#Liquidity101 Liquidity is the lifeblood of financial markets, determining how easily assets can be bought or sold without drastically affecting their price. In crypto, high liquidity means tighter spreads, faster transactions, and less slippage, which is key for traders and investors. Centralized exchanges (CEX) often boast deep liquidity due to high trading volumes, while decentralized exchanges (DEX) rely on liquidity pools where users contribute funds in exchange for fees.

Low liquidity can lead to volatile price swings and execution delays. Projects with strong liquidity attract more participants, creating a positive feedback loop. Understanding liquidity helps traders choose the right platforms and assets, minimizing risks and maximizing opportunities in rapidly evolving markets.