#Liquidity101

Liquidity refers to how easily an asset can be converted into cash without affecting its market price.

Types of Liquidity:

Market Liquidity: How quickly you can buy or sell an asset (like stocks or real estate) in the market.

Example: Shares of big companies (like Apple) are highly liquid.

Accounting Liquidity: A business's ability to pay off its short-term debts using its current assets.

Measured using ratios like Current Ratio and Quick Ratio.

High vs. Low Liquidity:

High liquidity = Easy and fast to sell (e.g., cash, stocks).

Low liquidity = Harder to sell or may lose value (e.g., land, collectibles).

In Crypto:

Liquidity means how easily a token can be bought/sold without large price changes.

Liquidity pools on platforms like Uniswap or PancakeSwap help maintain stable prices by providing a pool of tokens for trading.