Glossary and Basics

Blockchain

A decentralized and distributed ledger technology that records transactions in a secure, immutable manner across multiple nodes or computers. Each block contains a list of transactions and is linked to the previous block, forming a chain.

Smart Contract

A self-executing program stored on the blockchain that runs automatically when predefined conditions are met. Smart contracts enable secure and automated transactions without the need for intermediaries. They are fundamental to Ethereum and are used extensively in Layer 2 solutions to streamline transaction processes.

ABI (Application Binary Interface)

A critical part of interacting with smart contracts on Ethereum. The ABI defines the functions and events available within a smart contract, allowing applications to understand how to interact with the contract without accessing its source code directly. It serves as a bridge between the smart contract and external applications, ensuring compatibility and ease of use.

Nonce

A unique number assigned to each transaction to prevent duplicate transactions. In crypto, it’s also used to ensure that each transaction is processed in order and cannot be repeated.

Decentralized Payment Network

A payment infrastructure that doesn’t rely on a central authority, such as a bank. Instead, transactions are processed directly on the blockchain, enhancing transparency, security, and control over assets.

Ethereum

A popular, decentralized, open-source blockchain that enables the execution of smart contracts. Ethereum provides the foundation for many decentralized applications (dApps) and is known for its flexible smart contract capabilities, making it ideal for building scalable Layer 2 solutions like zk-Rollups and zk-Validium.

Gas

The fee required to execute a transaction or run a smart contract on Ethereum. Gas fees compensate Ethereum miners for the resources needed to verify and execute transactions. On Layer 2 solutions, these fees are often minimized due to the increased efficiency of off-chain processing.

Layer 1 (L1)

The base blockchain layer, often referred to as the main chain (e.g., Ethereum). It’s where fundamental security and consensus are managed, though it may be slower and more costly due to high transaction volumes and on-chain data processing.

Layer 2 (L2)

A secondary protocol built on top of Layer 1 to improve scalability and speed. Layer 2 solutions, like zk-Rollups and zk-Validium, process transactions off-chain and submit summaries to Layer 1, reducing congestion on the main chain.

zk-Rollup (Zero-Knowledge Rollup)

A Layer 2 scaling solution that processes multiple transactions off-chain and bundles them into a single proof, which is then submitted to the main blockchain (Layer 1). This approach reduces the load on the main blockchain while maintaining security and allowing faster, lower-cost transactions.

zk-Validium

A Layer 2 scaling technology similar to zk-Rollups, but with a key difference: it stores data off-chain, which allows even higher transaction throughput. While zk-Validium relies on off-chain data storage, it still ensures security through zero-knowledge proofs, making it ideal for applications that require fast and scalable transaction processing.

Zero-Knowledge Proof (ZKP)

A cryptographic technique that allows one party to prove to another that a statement is true without revealing any specific details about the statement itself. In blockchain, ZKPs enhance privacy and scalability by allowing transaction verification without exposing transaction details.

Non-Custodial Wallet

A type of digital wallet where only the user has control over the private keys and funds. Unlike custodial wallets, which rely on third-party management, non-custodial wallets give users full responsibility for their assets, enhancing security and privacy.

Stablecoin

A type of cryptocurrency pegged to the value of a stable asset, such as the US dollar. Stablecoins provide the price stability needed for everyday transactions, making them a preferred asset for spending on crypto-enabled debit cards.

Bridge

A service or protocol that enables the transfer of assets across different blockchain networks. For example, a bridge can allow users to bring assets from Ethereum to the Wirex Pay Chain, enabling cross-chain asset utilization.

Proof of Address (POA)

A document verifying a user’s residential address, typically required for identity verification. It ensures that users meet Know Your Customer (KYC) standards in compliance with anti-money laundering regulations.

Source of Funds (SOF)

Documentation verifying the origin of funds deposited into a blockchain account. It is part of the KYC process, used to ensure that funds are obtained legally and to prevent money laundering.

Know Your Customer (KYC)

A regulatory requirement that obliges financial platforms to verify the identities of their users. KYC helps prevent fraud and complies with anti-money laundering (AML) laws.