Crypto exchange glossary

13 terms that decide what you pay and what you risk on an exchange. Each one is defined, then tied to the actual numbers on our fee tables and safety scores.

• Cold storage

  Holding crypto in wallets whose private keys are never connected to the internet, so they cannot be reached by a remote attacker.

• Funding rate

  The periodic payment between long and short holders of a perpetual futures contract that keeps its price anchored to spot.

• Insurance fund

  A pool of assets an exchange sets aside to cover losses — either customer losses after a security incident, or liquidation shortfalls on derivatives, depending on the fund.

• KYC (Know Your Customer)

  The identity verification an exchange must complete before letting you trade or withdraw — a legal requirement wherever the exchange has a fiat licence.

• Limit order vs market order

  A market order fills now at whatever price the book offers; a limit order fills only at your price or better, or not at all.

• Liquidation

  The forced closure of a leveraged position by the exchange when losses have consumed the margin backing it.

• Maker and taker fees

  The two trading fees an exchange charges: a lower maker fee for orders that add liquidity to the book, a higher taker fee for orders that remove it.

• Perpetual futures

  A leveraged derivative that tracks an asset's price with no expiry date, kept in line with spot through a periodic funding payment between longs and shorts.

• Proof of reserves

  A published cryptographic or audited demonstration that an exchange holds the assets its customers have deposited.

• Slippage

  The difference between the price you expected and the price your order actually filled at, caused by the order eating through the book.

• Spread

  The gap between the best price a buyer will pay and the best price a seller will accept. You cross it on every trade, and it is a cost even when the fee is zero.

• Two-factor authentication (2FA)

  A second proof of identity at login and withdrawal beyond the password — an authenticator app, a hardware key, a passkey or an SMS code.

• Withdrawal fee

  What an exchange charges to send crypto or fiat off the platform — often a flat amount per asset that can exceed the trading fee on a small balance.

Looking for the longer read? The guides cover choosing an exchange, fees end to end, and opening an account.