The concept of liquidity describes how easily an asset can be sold or bought. If you purchase something that makes a considerable profit, but you can\u2019t sell it, then it\u2019s illiquid, and you can\u2019t realize your gains. Not a great position to be in. Luckily in traditional financial markets, exchanges, and other trading venues employ market makers. These market makers make it easier for traders to buy and sell by quoting prices to buy and sell an asset.When you think of orderbooks of exchanges with buy orders on the left and sell orders on the right, market makers put orders at different price points and sizes into the books. They then benefit from arbitrage while ensuring that little traders like me can exit positions fast.What works for traditional exchanges and brokers is also done on centralized cryptocurrency exchanges. They work with market makers to ensure that whenever a token is going live, traders won\u2019t have to sit on their unfilled orders forever \u2014 it might still sometimes happen. Either because the price you want to sell for is so high that no one accepts it or simply because there is zero demand for whatever you\u2019re selling. The market can be a b*tch.What works for centralized exchanges can\u2019t be replicated easily in decentralized exchanges (DEX). While they are called exchanges and facilitate exchange, you\u2019re not interacting with other traders. Your orders aren\u2019t matched with another person selling what you want. What happens in the backend is that you put money into a smart contract.Funny because Transaction fees for Ethereum Smart contracts are called Gas\u2026anywaySmart contracts are called smart, but they aren\u2019t smart enough to know what prices assets are trading for outside of the smart contract environment. They\u2019re just computer code, after all. No offense \ud83e\udd16When sending your tokens to a\u2026<\/p>","protected":false},"excerpt":{"rendered":"
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