This defense ended badly for my opponent just minutes ago.. highly flawed.

the reason that nf3 and nc3 are the most popular is because they transpose to more mainstream openings after a couple of moves. I love to play against this with white.

Hey MParkie, I suspect that is actually some kind of transposition glitch in the DB where White played Nf3 on move 2.  I think Nf3 is more popular than c4.

What i dont understand is why very few masters play 3.cxd5 considering the ridiculously high % of wins for white?

This defense is incorrect, and is in fact a common beginner's mistake. With apologies to JonnyHudz and the other commenters who had something nice to say about this defense, no modern master would play this defense, and it will not transpose into the Gruenfeld if white chooses the critical line 3. cxd5 Nxd5 4. Nf3 as suggested by panzerbjorn. In fact, if you look at the statistics, White is winning more than 61% of games outright after the critical 3. cxd5. I am a 1.d4! player, and I am always pleased when my opponent replies with the inferior 1...d5 and 2...Nf6. If they think they are getting to a QGD, they are sadly mistaken.

its good to defence..

It's playable, though the analysis by crouchingpossum is why I like to play against it.  I usually see this played by scholastic players who don't know how to play a proper QGD.  i like to throw in a 4.Nf3 after my 3. cxd5 so that my 5. e4 push is more effective.

CrouchingPossum

It is a good, defence, as it can transpose into the Grunfeld (used with great success by Fischer). It does potentially sacrifice a centre pawn for a C pawn, but if so, it just follows the theory of hypomodernism, (let your opponent get pawns in the middle, attack them with pieces and then break the centre open with your pieces).

If white takes with their C-pawn take back with the knight and then if they reply E4 then the centre pawns are easy targets for blacks responses.

I think this is the best response against the Queen's Gambit.

I don't mean to be ignorant or rude but how could this possibly be seen as a nice defence? Doesn't it fail to effectively protect the center?  The "queen's gambit" pawn can snatch up white's pawn on d5 ...

3. cxd5 either black is down a pawn or they 3. ...Qxd5 or 3. ...Nxd5

if black opts for either of these captures then white replies by chasing them around ... developing another piece and forcing white to run away.

3. ...Qxd5 4. Nc3 (attacking Q on d5)

or 

3. ...Nxd5 4. e4 (taking two center pawns early and forcing the N on d5 to run away.)

Doesn't look like a good defence to me; am I missing something, y'all?

Cool!

Good example. Happy New Year 2009.

oh I looooove this one, I only lose like 5% of my games when black plays the Mashall defence