#TradingPairs101 Liquidity is the ease with which an asset (e.g., cryptocurrency) can be bought or sold in the market without significantly affecting its price.

• High liquidity = ease of quick trading without large price changes.

• Low liquidity = difficulties in quick buying/selling and significant price fluctuations.

2. Why is liquidity important?

• Price stability – with high liquidity, prices are more stable because there are many buyers and sellers.

• Quick transaction execution – transactions occur quickly, without long waiting times.

• Smaller spreads – the difference between the buying price (bid) and the selling price (ask) is small, which means lower trading costs.

• Investor confidence – liquid markets are more attractive to traders and investors.

3. Liquidity in different places on centralized exchanges (CEX)

• Liquidity depends on the number of users and trading volume.

• Large exchanges, like Binance or Coinbase, have high liquidity. In decentralized exchanges (DEX)

• Liquidity comes from so-called liquidity pools, which are resources provided by users (liquidity providers).

• The larger the liquidity pool, the better the prices and faster the transactions.

• Example: Uniswap, PancakeSwap.