#Liquidity101 Liquidity 101 is the foundation for understanding what liquidity is in the crypto market.

Liquidity is the ease of buying or selling an asset without causing significant price variations. The higher the liquidity, the faster and cheaper you can trade.

There are two types:

1. Market liquidity – How much volume is available for buying and selling (e.g., pairs with high volume, like BTC/USDT, are highly liquid).

2. Protocol liquidity – In DEXs, it comes from liquidity pools, where users deposit pairs of tokens to facilitate swaps.

Low liquidity can cause slippage and make large trades difficult. High liquidity is a sign of a healthy and active market.