#Liquidity101 Liquidity refers to the ease with which an asset can be bought or sold without significantly affecting its price. In financial markets, high liquidity implies many buy and sell orders, allowing trades to be executed quickly and with little slippage. In centralized exchanges, order books define this liquidity. In DEXs, it is achieved through liquidity pools, where users provide funds to facilitate trading. A lack of liquidity can generate volatility and difficulty in closing trades. Therefore, it is always advisable to trade in liquid markets.