What it means
How easily a token can be exchanged or withdrawn without moving its price.
A pool with lots of liquidity can handle large exchanges at a fair rate. In a lending market, liquidity is the money not lent out right now, which is what lets you withdraw.
How it works
When almost everything in a market is borrowed, withdrawals can have to wait until borrowers repay.
Related terms
| Term | What it means |
|---|---|
| Exchange (swap) | Trading one token for another, such as EURC for USDC, at a rate set by the market. |
| Lending market | An onchain pool where people supply money that others borrow, with the interest paid by borrowers going to those who supplied it. |
| TVL | Total value locked: how much money is deposited in a protocol or pool right now. |
This glossary explains terms in general. It isn't investment, tax or legal advice.