I think this content will be very useful for those who are new to the cryptocurrency world, helping them understand the types of cryptocurrencies that currently exist.
You should know that cryptocurrencies (crypto) can be divided into different types (categories) depending on their function, purpose, or underlying technology.
Here are the common classifications along with the meanings of each type:
1. Layer 1 Coins
Examples: Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Avalanche (AVAX), Cardano (ADA)
• Meaning: These are the foundational blockchains on which other projects can build.
• Function: Process transactions, secure the network, and often support smart contracts.
• Characteristics: Have their own blockchain, can be used to develop DApps.
2. Layer 2 Solutions
Examples: Polygon (MATIC), Arbitrum (ARB), Optimism (OP)
• Meaning: Expand processing capabilities (scalability) for Layer 1.
• Function: Reduce gas fees, accelerate transaction speeds by processing off-chain.
• Characteristics: Built on Layer 1 like Ethereum, still inherits security from Layer 1.
3. Infrastructure
Examples: Chainlink (LINK), The Graph (GRT), Filecoin (FIL), Arweave (AR)
• Meaning: Provides supporting services for the blockchain ecosystem such as oracles, storage, indexing, etc.
• Function: Connect real-world data to smart contracts. Query blockchain data or store data in a decentralized manner.
4. DeFi Tokens
Examples: Uniswap (UNI), Aave (AAVE), Maker (MKR), Curve (CRV)
• Meaning: Tokens of decentralized finance protocols.
• Function: Lending, borrowing, trading, yield farming without intermediaries.
• Characteristics: Often have staking or governance mechanisms.
.... continue in the comments
You should know that cryptocurrencies (crypto) can be divided into different types (categories) depending on their function, purpose, or underlying technology.
Here are the common classifications along with the meanings of each type:
1. Layer 1 Coins
Examples: Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Avalanche (AVAX), Cardano (ADA)
• Meaning: These are the foundational blockchains on which other projects can build.
• Function: Process transactions, secure the network, and often support smart contracts.
• Characteristics: Have their own blockchain, can be used to develop DApps.
2. Layer 2 Solutions
Examples: Polygon (MATIC), Arbitrum (ARB), Optimism (OP)
• Meaning: Expand processing capabilities (scalability) for Layer 1.
• Function: Reduce gas fees, accelerate transaction speeds by processing off-chain.
• Characteristics: Built on Layer 1 like Ethereum, still inherits security from Layer 1.
3. Infrastructure
Examples: Chainlink (LINK), The Graph (GRT), Filecoin (FIL), Arweave (AR)
• Meaning: Provides supporting services for the blockchain ecosystem such as oracles, storage, indexing, etc.
• Function: Connect real-world data to smart contracts. Query blockchain data or store data in a decentralized manner.
4. DeFi Tokens
Examples: Uniswap (UNI), Aave (AAVE), Maker (MKR), Curve (CRV)
• Meaning: Tokens of decentralized finance protocols.
• Function: Lending, borrowing, trading, yield farming without intermediaries.
• Characteristics: Often have staking or governance mechanisms.
.... continue in the comments
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
SHIB
0.00001478
-3.39%
DOGE
0.2344
-2.54%
PEPE
0.00001482
+2.98%