Definition ∞ Layer One Liquidity refers to the availability and ease of exchange for digital assets directly on the primary blockchain network itself, without relying on secondary scaling solutions. It represents the depth of assets available for trading or lending at the base protocol level. This fundamental liquidity is essential for the direct functionality and utility of the blockchain.
Context ∞ The state of layer one liquidity is a significant factor in assessing a blockchain’s fundamental market efficiency and transaction costs, often discussed in news concerning network performance. High liquidity at this base layer supports robust decentralized applications and reduces price impact for large transactions. Efforts to enhance it through protocol upgrades or incentive programs are frequently reported.
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