Liquidity

What is Liquidity?

Liquidity is the total value of cryptocurrency assets (tokens) locked for trading in a pool through a smart contract of a specific decentralized exchange.

How is Liquidity measured?

The liquidity of a DEX pool is measured in the value of assets held in the liquidity pool, and is most often expressed in US dollars (USD) or equivalent units of other currencies (for example, in Ethereum or Bitcoin).

Why is Liquidity important?

The liquidity in the DEX pool provides the opportunity to make transactions quickly and without significant price losses. High liquidity minimizes price slippage, makes transaction execution prices more stable and predictable, improves trading conditions, and increases user confidence. The availability of liquidity contributes to the growth of trading volumes and reduces risks for participants.