#Liquidity101
Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. In highly liquid markets—like major crypto pairs or blue-chip stocks—there are many buyers and sellers, meaning faster trades and tighter spreads. Low liquidity can lead to slippage, volatility, and difficulty exiting positions. Centralized exchanges (CEXs) often have higher liquidity than decentralized ones (DEXs), but DEX liquidity depends on user-supplied pools. For traders, high liquidity = smoother execution, lower risk. Always check an asset’s liquidity before trading—it can make or break your strategy.