If you're new to Cardano or blockchain in general, you’ve probably come across a sea of unfamiliar words from “staking” to “eUTXO”. This glossary will help you understand the core terms and concepts that make up the Cardano ecosystem.
Core Concepts
Blockchain:
A blockchain is a distributed, digital ledger that records transactions in a series of linked blocks. Each block contains a set of transactions and is connected to the previous one, creating a secure and chronological chain.
Block:
A block is a container of data in a blockchain. It groups together a set of validated transactions and records them permanently. Each block is cryptographically linked to the one before it, forming the blockchain. In Cardano, new blocks are created and added by stake pool operators using the Ouroboros protocol.
Node:
A node is any computer that connects to the Cardano network and helps maintain it. Nodes can serve different roles:
- Relay nodes forward information to other nodes
- Producer nodes create new blocks (run by stake pool operators)
- Full nodes keep a complete copy of the blockchain and validate transactions
Running a node is essential for decentralization and network health.
Cardano (ADA):
A third-generation blockchain platform focused on scalability, sustainability, and peer-reviewed development. ADA is its native cryptocurrency.
Lovelace:
The smallest unit of ADA. 1 ADA = 1,000,000 Lovelace. Think of Lovelace like "cents" to ADA's "dollars"—it allows for precise, micro-denominated transactions.
Wallet:
Blockchain wallets are software or a device that allows users to manage and transact digital assets and NFTs. Wallets can be connected to use applications called DApps. Your ADA never "leaves" the blockchain—wallets just give you the keys to access and use it.
Proof of Stake (PoS):
A consensus mechanism where users "stake" ADA to help validate transactions and earn rewards. Cardano uses a PoS protocol called Ouroboros.
Ouroboros:
Cardano's unique PoS algorithm that secures the network while minimizing energy use.
Self-Sovereign Identity (SSI):
A digital identity that is owned and controlled by the individual, not a company or government. SSI solutions on Cardano let users prove who they are without giving up personal data.
On-Chain:
Refers to data, actions, or contracts that are recorded directly on the blockchain. On-chain processes are transparent, verifiable, and can’t be altered once confirmed.
Epoch:
An epoch is a fixed time period in the Cardano blockchain, currently lasting 5 days. During each epoch, the network finalizes blocks, distributes staking rewards, and schedules validator responsibilities.
Smart Contract and Development Terms
Smart Contracts:
Self-executing agreements written in code that automatically enforce their terms when conditions are met. On Cardano, smart contracts power DApps, enable DeFi, and eliminate the need for intermediaries. They can be written in languages like Aiken, Plutus, or Opshin.
DApp (Decentralized Application):
An app that runs on the blockchain without a central authority. Cardano supports DApps for DeFi, identity, gaming, and more.
DEX (Decentralized Exchange):
A DApp that lets users trade cryptocurrencies directly with each other without a middleman. On Cardano, DEXs like SundaeSwap and Minswap use smart contracts to enable trustless token exchange.
eUTXO (Extended Unspent Transaction Output):
Cardano's transaction model. It extends the UTXO model (used by Bitcoin) to support smart contracts and more complex logic with greater predictability.
Layer 1:
The base blockchain, in this case, Cardano. All smart contracts and tokens originate here.
Layer 2:
Scaling solutions built on top of Layer 1 to improve speed and lower fees.
Staking & Governance
Staking:
Locking your ADA in a stake pool to help secure the network and earn rewards. You keep full control over your funds.
Stake Pool:
A node run by operators that combines ADA from many users to increase the chances of earning block rewards.
Stake Pool Operator (SPO):
An SPO is the person or team responsible for running and maintaining a stake pool. They keep their node online, ensure it meets performance standards, and often communicate with the community. SPOs earn a portion of the staking rewards for their service.
Delegation:
The process of assigning your ADA to a stake pool. You retain ownership, and the pool does the work.
DRep (Delegated Representative):
A role in Cardano governance. ADA holders can vote directly or delegate to a DRep who votes on their behalf.
Voltaire:
The current era of Cardano focused on on-chain governance. Enables community-led decision-making and funding through voting.
Governance:
The process of making decisions about the future of a blockchain. In Cardano, governance is community-driven, allowing ADA holders to vote on proposals, upgrades, and funding.
Project Catalyst:
Cardano’s innovation fund. Anyone can submit a proposal, and ADA holders vote on which ones receive funding.
Cardano Constitution:
A community-agreed document defining the values and principles that guide governance decisions.
Assets, Tokens, and NFTs
Native Assets:
Tokens that are created directly on Cardano without needing a smart contract. ADA is the first native asset.
Stablecoin:
A cryptocurrency designed to maintain a stable value by being pegged to a fiat currency like USD or EUR. Stablecoins on Cardano let you hold and transact with digital dollars without the price volatility of ADA.
Minting:
Creating new tokens or NFTs on the blockchain.
NFT (Non-Fungible Token):
A unique digital item stored on the blockchain, often artwork, collectibles, or digital credentials.
Learning the language of Cardano is the first step toward becoming an empowered user, voter, or builder. As the ecosystem grows, so will its vocabulary, but the terms above form the foundation you’ll see over and over.
Bookmark this glossary and come back to it whenever something sounds unfamiliar. Cardano is a fast-evolving space, and understanding the basics puts you one step ahead.