Key terms you'll run into on this site and in crypto exchanges generally, defined plainly.
- Address Whitelisting
- A security setting that limits withdrawals to preapproved wallet addresses. It is one of the few exchange protections that can stop a stolen login from becoming an immediate loss.
- AMM
- Automated market maker. A smart contract that prices trades against a liquidity pool rather than matching buyers and sellers through a traditional order book.
- API Key
- A credential that lets software access an exchange account. Keys can be restricted to reading data or placing trades, and withdrawal permission should usually stay disabled.
- Auto Deleveraging
- A derivatives exchange process that closes profitable traders' positions if its insurance fund cannot cover losses from bankrupt liquidated accounts.
- Basis Trade
- A strategy that buys an asset in spot and sells its futures contract, or the reverse, to capture the gap between the two prices rather than betting on direction.
- Centralized Exchange
- An exchange run by a company that holds customer assets and matches trades internally. It is convenient, but users rely on the operator for custody and withdrawals.
- Cross Margin
- A margin mode that uses the available balance in an account as collateral for multiple positions. It can prevent a quick liquidation, but it also puts more funds at risk.
- Deposit Network
- The blockchain selected for a crypto deposit or withdrawal, such as Ethereum, Tron, or Arbitrum. Choosing the wrong network can make funds difficult or impossible to recover.
- Depth Chart
- A visual chart of open buy and sell orders at different prices. It shows liquidity near the current price, though large displayed orders can be canceled without warning.
- Derivatives Exchange
- An exchange offering contracts tied to crypto prices, including futures, options, and perpetuals. Traders can use leverage, which makes losses arrive much faster than in spot trading.
- DEX Aggregator
- A service that searches multiple decentralized exchanges and liquidity pools for a better swap route. The quoted price can still change before the transaction confirms.
- Funding Rate
- A periodic payment exchanged between long and short perpetual futures traders. Positive funding means longs pay shorts, while negative funding means shorts pay longs.
- Hot Wallet
- A wallet connected to the internet and used for routine deposits and withdrawals. It is practical for an exchange, but it carries more hacking risk than cold storage.
- Insurance Fund
- A reserve used by a derivatives exchange to absorb losses from liquidated accounts before those losses are pushed onto profitable traders through auto deleveraging.
- Isolated Margin
- A margin mode that assigns a fixed amount of collateral to one position. If that position is liquidated, the rest of the account balance is generally protected.
- KYC
- Know Your Customer checks that verify a user's identity, usually with ID documents and a selfie. Many exchanges require it before allowing meaningful deposits or withdrawals.
- Liquidation Price
- The estimated price at which an exchange will forcibly close a leveraged position because its collateral no longer meets the required maintenance margin.
- Maker Fee
- The trading fee charged for placing an order that adds liquidity to the order book, such as a limit order that does not fill immediately. It is usually lower than the taker fee.
- Mark Price
- A reference price used to calculate unrealized profit, loss, and liquidations on derivatives exchanges. It is designed to resist brief spikes in the last traded price.
- Market Maker
- A trader or firm that continuously posts buy and sell orders to provide liquidity. Some exchanges reward market makers with fee rebates or direct incentives.
- Order Book
- A live list of open buy orders, called bids, and sell orders, called asks. It is the core matching system for most centralized spot and derivatives exchanges.
- Perpetual Futures
- A futures contract with no expiry date. Its price is kept near the spot market through funding payments between long and short traders.
- Proof of Reserves
- A disclosure intended to show an exchange holds customer assets, often using wallet addresses and a cryptographic liability snapshot. It does not prove the business has no hidden debts.
- Slippage
- The difference between an expected trade price and the price actually received. Slippage gets worse with large orders, thin liquidity, and sudden market moves.
- Stop Limit Order
- An order that places a limit order after a chosen stop price is reached. It gives price control, but the limit order may never fill during a fast move.
- Taker Fee
- The fee charged for an order that immediately matches existing liquidity, such as a market order. Taker fees are commonly higher than maker fees.
- Travel Rule
- A compliance requirement that can require crypto businesses to collect and share sender and recipient details for qualifying transfers. It can delay withdrawals to certain platforms.
- Withdrawal Hold
- A temporary block on withdrawals after a security change, new device login, password reset, or fiat purchase. Good exchanges explain the reason and the release time clearly.