Description: Token liquidity refers to the ease with which a token can be bought or sold in the market without significantly affecting its price. In the context of decentralized finance (DeFi), liquidity is a crucial factor that determines the efficiency and functionality of markets. A token with high liquidity allows users to execute transactions quickly, which is essential for daily operations on exchange platforms and DeFi applications. Liquidity is often measured by transaction volume and market depth, meaning the amount of assets available to buy or sell at different prices. A lack of liquidity can lead to price slippage, where the cost of a transaction may be much higher than expected due to a scarcity of buyers or sellers. Therefore, liquidity not only affects user experience but also influences the stability and trust in the DeFi ecosystem as a whole. In summary, token liquidity is a key indicator of market health and its ability to facilitate efficient and effective transactions.
