Glossary

Quick reference for terms used throughout KhipuVault documentation. Definitions are kept simple and accessible.

A

ABI (Application Binary Interface)

A JSON file that describes how to interact with a smart contract - which functions it has, what parameters they take, and what they return.

Analogy: Like an instruction manual for talking to a smart contract.

Example: KhipuVault's contract ABIs are in the @khipu/web3 package.

Address

A unique identifier for a wallet or smart contract on the blockchain, usually starting with 0x followed by 40 hexadecimal characters.

Example: 0xdfBEd2D3efBD2071fD407bF169b5e5533eA90393

Analogy: Like an email address or bank account number, but for crypto.

APY (Annual Percentage Yield)

The yearly return on investment, including compound interest.

Example: 15% APY means $100 grows to $115 after one year (if compounded).

KhipuVault rates:

• Individual Pools: 12-18% APY
• Community Pools: 15-20% APY

APR (Annual Percentage Rate)

The yearly return without compounding.

APY vs APR: APY is always higher than APR when compounding occurs.

Audit (Smart Contract Audit)

A security review of smart contract code by professional security firms to find vulnerabilities.

Why it matters: Audited contracts are safer (but not risk-free).

KhipuVault: All contracts audited by [CertiK/OpenZeppelin/etc].

Learn more →

B

Blockchain

A distributed ledger (database) maintained by many computers simultaneously, where records (blocks) are linked together in a chain.

Analogy: Like a Google Doc that thousands of people can see but no one person can delete or change historical entries.

Key properties:

• Transparent (anyone can read)
• Immutable (can't change history)
• Decentralized (no single owner)

Learn more →

Block Explorer

A website that lets you search and view blockchain transactions, addresses, and blocks.

Mezo Block Explorer: https://explorer.test.mezo.org

Use case: Verify your transaction went through, check balances, audit smart contracts.

Bridge

A system for transferring assets between different blockchains.

Example: Moving Bitcoin from Bitcoin L1 to Mezo L2.

Risk: Bridges are common attack vectors in crypto. Use audited bridges only.

C

Censorship Resistance

The property that no single entity can block, freeze, or reverse your transactions.

Why it matters: Your money can't be seized like in traditional banking.

Learn more →

Chain ID

A unique number identifying a specific blockchain network.

Mezo Testnet Chain ID: 31611

Why you need it: To prevent transactions meant for one chain (e.g., Ethereum) from working on another (e.g., Mezo).

Collateral

Assets locked as security for a loan or financial position.

Example: In Bitcoin DeFi, your BTC is collateral that generates yields.

Community Pool

A savings product where multiple users pool funds together and share yields (also called Cooperative Savings).

Benefits:

• Higher yields than individual pools
• Social accountability
• Shared risk

Learn more →

Consensus

The mechanism by which blockchain nodes agree on the current state of the ledger.

Bitcoin consensus: Proof of Work (mining) Mezo consensus: Secured by Bitcoin's consensus

Contract Address

The address where a smart contract is deployed on the blockchain.

KhipuVault contracts: See contract addresses

D

dApp (Decentralized Application)

An application that runs on a blockchain instead of centralized servers.

Example: KhipuVault is a dApp for Bitcoin savings.

Key feature: No single company controls it.

DeFi (Decentralized Finance)

Financial services (lending, borrowing, saving, trading) built on blockchains without intermediaries like banks.

Traditional finance: Bank controls your money DeFi: Smart contracts control funds automatically

Learn more →

Deposit

Adding funds to a KhipuVault pool to start earning yields.

Process:

1. Approve token spending
2. Call deposit function
3. Receive shares representing your position

E

EOA (Externally Owned Account)

A wallet controlled by a private key (as opposed to a contract account).

Example: Your MetaMask wallet is an EOA.

ERC-20

A standard for fungible tokens on EVM-compatible blockchains.

Example: MUSD is an ERC-20 token.

Why standards matter: All wallets and dApps understand ERC-20, ensuring compatibility.

EVM (Ethereum Virtual Machine)

The runtime environment that executes smart contracts on Ethereum and EVM-compatible chains.

Mezo is EVM-compatible, meaning Ethereum tools (Solidity, MetaMask, etc.) work on Mezo.

Learn more →

Event (Smart Contract Event)

A log emitted by a smart contract when something happens (like a deposit or withdrawal).

Use case: The KhipuVault indexer listens to events to update the database.

F

Faucet

A service that gives free testnet tokens for testing purposes.

Mezo Faucet: https://faucet.test.mezo.org

Important: Testnet tokens have no real value.

Get MUSD →

Finality

The point at which a transaction is considered irreversible.

Mezo: ~10 seconds (soft finality), ~60 minutes (Bitcoin L1 finality)

Foundry

A Solidity development framework for building, testing, and deploying smart contracts.

KhipuVault uses Foundry for all contract development.

Developer docs →

G

Gas

The fee paid to execute transactions or smart contract functions on a blockchain.

Analogy: Like paying for electricity to run a program.

Mezo gas fees: ~$0.01-$0.10 (much cheaper than Ethereum)

Paid in: The network's native token (tBTC on Mezo testnet)

Gas Limit

The maximum amount of gas you're willing to spend on a transaction.

Too low: Transaction fails Too high: You pay for unused gas (waste money)

MetaMask estimates this automatically.

Gas Price

How much you pay per unit of gas, usually measured in Gwei.

Higher gas price: Faster transaction Lower gas price: Slower but cheaper

H

Hash

A unique fingerprint of data, generated by a cryptographic function.

Example: Transaction hash, block hash

Properties:

• Fixed length (64 characters)
• One-way (can't reverse)
• Unique (different data = different hash)

Hot Wallet

A wallet connected to the internet (like MetaMask).

Pros: Convenient, easy to use Cons: More vulnerable to hacks

Opposite: Cold wallet (offline storage)

I

Immutable

Cannot be changed or deleted.

Blockchain is immutable: Once a transaction is finalized, it's permanent.

Smart contracts: Usually immutable after deployment (but can be upgradeable with proxies).

Indexer

A service that listens to blockchain events and stores data in a database for fast querying.

KhipuVault indexer: Tracks deposits, withdrawals, yields in PostgreSQL.

Why needed: Querying blockchain directly is slow.

Individual Pool

A solo savings vault where only you deposit and earn yields.

Benefits:

• Full control
• Withdraw anytime
• No coordination needed

Learn more →

K

KYC (Know Your Customer)

Identity verification required by centralized services (banks, exchanges).

KhipuVault: No KYC required. Permissionless and decentralized.

L

Layer-1 (L1)

The base blockchain layer (Bitcoin, Ethereum).

Characteristics:

• Most secure
• Most decentralized
• Slowest and most expensive

Layer-2 (L2)

A secondary layer built on top of Layer-1 to improve speed and reduce costs.

Example: Mezo is a Bitcoin Layer-2.

Benefits: Faster, cheaper, while inheriting L1 security.

Learn more →

Liquidity

How easily an asset can be bought or sold without affecting its price.

High liquidity: Large pools, easy to trade Low liquidity: Small pools, price slippage

Liquidity Pool

A pool of tokens locked in a smart contract to facilitate trading or yield generation.

Example: MUSD/BTC liquidity pool on a DEX.

Yield source: KhipuVault uses liquidity pools to generate yields.

Learn more →

M

Mainnet

The live, production blockchain where real assets have real value.

Opposite: Testnet (for testing, no real value)

KhipuVault: Currently on testnet, mainnet coming soon.

Mempool

The waiting area for unconfirmed transactions.

Process: Tx submitted → mempool → miner picks it → block confirmation

MetaMask

The most popular browser wallet for Ethereum and EVM-compatible chains.

KhipuVault requires MetaMask (or compatible wallet).

Setup guide →

Mezo

The Bitcoin Layer-2 blockchain that powers KhipuVault.

Key features:

• Bitcoin security
• EVM-compatible
• Fast and cheap
• DeFi-ready

Learn more →

Miner

A node that validates transactions and creates new blocks (in Proof of Work systems like Bitcoin).

Reward: Block reward + transaction fees

Mnemonic Phrase (Seed Phrase)

A 12 or 24-word phrase that backs up your wallet.

Critical: Never share your seed phrase. Anyone with it controls your funds.

Example: witch collapse practice feed shame open despair creek road again ice least

Multi-Signature (Multi-Sig)

A wallet or contract that requires multiple signatures to execute transactions.

Example: 3-of-5 multi-sig = 3 out of 5 owners must approve

KhipuVault uses multi-sig for admin functions.

Learn more →

MUSD (Mezo USD)

A Bitcoin-backed stablecoin used on Mezo blockchain, pegged to $1 USD.

On testnet: Free from faucet On mainnet: Backed by real Bitcoin collateral

Get MUSD →

N

Node

A computer running blockchain software, validating and relaying transactions.

Full node: Stores entire blockchain Light node: Stores only recent data

Bitcoin has 15,000+ nodes worldwide.

Non-Custodial

You control your private keys and funds, not a third party.

KhipuVault is non-custodial: Only you can withdraw your funds.

Opposite: Custodial (like Coinbase, where they hold your keys)

Learn more →

Nonce

A number used to order transactions from a single address.

Purpose: Prevents replay attacks and ensures transaction order.

O

Oracle

A service that brings external data (like prices) onto the blockchain.

Example: Chainlink price feeds

Use case: DeFi protocols need price data for liquidations, yields, etc.

P

Permissionless

Anyone can participate without needing approval.

KhipuVault is permissionless: No KYC, no geographic restrictions.

Opposite: Permissioned systems (banks require approval)

Private Key

A secret key that controls a wallet and signs transactions.

Critical: Never share your private key. It's like your password + bank PIN combined.

MetaMask stores your private key locally (encrypted).

Proof of Work (PoW)

A consensus mechanism where miners solve computational puzzles to validate blocks.

Used by: Bitcoin

Trade-off: Very secure but energy-intensive.

Proof of Stake (PoS)

A consensus mechanism where validators stake tokens to validate blocks.

Used by: Ethereum (after the Merge)

Trade-off: Energy-efficient but potentially less secure.

Public Key

A cryptographic key derived from your private key, used to generate your address.

Can be shared publicly (unlike private key).

R

Reentrancy Attack

A smart contract vulnerability where a malicious contract repeatedly calls a function before state updates.

Famous exploit: The DAO hack (2016)

KhipuVault protection: Reentrancy guards on all external calls.

Learn more →

ROSCA (Rotating Savings and Credit Association)

A traditional community savings model where members contribute regularly and take turns receiving the pot.

Traditional: Based on trust, informal KhipuVault ROSCA: Enforced by smart contracts, transparent

Learn more →

RPC (Remote Procedure Call)

An endpoint that lets you interact with a blockchain node.

Mezo RPC: https://rpc.test.mezo.org

Use case: MetaMask uses RPC to send transactions, query balances, etc.

S

Seed Phrase

See Mnemonic Phrase

Slippage

The difference between expected price and executed price.

Example: You expect 100 tokens but get 98 due to liquidity changes.

Protection: Set slippage tolerance (e.g., max 1%)

Smart Contract

Self-executing code deployed on a blockchain that automatically enforces rules.

Analogy: Like a vending machine - you put money in, it follows programmed rules, you get product out. No human intermediary needed.

KhipuVault: All savings products are smart contracts.

Learn more →

Stablecoin

A cryptocurrency designed to maintain a stable value (usually $1 USD).

Examples: USDC, USDT, DAI, MUSD

Use case: Avoid Bitcoin volatility while using DeFi.

Staking

Locking tokens to support network operations and earn rewards.

Yield source: One way KhipuVault generates yields.

Learn more →

Solidity

The programming language for Ethereum and EVM-compatible smart contracts.

Example:

contract Example {
    function deposit() public payable {
        // Store funds
    }
}

KhipuVault contracts: Written in Solidity.

T

Testnet

A blockchain network used for testing, where tokens have no real value.

Mezo Testnet: Free tokens from faucet, safe to experiment.

Always test on testnet first before using mainnet.

Add Mezo Testnet →

Time-Lock

A delay mechanism on smart contract functions.

Example: Admin changes require 48-hour time-lock.

Security benefit: Users can exit before malicious changes.

Learn more →

Token

A digital asset on a blockchain.

Types:

• Utility tokens: Used within a protocol
• Governance tokens: Voting rights
• Stablecoins: Pegged to fiat
• NFTs: Unique tokens

Transaction (Tx)

An action on the blockchain (transfer, smart contract call, etc.).

Components:

• From address
• To address
• Value
• Gas fee
• Data (for contract calls)

TVL (Total Value Locked)

The total amount of assets deposited in a DeFi protocol.

Industry standard: Higher TVL often means more trust/adoption.

KhipuVault TVL: Visible on dashboard.

V

Validator

A node that validates transactions and creates new blocks (in Proof of Stake systems).

Mezo validators: Secure the Layer-2 network.

W

Wallet

Software or hardware that stores private keys and manages crypto assets.

Types:

• Hot wallet: Connected to internet (MetaMask)
• Cold wallet: Offline (hardware wallets)

KhipuVault supports: MetaMask, Coinbase Wallet, WalletConnect-compatible wallets.

Connect wallet →

Wei

The smallest unit of Ethereum (and EVM-compatible) currency.

Conversion: 1 ETH = 1,000,000,000,000,000,000 wei (10^18)

Why it matters: Smart contracts use wei to avoid decimals.

Whitelist

A list of approved addresses allowed to perform certain actions.

Example: Early access to a product launch.

Withdrawal

Removing funds from a KhipuVault pool back to your wallet.

Process:

1. Burn shares
2. Receive principal + yields
3. Pay gas fees

Y

Yield

Returns earned on deposited assets.

Sources:

• Staking rewards
• Liquidity provision fees
• Lending interest
• Trading fees

KhipuVault yields: 12-20% APY depending on product.

Learn more →

Yield Aggregator

A protocol that automatically moves funds between yield strategies to optimize returns.

KhipuVault uses: A yield aggregator to maximize your earnings.

Z

Zero-Knowledge Proof

A cryptographic method to prove something is true without revealing the underlying data.

Use case: Privacy, scalability (rollups)

Mezo uses: ZK proofs for Layer-2 security.

Common Abbreviations

Quick reference for frequently used abbreviations:

Still Have Questions?

Suggest a term? We're always improving this glossary. Suggest additions on GitHub or Discord.