#Liquidity101
Liquidity in crypto refers to how easily you can buy or sell a coin without causing big price changes. Coins with high liquidity—like Bitcoin and Ethereum—have many active traders, making it simple to trade them quickly and at fair prices. In contrast, newer or smaller coins often have low liquidity, making it harder to sell without accepting a lower price.
For traders, liquidity is crucial because it affects slippage, which is the gap between the expected price and the actual price of a trade. Crypto exchanges like Binance, Coinbase, and Uniswap display the liquidity of trading pairs. In decentralized finance (DeFi), platforms like Uniswap and PancakeSwap use liquidity pools, where users can deposit tokens and earn fees, helping to keep trading smooth and efficient.
