Glossary
Layer 2
A network on top of an L1 that processes transactions cheaply and settles them back to it.
A layer 2 processes transactions off the main chain and settles the results back to it. Arbitrum, Optimism, Base and zkSync are the major Ethereum L2s.
They inherit Ethereum's security while costing cents instead of dollars. That cost difference is why most airdrop farming now happens on L2s — and why L2 tokens have been among the largest distributions in recent cycles.
Related terms
Airdrop
Free tokens distributed to wallet addresses, usually to reward early users of a protocol.
AMM
Automated Market Maker — a protocol that prices assets with a formula instead of an order book.
APR vs APY
APR is the yearly rate without compounding; APY includes compounding and is always higher.
ATH
All-Time High — the highest price an asset has ever traded at.
Bear Market
A prolonged decline, conventionally 20% or more from recent highs.
Bull Market
A prolonged rise driven by new demand, easy credit and rising confidence.