Glossary
Web3 Finance Glossary
Plain definitions of the accounting, tax, payroll, and treasury terms that come up when you're running a Web3 company or DAO.
- Blockchain accounting accounting
- Recording and reconciling financial transactions that occur on a blockchain, using immutable on-chain records as the source of truth. Unlike traditional accounting, blockchain accounting eliminates manual data entry — every transaction is permanently timestamped and publicly verifiable. #blockchain-accounting
- On-chain bookkeeping accounting
- Maintaining financial records by ingesting raw blockchain data rather than manual entry. An on-chain bookkeeping platform reads wallet and contract activity, classifies each transaction by type, and produces standard accounting outputs — general ledger, trial balance, profit and loss. #on-chain-bookkeeping
- On-chain reconciliation accounting
- Matching blockchain transactions against off-chain records (bank statements, invoices, internal ledgers) to confirm they agree. Because every on-chain transaction has a unique hash and timestamp, reconciliation can be automated and audited without relying on a counterparty's statement. #on-chain-reconciliation
- Multi-chain reconciliation accounting
- Reconciling transactions spread across several blockchains — Ethereum, Arbitrum, Polygon, Solana, and others — into a single unified ledger. The main challenge is parsing each chain's native transaction format and avoiding double-counting assets that have been bridged between chains. #multi-chain-reconciliation
- Cross-chain accounting accounting
- Accounting for assets and transactions that move between blockchains via bridges or cross-chain protocols. Cross-chain accounting must correctly attribute the source and destination of bridged funds to prevent duplicate entries and misclassification. #cross-chain-accounting
- Crypto reconciliation accounting
- Verifying that every crypto transaction in a company's books matches the corresponding on-chain data. Crypto reconciliation is typically done at the wallet, exchange account, and protocol level, and is required before generating accurate tax reports or financial statements. #crypto-reconciliation
- Blockchain audit trail accounting
- The immutable record of all transactions stored on a blockchain, providing a verifiable history that cannot be altered retroactively. For accounting, this record serves as a primary source document and removes the risk of falsified entries — every line item can be traced to a specific block and transaction hash. #blockchain-audit-trail
- DeFi accounting accounting
- Accounting for interactions with decentralized finance protocols — liquidity provision, yield farming, staking, borrowing, and lending. DeFi accounting is complex because a single protocol interaction can produce multiple simultaneous events, each with its own cost basis and potential tax consequence. #defi-accounting
- NFT accounting accounting
- Accounting for the creation, purchase, sale, or royalty income from non-fungible tokens. NFT accounting tracks cost basis per token and records secondary-sale royalty income as it accrues on-chain, requiring different treatment from fungible asset trades. #nft-accounting
- Crypto ERP accounting
- An enterprise resource planning system built or adapted for companies whose operations involve crypto assets. A crypto ERP integrates blockchain data, multi-currency accounting, payroll, and compliance in one platform — replacing the disconnected stack of spreadsheets, exchange dashboards, and traditional accounting software. #crypto-erp
- Web3 finance OS accounting
- A unified platform that consolidates all financial operations for a Web3 company or DAO — accounting, tax, payroll, treasury management, and compliance. The term reflects the shift from point tools to a single operating layer for finance, similar to how an OS unifies applications on a computer. #web3-finance-os
- Crypto cost basis tax
- The original purchase price of a crypto asset, used to calculate capital gains or losses when the asset is later sold or exchanged. Cost basis includes the acquisition price plus any transaction fees paid at the time of purchase, and the method used to determine it (FIFO, LIFO, HIFO) can significantly change taxable income. #crypto-cost-basis
- FIFO (First In, First Out) tax
- A cost basis method where the oldest crypto assets in a wallet are treated as sold first. FIFO is the default method in many jurisdictions, including the UK, and tends to produce higher capital gains in a market where asset prices have risen over time. #fifo
- LIFO (Last In, First Out) tax
- A cost basis method where the most recently acquired crypto assets are treated as sold first. LIFO is not permitted in all jurisdictions — it is disallowed in the UK, for example — but where allowed, it can reduce taxable gains in a rising market by matching sales against higher-cost recent purchases. #lifo
- HIFO (Highest In, First Out) tax
- A cost basis method where the highest-cost crypto assets are treated as sold first. HIFO minimizes taxable gains in the short term by pairing each sale with the most expensive lot in the wallet, regardless of when it was acquired. #hifo
- Crypto tax reporting tax
- Calculating and reporting taxable events from cryptocurrency transactions to a tax authority. Taxable events typically include selling crypto for fiat, swapping one crypto for another, receiving staking or mining rewards, and using crypto to pay for goods or services. Each event requires a gain or loss calculation based on cost basis. #crypto-tax-reporting
- Gas fees (tax treatment) tax
- Transaction fees paid to blockchain validators to execute on-chain operations. For tax purposes, gas fees paid when acquiring an asset increase cost basis; gas fees paid when disposing of an asset reduce the net proceeds. Treatment varies by jurisdiction, so most Web3 accounting platforms track gas fees separately for accurate tax calculation. #gas-fees-tax-treatment
- Yield farming (accounting) tax
- The practice of providing liquidity or staking assets in DeFi protocols in exchange for yield. Each yield payment is generally treated as ordinary income at its fair market value at the time of receipt, creating a continuous stream of small taxable events that require automated tracking to report accurately. #yield-farming-accounting
- Token vesting tax
- A schedule by which team members or investors receive token allocations gradually over time, typically with an initial cliff period followed by linear release. Each tranche that unlocks creates an accounting event — usually income recognition at fair market value on the vesting date — that must be tracked and reported. #token-vesting
- Crypto payroll tax tax
- Tax obligations generated by paying employees or contractors in cryptocurrency. In most jurisdictions, crypto wages are treated as ordinary employment income at the fair market value on the date of payment, requiring employers to calculate and withhold income tax and social contributions just as they would for fiat salaries. #crypto-payroll-tax
- Web3 payroll payroll
- A payroll system that processes employee or contractor compensation using cryptocurrency, stablecoins, or a combination of crypto and fiat. Web3 payroll platforms automate payment scheduling, multi-currency conversion, tax withholding, and on-chain transaction records across multiple jurisdictions. #web3-payroll
- Smart contract payroll payroll
- A payroll mechanism encoded in a smart contract that automatically distributes salaries on a predefined schedule — monthly, weekly, or per block — without requiring manual approval each time. Payments are triggered by on-chain conditions and recorded immutably, creating a verifiable compensation history. #smart-contract-payroll
- Stablecoin payroll payroll
- Paying employees or contractors in stablecoins (USDC, USDT, DAI) to eliminate the price volatility risk of crypto-denominated salaries. Stablecoin payroll is common in DAOs and cross-border Web3 teams because it provides the on-chain settlement benefits of crypto without currency exposure. #stablecoin-payroll
- Decentralized payroll payroll
- A payroll system that operates without a central intermediary, using smart contracts to automate and enforce compensation agreements directly between employer and employee. Decentralized payroll removes the need for a traditional payroll processor and allows global contributor payments with on-chain auditability. #decentralized-payroll
- DAO treasury treasury
- The collective funds held and managed by a Decentralized Autonomous Organization, typically stored in one or more multi-signature smart contracts. DAO treasury management covers tracking token holdings, stablecoin reserves, contributor payments, grant disbursements, and protocol revenue — all on-chain and subject to governance votes. #dao-treasury
- Treasury management (Web3) treasury
- Managing a company's or DAO's digital asset holdings, including liquidity planning, risk monitoring, diversification across stablecoins and volatile assets, yield optimization, and cash flow forecasting in a multi-chain environment. Web3 treasury management differs from traditional treasury because holdings can change in value by the hour and move across chains. #treasury-management-web3
- Multi-signature wallet treasury
- A crypto wallet that requires multiple private key holders to authorize a transaction before it is broadcast. Multi-sig wallets (commonly 2-of-3 or 3-of-5) are the standard for DAOs and corporate crypto accounts because they enforce authorization controls directly on-chain, without relying on a custodian. #multi-signature-wallet
- On-chain invoice treasury
- A payment request created and settled directly on a blockchain, typically using a smart contract or payment protocol. On-chain invoices create an immutable record of both the obligation and the settlement, simplifying accounts receivable reconciliation and providing payment proof without a third-party processor. #on-chain-invoice
- Proof of reserves treasury
- A cryptographic attestation — verifiable on-chain — that a custodian, exchange, or protocol holds the assets it claims to hold. For financial reporting, proof of reserves functions as a real-time balance sheet check that is independently verifiable without a traditional audit engagement. #proof-of-reserves
- MiCA (Markets in Crypto-Assets) regulation
- The European Union's regulatory framework for crypto-asset markets, phased in from 2024 to 2025. MiCA establishes rules for crypto-asset issuers, service providers, and stablecoin operators — covering licensing, reserve requirements, financial reporting, and consumer protection. It is the first comprehensive crypto regulation at this scale globally. #mica
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