#Liquidity101 Liquidity 101: Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. In the crypto ecosystem, high liquidity signals a healthy market, enabling faster transactions and tighter bid-ask spreads. Centralized exchanges (CEXs) and decentralized exchanges (DEXs) rely on liquidity pools and market makers to ensure seamless trading. Low liquidity can lead to slippage, price volatility, and poor user experience. Institutional and retail participants alike must assess liquidity metrics when entering or exiting positions. Providing liquidity, often through staking or automated market makers (AMMs), can generate passive income but carries risks. Ultimately, liquidity is a cornerstone of market efficiency and trading confidence.