Glossary
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 pre-approved wallet addresses. It adds friction, but it's one of the best defenses against account takeover.
- AML Screening
- Checks against sanctions lists, crime databases, and suspicious transaction data. Exchanges use it to flag deposits, withdrawals, or accounts linked to illicit activity.
- API Key
- A credential that lets trading software connect to an exchange account. Disable withdrawal permissions unless you have a very specific reason to enable them.
- Ask Price
- The lowest price a seller is willing to accept for an asset. The best ask is the cheapest offer currently visible in the order book.
- Bid Price
- The highest price a buyer is willing to pay for an asset. The gap between the best bid and best ask is the spread.
- Centralized Exchange (CEX)
- A trading platform run by a company that holds customer assets or controls settlement. CEXs are convenient, but users must trust the operator's custody and controls.
- Cold Storage
- Crypto held offline, usually in hardware wallets or isolated systems. Reputable exchanges keep most customer funds cold, rather than exposed in internet-connected wallets.
- Cross Margin
- A margin mode where your available account balance supports all open positions. It can prevent a small liquidation, but a bad trade can damage the whole account.
- Custodial Exchange
- An exchange that controls the private keys for customer deposits. You can trade easily, but you don't have direct possession of the crypto in your account.
- Deposit Network
- The blockchain used to send funds to an exchange, such as Ethereum, Tron, or Arbitrum. Choosing the wrong network can turn a routine deposit into a support ticket.
- DEX Aggregator
- A service that searches multiple decentralized exchanges and routes a swap through the best available pools. It can improve pricing, though gas costs still matter.
- Funding Rate
- A periodic payment between long and short perpetual futures traders. Positive funding means longs pay shorts, often a sign that bullish leverage is getting crowded.
- Hot Wallet
- A wallet connected to the internet and used for day-to-day deposits and withdrawals. It is necessary for exchange operations, but carries more attack risk than cold storage.
- KYC
- Know Your Customer verification, usually requiring identity documents and sometimes proof of address. Most serious centralized exchanges require it before full access is granted.
- Limit Order
- An order to buy or sell at a chosen price or better. It gives you price control, but it may never fill if the market moves away.
- Liquidity Pool
- A smart contract holding assets that decentralized traders swap against. Pool depth affects price impact, and liquidity providers can lose money through impermanent loss.
- Maker Fee
- The trading fee charged when your order adds liquidity to the order book, usually through a resting limit order. Maker fees are often lower than taker fees.
- Market Maker
- A firm or trader that continuously posts buy and sell quotes. Good market makers tighten spreads, which is far more useful than an exchange's flashy marketing claims.
- Market Order
- An order that executes immediately against available bids or asks. It is fast, but thin order books can produce ugly fills and unexpected slippage.
- Order Book
- A live list of open buy and sell orders at different prices. It shows visible liquidity, though large traders can cancel orders before they are filled.
- Proof of Reserves
- A method for showing that an exchange controls certain wallet balances, often using cryptographic attestations. It is useful, but it does not prove the exchange has no hidden liabilities.
- Slippage
- The difference between the expected trade price and the actual execution price. It gets worse during volatility or when trading a coin with weak liquidity.
- Spot Pair
- A market for directly exchanging one asset for another, such as BTC/USDT. Unlike futures, spot trading does not involve an expiry date or funding payments.
- Taker Fee
- The fee charged when an order immediately matches existing liquidity in the order book. Market orders are usually taker trades and often cost more.
- Trading Pair
- Two assets quoted against each other, such as ETH/USD or SOL/USDT. The first asset is the base asset, while the second is used to price it.
- Travel Rule
- A rule requiring regulated crypto firms to share sender and recipient details for qualifying transfers. It can delay withdrawals to some exchanges or self-custody services.
- Withdrawal Fee
- A charge an exchange applies when you send crypto out. It may reflect network costs, but some platforms use it as a quiet extra revenue source.