#Liquidity101

Liquidity refers to how easily an asset can be bought or sold in the market without affecting its price significantly. In the context of cryptocurrency, high liquidity means there are many buyers and sellers, making it easier to trade quickly and at stable prices. Markets with high liquidity tend to have lower spreads between the buy and sell prices, reducing trading costs. On the other hand, low liquidity can lead to price slippage and difficulty executing large orders. Liquidity is important for both traders and investors, as it reflects the health and efficiency of a market. Centralized exchanges (CEXs) usually offer higher liquidity due to their large user base, while decentralized exchanges (DEXs) may have lower liquidity, especially for less popular tokens. Overall, liquidity plays a key role in market stability, price discovery, and trade execution.