Imagine a large digital ledger shared across thousands of computers. Every transaction is recorded permanently. No one can edit or delete an entry once it's been written. This simple principle, a register that everyone can read and that no single party can falsify, is enough to remove the need for a trusted third party like a bank or a notary.

How does the blockchain work?

The blockchain is a chain of blocks: each block contains a set of transactions, and every new block is linked to the previous one through a unique cryptographic fingerprint called a hash. Concretely, the hash is a digital signature that summarizes the contents of the block: changing even a single comma in a transaction completely changes the hash. Since each block contains the hash of the previous one, rewriting a past transaction would require recomputing the entire chain and convincing the majority of the network, which is economically impossible on Bitcoin or Ethereum.

What makes it revolutionary is its decentralization. Unlike a bank that stores your data on a central server, the blockchain is copied across thousands of computers called nodes, spread around the world. If a single node is compromised, hacked or shut down, the others keep running normally and preserve the entire history. To take Ethereum down, you would have to simultaneously turn off tens of thousands of independent machines: this is what we call censorship resistance.

For a transaction to be added, it must be validated by the network. This is called the consensus mechanism, the rule that allows thousands of strangers to agree on the state of the ledger, with no leader and no central authority:

A transaction's journey, step by step

To picture what happens when you send crypto, here's the journey of a transaction:

Step 1, signature. From your wallet, you sign the transaction with your private key. No one else can produce that signature, it's the proof that you really are the one moving the funds. Step 2, mempool. Your transaction joins the mempool, a public waiting room where it sits anywhere from a few seconds to several minutes depending on the fee you offered. Step 3, inclusion. A validator picks it up and includes it in the next block alongside other transactions. Step 4, confirmation. The block is broadcast to the entire network, verified by other nodes, and added to the chain. Once a few blocks are stacked on top, the transaction is considered final and can no longer be reversed.

Beyond money: programs and applications

Once recorded in a block, a transaction is immutable: no one can modify it, not even the protocol's creator. This property is what makes the blockchain a trusted tool with no intermediary, and what opens the door to applications that were impossible in the classic financial system.

The first application of blockchain was cryptocurrency (Bitcoin, 2009): sending value from one side of the world to the other in a few minutes, with no bank and no public holiday. But a blockchain like Ethereum can do much more: it can execute code directly on chain. Every node on the network runs the same program on the same data and agrees on the result. This unlocks three big families of applications:

• Smart contracts: programs that execute automatically when their conditions are met (a security deposit that releases itself, an insurance that triggers as soon as a flight is cancelled, a loan that repays itself when the collateral is sufficient). No human, no paperwork.
• NFTs: unique tokens that represent a piece of art, a concert ticket, a domain name, a certificate of ownership. Two NFTs are never interchangeable, unlike two euros which are.
• DeFi (decentralized finance): lending, swapping and yield apps, open 24/7 to anyone in the world, with no account creation or KYC at the protocol level.

All of these objects rely on smart contracts. You interact with them through your wallet, without creating an account, without giving your name. Your public address is your identifier.

A cryptocurrency is a digital currency that runs on a blockchain, with no central bank or government to issue or control it. Its value is not backed by any state: it is determined continuously by supply and demand on exchange platforms. If more people want to buy than sell, the price goes up; if it's the opposite, it goes down. No authority can decree that one bitcoin is worth 50,000 €: the market decides in real time.

Unlike the euro, which a central bank can print in unlimited quantities, most cryptocurrencies have issuance rules written into their code. These rules are public and cannot be changed overnight. That's the big difference with a classic currency: the monetary policy of a Bitcoin or an Ethereum is predictable and auditable by anyone.

Coin vs token: the nuance that creates confusion

You will quickly come across both words, sometimes used as synonyms. The distinction is useful:

• Coin: the native currency of a blockchain. BTC on Bitcoin, ETH on Ethereum, SOL on Solana. It's what pays the gas (transaction fees) on its chain.
• Token: an asset issued on top of a blockchain via a smart contract. The stablecoins USDC and USDT, governance tokens UNI, AAVE, ARB are tokens, not coins. They exist thanks to Ethereum (or another chain) but they are not the native currency of the network.

Concretely, to send 100 USDC on Ethereum, you spend USDC (the token) and you pay the fees in ETH (the native coin). Many beginners get stuck because they have USDC on Arbitrum but zero ETH to pay the gas.

The big families of tokens

There are tens of thousands of tokens today. Most fall into one of these categories:

What gives a crypto its value?

It's the question every beginner asks. Four pillars:

• Scarcity: a maximum number of tokens fixed in advance and impossible to increase.
• Real utility: a protocol used by millions of people has a stronger token than an empty project.
• Network security: the more attackable the blockchain, the less its assets are worth. Bitcoin and Ethereum are the most secure.
• Liquidity: if you can buy and resell instantly without moving the price, the asset inspires trust.

A wallet (or "purse") doesn't actually store your crypto, contrary to what the name suggests. Your crypto always stays on the blockchain. The wallet only stores your cryptographic keys, the ones that prove to the network that you have the right to move the funds tied to your address. It's your gateway into Web3 and, in practice, your digital identity.

To understand what follows, keep this image in mind: the blockchain is a giant public vault. Everyone can see what's in each locker (balances are public), but only the person with the key to a locker can open it. The private key is that key, the public address is the locker number.

The relationship between private key and public address is one-way: from the private key, you can easily compute the public address, but the reverse is mathematically impossible. That's what lets you share your address safely without ever revealing your key.

Types of wallets

Two main families exist, depending on whether the private key is exposed to the internet or not. Pros usually use both in parallel: a hot wallet for daily operations, a cold wallet for long-term savings.

A third family deserves a mention: smart wallets (or contract wallets) like Safe (formerly Gnosis Safe), Argent or Coinbase Smart Wallet. They're no longer controlled by a single key but by a smart contract that can require multiple signatures, withdrawal limits, or social recovery via trusted friends. It's an answer to the lost-wallet nightmare.

Don't be scared: millions of people manage a wallet safely. You just need to follow a few simple rules below.

Essential security rules

Almost 100% of crypto losses come from poor seed phrase handling or signing a malicious transaction. The blockchain itself is almost never hacked, the user is the one who gets fooled. Here are the non-negotiable rules:

The recommended wallet for farming: Rabby

Before going further, three terms to clarify:

• Airdrop: free distribution of tokens to those who used a protocol. That's what we're trying to capture.
• EVM (Ethereum Virtual Machine): the engine of Ethereum. EVM-compatible chains (Arbitrum, Optimism, Base, Polygon...) share the same standard, so a single wallet works on all of them.
• Protocol: a decentralized application (a DEX, a perp exchange, a lending market). You interact with it by signing transactions from your wallet.

For airdrops, the recommended wallet is Rabby. It's an EVM wallet: it works on Ethereum, Arbitrum, Optimism, Base, and every other EVM chain. Here's why it's better than MetaMask for a farmer:

• Automatic network switching: it detects the chain of the protocol you're visiting and switches by itself.
• Transaction simulation: before signing, you see exactly what's about to leave and enter your wallet. A key protection against scams.
• Multi-account: a farmer creates several addresses (often one per protocol) to multiply eligibility. Rabby handles this routine more cleanly than MetaMask.
• Built-in scam alerts: it flags known malicious contracts.

Exchanges are where you buy, sell and swap cryptocurrencies. There are two fundamental types: CEX (centralized) and DEX (decentralized). The difference is not just a technical detail: it determines who really controls your funds, what data you give access to, and which airdrops you can capture.

The classic newcomer journey

For a beginner, the typical scenario is almost always the same:

1. Open an account on a CEX (Binance or Coinbase) and complete KYC.
2. Deposit 100 or 1,000 € by SEPA transfer.
3. Buy ETH or a stablecoin (USDC).
4. Withdraw those funds to your own wallet (Rabby) on a compatible blockchain (often Arbitrum or Base, to save on gas).
5. From there, swap and use DEXs to interact with protocols, build up activity, and become eligible for airdrops.

The critical moment is step 4: the withdrawal from the CEX to your wallet. Always send a small test amount (10 € in stable) before transferring a large sum. A typo in the address or a network mistake (sending on Ethereum mainnet when it should have been Arbitrum, for example) can permanently lose your funds.

Understanding the difference between Layer 1 and Layer 2 is crucial to navigate the crypto ecosystem and, above all, to optimize your fees. Misreading these layers will make you pay 30 times too much for every transaction and will block you when a protocol runs on a chain where you don't have the right gas token.

The simplest analogy: think of a main highway (the L1) on top of which elevated express lanes (the L2s) have been built to relieve traffic. The cars taking the express lane reach the same destination, much faster and far cheaper, but they all come back down to the main highway for final security.

How a Layer 2 works (in pictures)

In plain terms: you send a tx on Arbitrum, it executes immediately for almost free, then it ends up in a big package posted to Ethereum. The L1 doesn't see your individual transactions, but it sees the summary and the proof that they are valid. That's what gives you the security of Ethereum at the price of a light chain.

The two big models: Optimistic vs ZK Rollups

Not all L2s are equal. They differ in how they prove the validity of their batches to the L1:

• Optimistic Rollups (Arbitrum, Optimism, Base): transactions are posted on Ethereum assuming they are valid. For 7 days, anyone can challenge by publishing a fraud proof. Withdrawing funds to Ethereum therefore nominally takes 7 days, unless you go through a paid third-party bridge.
• ZK Rollups (zkSync, Starknet, Scroll, Linea): each batch comes with a mathematical proof (zero-knowledge proof) that instantly demonstrates the validity of all transactions. No challenge period, near-instant exit, but more complex infrastructure.

For the everyday user, the difference is invisible: you sign the same way. It mostly matters when you want to withdraw large amounts to Ethereum.

Popular L2s

Arbitrum and Optimism dominate by volume on Ethereum. Base (by Coinbase) attracts newcomers thanks to its native integration in the Coinbase app. zkSync, Scroll, Linea represent the new ZK wave. Blast made waves in 2024 with massive farming. They all sign with the same EVM wallet (Rabby, MetaMask), but each is selected from the wallet's list of networks.

Why does it matter for airdrops?

Many L2s don't yet have their own token, or are preparing new distributions. Arbitrum distributed $ARB in March 2023 (on average several thousand dollars per eligible address). Optimism distributed $OP in several waves starting in 2022. More recently, zkSync, Starknet, Scroll, LayerZero, Blast have also fired their airdrops. The next L2s to launch their token represent the biggest farming opportunities right now, and that's exactly what the rest of this course will teach you to capture methodically.

The classic beginner trap: not bridging your funds to the L2 and paying $50 in gas on Ethereum mainnet for a swap that would have cost 5 cents on Arbitrum.

The word gas often causes confusion. It's actually a simple metaphor: you pay fuel to drive your transaction on the blockchain. The more complex the action, the more gas it consumes, exactly like a car burns more fuel uphill than on flat ground. "Gas" is the unit measuring the computational work needed to execute a transaction on the blockchain. Each action (sending tokens, interacting with a smart contract, minting an NFT) consumes a different amount of gas.

Why do we pay gas? For two reasons: to compensate the validators who secure the network and execute your code, and to prevent spam. Without gas, anyone could flood Ethereum with millions of useless transactions and freeze the network for everyone. Gas attaches a cost to every action and forces prioritizing what deserves to be written into the blockchain.

Which gas token for which chain?

The classic trap: a beginner buys USDC on Coinbase, sends them to Arbitrum, and ends up stuck because they don't have a cent of ETH to pay for the slightest transaction. Here's the reference table:

How is it calculated on Ethereum?

The formula is simple:

The gas used depends on the complexity of the action (a simple ETH transfer = 21,000 gas, a Uniswap swap ~150,000 gas, an NFT mint 200,000 to 500,000 gas). The gas price depends on demand on the network at time T: if many people want to write into the next block, the price climbs. The Gwei is a sub-unit of ETH (1 ETH = 1,000,000,000 Gwei). The price moves in real time with congestion: in quiet hours 5 to 10 Gwei, during a bull-run viral NFT mint it can spike to 200+ Gwei.

To track gas live on Ethereum, the pro reflex is to keep a tab open on etherscan.io/gastracker or blocknative.com/gas. On L2s, gas is so low it's not worth checking.

Concrete examples

How to lower your fees

On a platform like Hyperliquid, Trade.xyz or any CEX (Binance, Bybit), one of the most important elements to understand is the order book. It reflects, in real time, market activity and determines the price at which your orders will execute. Without this understanding, you'll systematically pay more than necessary and you'll get eaten by liquidity every time you trade a serious size.

The analogy: picture an auction at the fish market. Sellers shout their selling prices, buyers their buying prices, and a trade happens as soon as the two sides meet. The order book is exactly that, but displayed in real time on your screen and fed by thousands of participants worldwide.

Definition

An order book is a list of every pending order on a market. An order represents an intent: either buy an asset at a given price, or sell an asset at a given price. Until those orders are executed, they remain visible in the book, where anyone can see them and come "eat" them.

Two types of orders coexist:

• Market order: you take what's available immediately. Execution guaranteed, price taken. It's the "I want to buy now at any reasonable price" option. You're a taker, you take liquidity from the book.
• Limit order: you set your price and wait for someone to come fill it. Price guaranteed, execution uncertain. You're a maker, you bring liquidity to the book, and fees are almost always lower (sometimes negative on certain platforms).

Price rises when buyers fill sell orders. It falls when sellers fill buy orders.

Diagram: what an order book looks like

Here's a simplified view of an order book on the ETH/USDC pair. At the top, sellers; at the bottom, buyers; in the middle, the spread (the gap between the best bid and the best ask).

How to read it? If you place a buy order at 3,213, it executes instantly against the asks at 3,212.50 then 3,213.10 until your size is filled. If you place a limit order at 3,211, it joins the bid stack and waits for a seller to come fill it at that price.

Reading and interpreting the data

Each row of the book corresponds to a price level, paired with a quantity (the volume of orders available). This lets you observe:

• Where the zones of interest sit
• Where volume concentrates
• How the market is structured at a given moment

Significant volume at a certain price indicates a strong presence of buyers or sellers.

Buy and sell "walls"

Some areas of the book concentrate a lot of volume. We call these "walls":

Using the order book to generate volume

In a volume strategy, the goal isn't to predict the market, but to execute your actions cleanly while limiting losses to a maximum. The order book becomes an essential tool.

Following on from the order book, the stop-limit is an automated order that's essential for building a coherent strategy, especially when you can't watch the market non-stop (and that's almost always the case in real life). It's available on most platforms (Binance, KuCoin, Hyperliquid…).

Before going deeper: why is it critical? Because crypto markets run 24/7. While you sleep or work, the price can move ±10% in a few minutes. Without a conditional order, either you stay glued to your screen (impossible to keep up), or you absorb drawdowns blind. The stop-limit turns a decision into autopilot: you set the conditions calmly, and the market executes them for you.

The three order types to know

Pros and cons

Liquidity is how easily an asset can be bought or sold without strongly impacting its price. It's a central concept in finance, and even more so in crypto, where most listed tokens are in fact illiquid.

The analogy: trying to sell a suburban house takes weeks and the price gets negotiated; selling an Apple share takes a second and the price barely moves. The house is illiquid, the share liquid. In crypto, Bitcoin is the equivalent of the Apple share; an obscure meme coin is the equivalent of a studio in an isolated village. You can put any price in the window, it won't sell unless a buyer comes along.

How to gauge a market's liquidity?

Before taking a position, three indicators to look at:

• 24h volume: how many dollars traded on the pair in the last 24h. Below $100,000, be careful. Below $10,000, consider that the market doesn't exist.
• Order book depth: on Hyperliquid or Binance, the interface shows the depth chart, a curve showing how much capital is needed to move price by ±2%. A steep curve = illiquid market.
• Bid/ask spread: already covered above. A tight spread (less than 0.1%) on a major venue = good liquidity.

Why does it matter for farming?

When you generate volume on a platform, you need to be able to enter and exit positions without losing money on execution. A liquid market lets you do that cleanly. An illiquid market turns every operation into a potential source of loss, and stacked over hundreds of trades, that can eat your entire expected gain. Another consequence: if a protocol offers an airdrop based on volume traded, doing that volume on an illiquid market may cost you more in slippage than the airdrop will be worth.

Quick reminder before diving in: a swap is exchanging one token for another on a DEX (for example USDC → ETH). It's the most common operation in DeFi.

The analogy to understand MEV: imagine a supermarket cashier who can, in exchange for a tip, let someone cut in front of you in line. An opportunist sees your full cart of items they also want, offers a bigger tip, jumps ahead of you, buys everything, and resells it later at a higher price. On the blockchain, the "line" is called the mempool, the "cashier" is the validator, and the opportunist is an MEV bot. Everything is legal and programmed, but you're the one footing the bill.

When you do a swap, your order isn't executed instantly: it first goes through the mempool, a public waiting room where every pending transaction is visible before being recorded into a block. And that's exactly where automated programs, the MEV bots, scan and strike. Why do these attacks exist? Because everything is public and there's money to capture by reordering transactions. This is what we call MEV.

The 3 MEV attacks to know

How to protect yourself in practice

Everything to understand about valuation, prices, volumes and the dynamics of the crypto market. Click a question to expand the answer.