Description: The ‘Narrow Spread’ refers to the reduction in the difference between the buying price and the selling price of a financial asset. This concept is fundamental in the field of finance and the financial markets. A narrow spread indicates a more efficient market where buyers and sellers can transact at a lower cost. Practically, a smaller difference between the bid price and the ask price means that traders can enter and exit positions with less slippage, which is especially important in volatile markets. The narrow spread is an indicator of liquidity; the narrower the spread, the greater the liquidity of the asset, which in turn can attract more investors and traders. In the context of decentralized finance (DeFi), where digital assets are traded on decentralized platforms, the narrow spread becomes a critical factor for the adoption and use of these assets, as it directly affects user experience and market efficiency.
