---
description: >-
  This page lays out definitions of some of the technical and legal terms used
  throughout this document
---

# Glossary

### Airdrop&#x20;

When new tokens are created and distributed to wallets ‘for free’ i.e. based on past behavior that is deemed to have been in the interest of the application’s development.

### Bid/Ask Spread

A bid/ask spread is the difference between the bid price and the ask price for a given asset. The bid price represents the highest price a buyer is willing to pay for the asset, while the ask price represents the lowest price a seller is willing to accept.

### Blockchain&#x20;

A type of distributed database. It is a growing database of time-stamped transactions that cannot be altered. Each new addition to the database is a ‘block’ of data that contains transactions. These transaction blocks are verified by a network of computers and added to the chain. Also termed ‘distributed ledger’.&#x20;

* Decentralized exchange&#x20;
* Sometimes referred to as a DEX, these allow users to buy and sell digital assets directly with each other, bypassing intermediaries that might impose fees, such as an exchange or clearinghouse.&#x20;

### Decentralized Finance&#x20;

Decentralized Finance (DeFi) is an umbrella term for a collection of projects that use dApps (via ‘smart contracts’) to mimic the functionality or service typically provided by a centralized financial intermediary, e.g., a bank or an exchange.&#x20;

DeFi may have the potential to lower traditional financial fees, create near-instant settlements of digital assets and have other uses from lending, borrowing, trading, payments and asset management.&#x20;

### Distributed Ledger Technology (DLT)&#x20;

Distributed Ledger Technology (DLT) is a type of database that is shared and replicated across a network of computers (see Nodes). &#x20;

One of the most well-known examples of distributed ledger technologies is a blockchain. &#x20;

### Digital Assets&#x20;

A Digital Asset is a broad term referring to non-tangible forms of electronic records that represents an ownership of a unique item, such as a cryptocurrency, digital collectable, or digital token.&#x20;

### Document of Title

A document of title, such as the Gold Token, is a contract with, not an interest in, the bailee (_i.e.,_ WisdomTree Digital or its affiliate). A Gold Token user’s ability to obtain gold in exchange for a Gold Token depends upon WisdomTree Digital’s maintenance of the gold with the Custodian and compliance with the conditions for retrieval. The gold will be held in a customer account that would not be subject to the insolvency of the WisdomTree Digital.

### Token&#x20;

A token is a digital asset that represents a certain value, utility, or function on a blockchain network. Tokens are built on top of a blockchain via a decentralized application (see: dApp) and can be used for many purposes including representing financial assets, a vote, or stake in a project. &#x20;

Two main types of tokens include: &#x20;

* Security Tokens: Security Tokens represent ownership of a real-world asset such as a stock, bond, real estate, or artwork. They are subject to regulatory oversight and typically treated as financial securities&#x20;
* Utility Tokens: These tokens grant a specific use case for the owner to a product or service on the blockchain. Tokens can be used or redeemed as part of smart contracts for different services.  &#x20;

### Tokenization&#x20;

Tokenization is the process of representing a real-world asset or utility as a digital asset on a blockchain. This allows the asset or utility to be securely transferred and stored on the blockchain leveraging the protocol’s efficiencies and accessibilities. &#x20;

A few of the benefits of tokenization include, but are not limited to:&#x20;

* Lower transaction costs&#x20;
* Near instant settlement&#x20;
* Improved security&#x20;
* Greater accessibility&#x20;
* Increased liquidity&#x20;

### Smart Contract&#x20;

A smart contract is executable code stored on a blockchain that performs various functions enabling versatility in the system.
