Spot versus derivatives, funding rates, open interest, liquidations and order books — the plumbing behind the price you see.
On a spot market you buy the coin itself. On a derivatives market you trade a contract whose value follows the coin’s price. That one difference changes what you own, what you can lose and which costs you pay.
A perpetual future never settles, so something else has to keep its price close to the real coin. That job falls to funding: small, regular payments between traders who are long and traders who are short.
Open interest counts how many derivative positions are still open. Liquidations are what happens when a leveraged position runs out of margin and the venue closes it for you. Here is how both work, with the arithmetic.
An order book is the list of everyone currently willing to buy or sell, sorted by price. Reading it tells you the spread, how deep the market is, and roughly what a trade of your size will really cost.
A centralized exchange is a company that holds your funds and matches orders for you. A decentralized exchange is a set of smart contracts you trade against from your own wallet. Each removes some risks and adds others.
Netflow tracks whether more coins arrived at exchange wallets than left them. The subtraction is trivial; deciding which wallets belong to exchanges is where the uncertainty lives.
The funding rate is the percentage that holders of perpetual futures pay each other at regular intervals. Charted over time, it shows which side of the derivatives market has been paying to stay in.
Open interest adds up every futures and perpetual position that has not yet been closed. It shows how big the derivatives market is at a moment in time — not which way it is betting.
A DEX is an exchange made of smart contracts. You trade straight from your wallet, usually against a pool of tokens rather than another person’s order.
Leverage lets you hold a position bigger than the money you put in. Every price move is then multiplied against your deposit — in both directions.
Liquidity describes how easily you can buy or sell something at a fair price. In DeFi, the word also means the tokens people deposit into pools so others can trade.
Market capitalization multiplies the latest price by the number of coins or tokens. It is a widely quoted size measure in crypto — and an easily misread one.
Slippage is the gap between the price you were shown and the price you actually got. It is usually small in busy markets and can be large in thin ones.
Blocks, transactions, keys and fees: the moving parts every other topic builds on.
Supply schedule, mining, difficulty, Lightning and spot ETFs.
Accounts, gas, staking, the fee burn and layer-2 rollups.
Stablecoins, exchanges without order books, liquidity pools and on-chain lending.
How analysts turn public ledger data into cost-basis, holder and flow signals — and where that breaks.
Risk, volatility, diversification, position sizing and market cycles for crypto beginners.
Custody choices, seed phrases, hardware wallets and the scams that target new users.
The price on a chart is the result of many separate markets: spot venues where coins change hands, derivatives venues where traders exchange contracts that follow the price, and order books or pools that decide what a trade of a given size really costs. Leverage connects them, and leverage is where many beginners get hurt. This section explains how each piece works, with arithmetic computed in code. It is written to help you understand news and charts, not to encourage trading: leveraged positions can lose money faster than most beginners expect.
Begin with the difference between owning a coin and holding a contract, then work outwards:
Each guide ends with the mistakes beginners make most often in that area, and every figure in it links to the source it came from. Where a worked example uses made-up prices or position sizes, the inputs are labelled as hypothetical so you can tell them apart from real market data.
Two metric profiles follow directly from these guides: the funding rate and open interest. The leverage, liquidity and slippage glossary entries define the words you will see most. Before acting on anything here, read crypto volatility and risk in the investing section.
On a spot market you buy the coin itself. On a derivatives market you trade a contract whose value follows the coin’s price, often with leverage. That changes what you own, what you can lose and which costs you pay. Spot vs derivatives compares them side by side.
When a leveraged position no longer has enough margin to cover its losses, the venue closes it for you. Open interest and liquidations shows how that works, with the arithmetic.