How quickly and easily an asset can be bought or sold, or converted into cash, without significantly affecting its price.
Cash is the most liquid asset, since it can be spent immediately. Shares of a large listed company are usually highly liquid because many buyers and sellers trade them every day. Real estate, private company shares, or rare collectibles are less liquid, since finding a buyer at a fair price can take time.
In business, liquidity also describes a company's ability to meet short-term obligations like salaries and bills. A startup may be valuable on paper yet still fail if it runs out of cash. In crypto and DeFi, liquidity refers to the depth of funds available for trading on an exchange or in a liquidity pool; thin liquidity can cause large price swings and slippage.
Decentralized Finance: financial services such as lending, borrowing, and trading built on blockchains using smart contracts.
RunwayThe amount of time a startup can keep operating before running out of cash, based on its current spending.
StablecoinA cryptocurrency designed to maintain a stable value, usually by being pegged to a fiat currency such as the US dollar.
Yield FarmingA DeFi strategy in which users lend or stake crypto assets in protocols to earn rewards, often in the form of additional tokens.
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