#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without affecting its price. In simple terms, it’s the ability to quickly convert an asset into cash. For example, stocks and cryptocurrencies with high trading volumes are considered highly liquid because you can sell them fast at market value. On the other hand, real estate or rare collectibles are less liquid. In crypto, liquidity is essential for smooth trading, stable prices, and low slippage. Decentralized exchanges (DEXs) often rely on liquidity pools provided by users, who earn fees or rewards in return. Good liquidity means a healthy, active market.