DeFi & DEX glossary
The vocabulary of on-chain markets, in plain English. Every term below is one you will meet reading prices, liquidity and volume across CoinVerum — each links to a deeper guide where one exists.
- AMM (Automated Market Maker)
- A smart-contract exchange that prices trades from a formula over a pool’s reserves instead of an order book. Every major DEX CoinVerum indexes is an AMM. Learn more →
- Arbitrage
- Trading the same asset across venues to profit from price differences. Arbitrage is what keeps on-chain and off-chain prices aligned for liquid assets. Learn more →
- CEX vs DEX
- A centralized exchange runs a private order book you must trust; a decentralized exchange runs on public smart contracts whose prices and reserves anyone can verify on-chain. Learn more →
- Concentrated liquidity
- A design (Uniswap V3/V4) where LPs place liquidity in a chosen price range for far greater capital efficiency, at the cost of active management and amplified impermanent loss. Learn more →
- Constant-product formula
- The x · y = k pricing rule used by Uniswap V2-style AMMs: the product of the two reserves stays constant, so price is their ratio and large trades move it. Learn more →
- Depeg
- When a stablecoin loses its target value and trades meaningfully above or below it. On-chain pool skew is often the earliest warning sign. Learn more →
- ERC-20
- The Ethereum standard that defines how fungible tokens behave. Most DeFi contracts, including AMMs, expect assets in this format. Learn more →
- FDV (Fully Diluted Valuation)
- Current price multiplied by the total or maximum supply — the value if every token that will ever exist were already circulating. A large gap over market cap signals future dilution. Learn more →
- Front-running
- Placing a transaction ahead of a known pending one — for example a bot buying a token before your large order to profit from the price move you will cause. Learn more →
- Impermanent loss
- The value gap between holding two tokens and providing them as pool liquidity after their relative price moves. Swap fees can offset it. Learn more →
- Liquidation
- The forced sale of a borrower’s collateral in a lending protocol when their position falls below the required health threshold. Learn more →
- Liquidity depth
- How much value sits in a pool near the current price — the real determinant of how large a trade you can make without heavy price impact. Learn more →
- Liquidity mining
- Earning a protocol’s native token as a reward for providing liquidity — a way protocols bootstrap depth. Its yield is only as valuable as the reward token. Learn more →
- Liquidity pool
- A smart contract holding reserves of two or more tokens that traders swap against. Pool balances are the raw material of on-chain liquidity. Learn more →
- Liquidity provider (LP)
- Anyone who deposits tokens into a liquidity pool to earn a share of its swap fees, receiving LP tokens that represent their stake. Learn more →
- LP token
- A token minted to a liquidity provider that represents their proportional share of a pool and can be redeemed for the underlying reserves plus accrued fees. Learn more →
- Market cap
- Current price multiplied by circulating supply — the tokens actually trading today. Learn more →
- MEV (Maximal Extractable Value)
- Value extracted by reordering, inserting or censoring transactions within a block. On DEXes it most often hits traders as sandwich attacks. Learn more →
- Order book
- A list of outstanding buy and sell orders used by traditional and centralized exchanges. AMMs replace it with a pricing formula. Learn more →
- Price impact
- How much your own trade moves a pool’s price, determined by trade size relative to pool depth. Big trades in shallow pools cause large impact. Learn more →
- Rug pull
- A scam where insiders drain a token’s liquidity or dump hidden supply, collapsing the price and leaving holders unable to sell. Most leave on-chain warning signs. Learn more →
- Sandwich attack
- An MEV strategy where a bot buys just before your trade and sells just after, exploiting the price impact your transaction creates. Learn more →
- Slippage
- The difference between the price you were quoted and the price you actually got, including price impact and any market movement between quote and execution. Learn more →
- Spot price vs execution price
- Spot price is the marginal price at the current reserves; execution price is the average price you actually get once your trade moves the curve. The gap is price impact. Learn more →
- Stablecoin
- A token designed to hold a fixed value, usually $1, backed by fiat reserves, crypto collateral, or algorithmic incentives. Learn more →
- TVL (Total Value Locked)
- The USD value of the tokens held in a protocol’s smart contracts. For a DEX it measures the depth traders can swap against. Learn more →
- WETH (Wrapped Ether)
- Ether packaged as an ERC-20 token so it can be used in smart contracts. 1 WETH is always redeemable for 1 ETH, and it is a core reference asset for on-chain pricing. Learn more →
- Wrapped token
- A token that represents another asset 1:1 in a compatible format — like WETH for ETH or WBTC for Bitcoin — so it can trade inside DeFi. Learn more →
- Yield farming
- Moving capital between DeFi protocols to maximise return, typically by supplying liquidity in exchange for swap fees plus token incentives. Learn more →