💧 #Liquidity101 – Crypto Edition
1. What is Liquidity?
Liquidity = How easily you can buy/sell a crypto without affecting its price.
🟢 High Liquidity = Fast trades, tight spreads
🔴 Low Liquidity = Slippage, price jumps
2. Why Liquidity Matters?
✅ Smooth trading experience
✅ Better price accuracy
✅ Lower spread (buy/sell price gap)
✅ Quick order execution
3. What Impacts Liquidity?
🔹 Trading Volume (more = better)
🔹 Exchange popularity
🔹 Token popularity & utility
🔹 Market depth
4. Liquidity Pools (DeFi) 🧪
In DEXs like Uniswap, liquidity comes from users locking tokens into liquidity pools.
Earn rewards (fees or tokens) = Liquidity Providers (LPs)
5. Slippage 🚨
Difference between expected price vs actual executed price.
🔺 Happens in low liquidity or large trades.
6. Centralized vs Decentralized:
CEX (Binance, Coinbase): Central order book, high liquidity
DEX (Uniswap, PancakeSwap): Liquidity pools, depends on LPs
7. How to Check Liquidity?
🔍 Look at order book depth, 24h volume, spread, or liquidity pool TVL (for DeFi).
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