Glossary

Key terms you'll run into on this site and in crypto exchanges generally, defined plainly.

ADL

Auto deleveraging. A futures exchange may reduce winning traders' positions to cover losses when its insurance fund cannot absorb bankrupt accounts.

API Key

A credential that lets trading software connect to an exchange account. Disable withdrawal permission unless you have a very specific reason to allow it.

Ask Price

The lowest price a seller is currently willing to accept. It sits on the sell side of the order book.

Base Currency

The first asset in a trading pair. In BTC/USDT, BTC is the base currency and order sizes are usually shown in BTC.

Bid Price

The highest price a buyer is currently offering. The gap between the best bid and best ask is the spread.

Centralized Exchange (CEX)

A platform run by a company that holds customer assets and matches trades internally. It is convenient, but you rely on the operator's custody and controls.

Cold Wallet

A wallet kept offline from internet-connected systems. Exchanges use cold storage to reduce the risk of a hot wallet hack.

Cross Margin

A margin mode where available collateral is shared across positions. It can prevent one trade from closing early, but a bad trade can threaten the whole balance.

Custody

Control over private keys and the assets tied to them. On a custodial exchange, the platform has the keys, not the customer.

Deposit Address

The blockchain address an exchange assigns for receiving a specific asset. Sending the wrong network or token can make recovery difficult or impossible.

Depth Chart

A chart showing cumulative buy and sell orders at different prices. It helps reveal thin books, large walls, and likely slippage.

Derivatives Exchange

An exchange offering contracts such as futures, options, or perpetuals rather than simple spot purchases. These products often involve leverage and liquidation risk.

Funding Rate

A periodic payment between long and short perpetual futures traders. Positive funding means longs pay shorts, and high rates can make holding a position expensive.

Hot Wallet

A wallet connected to the internet for routine deposits and withdrawals. It is practical for exchange operations but carries more attack exposure than cold storage.

KYC

Know Your Customer checks that require identity documents, selfies, or address evidence. They are common on regulated exchanges and can affect withdrawal limits.

Limit Order

An order to buy or sell at a chosen price or better. It gives price control, though it may never fill if the market moves away.

Liquidity

How easily an asset can be bought or sold without moving its price much. Deep liquidity usually means tighter spreads and cleaner execution.

Maker Fee

The fee charged when an order adds liquidity to the order book, usually through an unfilled limit order. Maker rates are often lower than taker rates.

Market Order

An order that executes immediately against available orders. It is fast, but the final price can be worse than expected in a thin market.

Order Book

A live list of open buy and sell orders, organized by price. It shows current supply and demand, though large displayed orders can be cancelled.

Perpetual Futures

Futures contracts with no expiry date. They track spot prices through funding payments and are a common source of rapid liquidations.

Proof of Reserves

Evidence an exchange publishes to show it controls certain on-chain assets. It is useful, but it does not prove the exchange has no hidden debts or liabilities.

Slippage

The difference between the expected trade price and the actual execution price. Large orders and shallow books usually create more slippage.

Spot Market

The market for buying or selling the actual asset for immediate settlement. Unlike futures, spot trading does not create a derivative position.

Taker Fee

The fee charged when an order removes liquidity by filling an existing order. Market orders are almost always taker orders.

Trading Pair

Two assets quoted against each other, such as ETH/USDT. The first asset is traded, while the second is used to express its price.

Withdrawal Whitelist

A security feature that restricts withdrawals to preapproved wallet addresses. It adds friction, which is exactly why it is worth enabling.