Digital Assets

Understanding Centralised Liquidity

Liquidity in digital assets measures how efficiently a token can be bought and sold. According to Kaiko’s token liquidity ranking report, BTC is the most liquid token, meaning that an investor could, for example, buy or sell $100k worth of BTC without significantly affecting its price.

Conversely, someone trying to sell $100k of a less liquid token would face slippage, meaning that they receive less in USD terms than what they sold is theoretically worth. For example, if an investor (at the time of this report) tried to sell $100k worth of WLD on Uniswap V3, they would face a slippage of 6.3% and only receive $93.6k USDC.

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