Liquidity
Definition
Liquidity measures how easily an asset can be bought or sold without significantly affecting its price. High liquidity means many buyers and sellers, tight spreads, and stable prices. Low liquidity leads to price slippage and volatility on larger trades.
Technical Explanation
Liquidity manifests in order book depth—more orders at various price levels mean better liquidity. Key metrics include bid-ask spread (difference between buy and sell prices), slippage (price movement from order execution), and trading volume.
DeFi introduced liquidity pools: users deposit token pairs into smart contracts that enable automated market-making. Liquidity providers earn fees but face impermanent loss risk when prices diverge from deposit ratios.
SynX Relevance
As SynX adoption grows, liquidity develops through exchange listings and trading pairs. The community can provide liquidity on decentralized exchanges, earning fees while supporting the ecosystem's tradability and accessibility.
Frequently Asked Questions
- Why does liquidity matter?
- Higher liquidity means better prices, lower slippage, and easier trading for everyone.
- Where can I trade SynX?
- Check the official channels for current exchange listings and trading pairs.
- What is impermanent loss?
- Value loss liquidity providers face when deposited token prices change relative to each other.
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