#Liquidity101

Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. In highly liquid markets, like major cryptocurrencies or stocks, trades happen quickly with minimal price changes. This benefits traders by reducing slippage and enabling smooth entry and exit. Low liquidity means fewer buyers or sellers, leading to larger price swings and delays in execution. Exchanges with high trading volume usually offer better liquidity. In decentralized finance (DeFi), liquidity pools provide funds for trading pairs, enabling DEX functionality. Strong liquidity is essential for market stability, efficient pricing, and building trust among investors and users.