An automated market maker (AMM) is a type of decentralized exchange that prices trades with a formula over a pool of tokens. It replaces order matching, so anyone can trade against the pool at any time.
A centralized exchange (CEX) is a crypto trading platform run by a single company that holds customer funds and matches buy and sell orders on its own servers. It works much like a traditional brokerage.
A decentralized exchange (DEX) is a trading venue built from smart contracts, where users swap tokens directly from their own wallets. No company takes custody of funds, and trades settle on chain.
A liquidity pool is a reserve of two or more tokens held in a smart contract that traders swap against. The price shifts automatically as the ratio of tokens in the pool changes.
Maximal extractable value (MEV) is the profit that whoever orders transactions in a block can capture by including, excluding or reordering them. Users experience it as front-running and worse trade prices.
An order book is the live list of buy and sell orders for an asset, organised by price. A matching engine pairs compatible orders to produce trades.
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