fourplexes all qualify within SFR for policy purposes. | |
Slashing | A mechanism in proof of stake blockchain protocols intended to discourage certain user behavior. | (Harvey, Rmachandran, & Sandoro, 2021) |
Slashing Condition | The mechanism that triggers a slashing. An example of a slashing condition is when collateralization triggers a liquidation. | (Harvey, Rmachandran, & Sandoro, 2021) |
Smart Contract | A contract is activated when it receives ETH, or gas. Given the distributed nature of the Ethereum blockchain, the program runs on every node. A feature of the Ethereum blockchain, the main blockchain for DeFi applications. | (Harvey, Rmachandran, & Sandoro, 2021) |
Smart Contract | Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss. | (IBM, 2022) |
Sophisticated Investor | A sophisticated investor is a classification of investor indicating someone who has sufficient capital, experience and net worth to engage in more advanced types of investment opportunities. See also Accredited Investor. | (Chen, Sophisticated Investor, 2020) |
Sovereign Lien | A sovereign lien refers to a debt held by a government entity which is attached to real estate. Sovereign liens are superior to all other liens and failure to pay them can result in foreclosure.
Sovereign liens typically originate as property taxes and government assessments. Occasionally, they can be based on unpaid income taxes and are attached to a property through a formal judicial proceeding. | |
Special Purpose Deeds | Special purpose deeds are frequently used in connection with court proceedings and instances where the deed is from a person acting in some type of official capacity. Most special purpose deeds offer little to no protection to the grantee and are essentially quitclaim deeds.
Types of special purpose deeds include but are not limited to:
Administrator’s Deed: This may be used when a person dies intestate (without a will). A court appointed administrator will dispose of the decedent’s assets and an administrator’s deed may be used to convey the title of real property to the grantee.
Executor’s Deed: This may be used when a person dies testate (with a will). The estate’s executor will dispose of the decedent’s assets and an executor’s deed may be used to convey the title or real property to the grantee. Sheri ’s Deed: This is given to the successful bidder at an execution sale held to satisfy a judgment that has been obtained against the owner of the property. The grantee receives whatever title the judgment debtor has.
Tax Deed: This is issued when a property is sold for delinquent taxes. Deed in Lieu of Foreclosure: This is given by a borrower who is in default on a mortgage directly to the lender. This serves to prevent foreclosure proceedings, and if the lender accepts the deed in lieu of foreclosure, the loan is terminated. Many lenders prefer to foreclose to clean up the title.
Deed of Gift (Gift Deed): This is used to convey the title on real property that is given for no consideration or for only a token consideration. In some states, the gift deed must be recorded within two years, or it becomes void. | (Folger, 2021) |
Specie | Metallic currency such as gold or silver (or nickel and copper) that has value of its own (i.e., if melted and sold as a metal). | (Harvey, Rmachandran, & Sandoro, 2021) |
Stablecoin | A token tied to the value of an asset such as the U.S. dollar. A stablecoin can be collateralized with physical assets (e.g., U.S. dollar in USDC) or digital assets (e.g., DAI) or can be uncollateralized (e.g., AMPL and ESD). | (Harvey, Rmachandran, & Sandoro, 2021) |
Stablecoin | A stablecoin is a class of cryptocurrencies that attempt to o er price stability and are backed by a reserve asset. Stablecoins have gained traction as they attempt to offer the best of both worlds—the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of at currencies. | (Hayes, Stablecoin, 2022) |
Staked Incentive | A token balance custodied in a smart contact whose purpose is to influence user behavior. A staking reward is designed to encourage positive behavior by giving the user a bonus in their token balance based on the stake size. A staking penalty (slashing) is designed to discourage negative behavior by removing a portion of a user’s token balance based on the stake size. | (Harvey, Rmachandran, & Sandoro, 2021) |
Staking | The escrows of funds in a smart contract by users who are subject to a penalty (slashed funds) if they deviate from expected behavior. | (Harvey, Rmachandran, & Sandoro, 2021) |
Swap | The exchange of one token for another. In DeFi, swaps are atomic and non-custodial Funds can be custodied in a smart contract with withdrawal rights exercisable at any time before the swap is completed. If the swap is not completed, all parties retain their custodied funds. | (Harvey, Rmachandran, & Sandoro, 2021) |
Symmetric Key Cryptography | A type of cryptography in which a common key is used to encrypt and decrypt a message. | (Harvey, Rmachandran, & Sandoro, 2021) |
testnet | An identically functioning blockchain to a mainnet, whose purpose is to test software. The tokens associated with the testnet when testing Ethereum, for example, are called test ETH, which are obtained for free from a smart contract that mints the test ETH (known as a faucet). This can refer to fungible or non-fungible cryptocurrency units, each of which can be called a token. | (Harvey, Rmachandran, & Sandoro, 2021) |
Token | Tokens are digital vouchers that can be exchanged. | |
Token vs coins | A coin is a cryptocurrency that has its own blockchain. A token is a cryptocurrency that is recorded on another coin’s blockchain. | (Streetman, 2021) |
Trading pairs | Trading pairs are the available exchanges on an exchange. For example, some tokens may only be traded for a handful of specific other tokens. To sell for cash, you often must trade your token for another; perhaps trade that one for Bitcoin and sell Bitcoin for cash. Trading pairs also impact valuation. If your trades are for Ripple and later Ripple goes down in value, your coin also goes down in value unless new trades have happened that show your exchange rate with Ripple changing.
This fact is important because it reduces the confidence you should have in the crypto values listed at popular exchange sites. When the values can change without new trades providing information, it calls into question the values listed. | (Streetman, 2021) |
Transparency | The ability for anyone to see the code and all transactions sent to a smart contract. A commonly used blockchain explorer is etherscan.io. | (Harvey, Rmachandran, & Sandoro, 2021) |
TROPTIONS/ XTROPTIONS.GOLD XTROPTIONS/ XTROPTIONS / / TROPTIONS.GOLD.AUS | The original barter cryptocurrencies. TROPTIONS were created (not on the blockchain) in 2003 was a way to trade options.
(Trade plus Options = TROPTIONS). In 2017 they were moved to the blockchain to obtain. TROPTIONS have been used, perhaps more the benefits of immutability and easy trades than any other cryptocurrency, for real estate transactions | (Streetman, 2021) |
Utility Token | A fungible token required to use some functionality of a smart contract system or that has an intrinsic value defined by its respective smart contract system. For example, a stablecoin, whether collateralized or algorithmic, is a utility token. | (Harvey, Rmachandran, & Sandoro, 2021) |
Vampirism | An exact or near-exact copy of a DeFi platform designed to take liquidity away from an existing platform often by offering users direct incentives. | (Harvey, Rmachandran, & Sandoro, 2021) |
Value | The value of a cryptocurrency is how much it is worth; valuation can be very challenging. The common way to value a cryptocurrency is to look at its most recent trades at an exchange. However, this is challenging, as the recent trades might be at different values.
Further, some cryptocurrencies (for example, barter currencies) don’t generally have both ends of the transaction (and thus the value) available on the blockchain. Value may also be defined more generally as the price at which a willing buyer and seller would trade an asset. | (Streetman, 2021) |
Vault | A smart contract that escrows collateral and keeps track of the value of the collateral. | (Harvey, Rmachandran, & Sandoro, 2021) |
Velocity of Capital or Turns of Capital | Velocity of capital is an expression of a concept known as “turning.” It is illustrated by an annualized rate of return. For instance, a return of 4% earned in one month, would produce an annualized return of 48%, or a velocity of .48. In simple terms velocity of capital answers the question of how quickly will I double my money | (Kiyosaki, 2022) |
Vertical Scaling | The centralization of all transaction processing to a single large machine, which reduces the communication overhead (transaction-block latency) associated with a proof of work blockchain, such as Ethereum, but results in a centralized architecture in which one machine is responsible for much of the system’s processing. | (Harvey, Rmachandran, & Sandoro, 2021) |
To perform and document necessary research and investigations. Also known as Due Diligence. To make a prior examination and critical analysis, or detailed evaluation, of a document, a line of action regarding someone or people, etc.: If something is vetted, it is checked carefully to make sure that it meets the requirements. | (Get the Words, 2022) | |
A wallet is where cryptocurrency is stored. There are many different types for different uses, and often the type of cryptocurrency will determine which wallets are feasible. | (Streetman, 2021) | |
Warranty Deed | Different types of warranty deeds are used to offer various legal protections to the grantor, in the event there’s a problem or defect with the title once it’s been transferred. Warranty deeds come with different levels of protection, and are split into two distinct categories:
General Warranty Deed: Typically used in residential real estate transactions, a general warranty deed guarantees that the seller has the full legal right to sell the property, and that the property is completely free and clear of debts, liens, or other encumbrances. This type of deed comes with the most significant protection for the grantee and provides them with legal recourse if an unsettled debt or issue arises.
Special Warranty Deed: A special warranty deed protects a grantee against any issues or claims that might have arisen during the time the grantor owned the property entirely. It doesn’t apply to the entire history of the property, as the property’s whole history isn’t likely known by the current owner.
Most often, this type of deed is used in the sale of residential real estate, or for commercial property. While not providing as much legal protection as a general warranty deed, it assures that the grantor is the legal owner of the property title and guarantees that the property was not encumbered when the grantor had ownership. | (Freer, 2022) |
Wholesaler | In real estate wholesaling, a wholesaler contracts a home with a seller, then finds an interested party to buy it. The wholesaler contracts the home with a buyer at a higher price than with the seller and keeps the difference as profit. Real estate wholesalers generally find, and contract distressed properties. | (Segal, 2022) |
Yield Farming | A means to provide contract-funded rewards to users for staking capital or using a protocol. | (Harvey, Rmachandran, & Sandoro, 2021) |
