Research · Trading Glossary
Trading Glossary
Plain-English definitions of the trading terms that start with L.
L
- Latency
- The delay between submitting a transaction and receiving confirmation.
- Launchpad
- A platform facilitating structured token launches and distribution.
- Layer 0
- Infrastructure beneath individual chains, providing shared networking, security, or chain-deployment frameworks.
- Layer 1 (L1)
- A base blockchain that provides its own consensus and settlement — Bitcoin, Ethereum, Solana.
- Layer 2 (L2)
- A protocol built on top of a Layer 1 that processes transactions off the base chain while inheriting its security guarantees.
- Layer 3 (L3)
- An application-specific chain settling to a Layer 2 rather than directly to a Layer 1.
- Least Privilege
- Granting each person and system only the access strictly required for their function.
- Ledger
- The authoritative record of all balances and transactions.
- Legal Wrapper
- A recognized legal structure adopted by a DAO to enable contracting, limit member liability, and satisfy regulatory requirements.
- Lending Protocol
- A smart contract system matching depositors with borrowers algorithmically.
- Leverage
- The multiple by which a position exceeds the trader's own capital. Leverage amplifies gains and losses symmetrically.
- Licensing / Authorization
- Formal permission from a regulator to conduct specified financial activities.
- Light Client
- A node that verifies block headers and requests specific data from full nodes rather than storing the full chain. Enables verification on resource-constrained devices.
- Light Client Bridge
- A bridge in which each chain verifies the other's consensus directly through an on-chain light client.
- Lightning Network
- Bitcoin's payment channel network, enabling fast, low-cost payments routed across a mesh of channels.
- Limit Order
- An order executing only at a specified price or better.
- Liquid Proof of Stake (LPoS)
- A variant allowing holders to delegate stake without transferring custody and to redelegate freely.
- Liquid Restaking Token (LRT)
- A transferable token representing a restaked position.
- Liquid Staking
- Staking through a protocol that issues a transferable token representing the staked position, preserving liquidity.
- Liquid Staking Token (LST)
- A transferable token representing a staked position and its accruing rewards.
- Liquidation
- The forced sale of collateral when a position's health deteriorates past a defined threshold.
- Liquidation MEV
- Competing to execute profitable liquidations of undercollateralized positions.
- Liquidation Penalty
- The discount or fee applied during liquidation, compensating the liquidator and the protocol.
- Liquidation Price
- The price at which a leveraged position is force-closed.
- Liquidation Threshold
- The collateral ratio at which a position becomes eligible for liquidation.
- Liquidity
- The ease with which an asset can be traded in size without moving the price.
- Liquidity Bootstrapping Pool (LBP)
- A launch mechanism with dynamically shifting pool weights, designed to reduce bot advantage and support price discovery.
- Liquidity Fragmentation
- The dispersal of an asset's liquidity across multiple chains and wrapped representations, degrading execution quality on each.
- Liquidity Lock
- Committing launch liquidity to a time-locked contract so it cannot be withdrawn, an anti-rug measure that can be independently verified.
- Liquidity Mining
- Distributing protocol tokens to liquidity providers as an incentive to attract capital.
- Liquidity Network Bridge
- A model where liquidity pools exist on both chains and users swap into locally held assets rather than receiving a wrapped representation.
- Liquidity Pool
- A smart contract holding reserves of two or more assets against which users trade.
- Liquidity Provider (LP)
- A participant who deposits assets into a pool or venue so that others can trade against them, earning fees in return.
- Liquidity Provision Agreement
- A contractual arrangement engaging a market maker to maintain defined spread and depth commitments on a listed asset.
- Listing
- The addition of an asset to a trading venue.
- Listing / Bid
- An offer to sell at a stated price, or an offer to buy.
- Litepaper
- A condensed, non-technical version of a whitepaper aimed at a general audience.
- LMD-GHOST
- Ethereum's fork choice rule, which selects the branch supported by the greatest weight of recent validator attestations.
- Loan-to-Value (LTV)
- Debt expressed as a percentage of collateral value.
- Lock-and-Mint
- The most common bridge model: assets are locked on the source chain and a representative token is minted on the destination chain.
- Lockup
- A period during which tokens cannot be transferred or sold.
- Logic Error
- A flaw in intended business logic rather than in implementation mechanics; the class of bug least likely to be caught by automated tooling.
- Long
- A position that profits when the price rises.
- Long-Range Attack
- An attack in which an adversary rebuilds chain history from an early point using previously valid keys. Mitigated by weak subjectivity checkpoints.
- Longest Chain Rule / Heaviest Chain Rule
- The rule that nodes treat the chain with the most accumulated work as canonical.
- Low Float / High FDV
- A launch structure with small circulating supply and large scheduled unlocks, a pattern associated with sustained downward price pressure post-listing.
- LP Token
- The token representing a provider's proportional claim on a liquidity pool.