#Liquidity101

Liquidity is the ability of an asset to be converted into cash without significantly affecting its price. In financial markets, liquidity is key to ensuring efficient operations and minimizing transaction costs.

Types of liquidity:

Market liquidity: Refers to the ease with which an asset can be bought or sold without large price variations.

Accounting liquidity: Represents the amount of cash available in a company to cover its short-term obligations.

Bank liquidity: Indicates the ability of banks to meet their financial commitments without issues.

In the world of cryptocurrencies and DeFi, liquidity pools allow the exchange of tokens without the need for a traditional order book. Platforms like Uniswap and Curve use these pools to facilitate decentralized trading.