Definition ∞ A Market Friction Indicator measures the impediments or costs associated with executing trades and moving capital within a financial market. These frictions can include transaction fees, slippage, liquidity constraints, or regulatory hurdles. A high friction indicator suggests inefficiencies that can deter market participation and price discovery. Conversely, a low indicator points to a more liquid and accessible trading environment. This metric helps assess the operational efficiency of a market.
Context ∞ In the context of digital assets, Market Friction Indicators are frequently discussed in relation to network congestion, gas fees on blockchains, and the ease of converting crypto to fiat. News often highlights efforts by protocols to reduce these frictions, such as layer-2 scaling solutions or improved cross-chain bridges. The ongoing objective is to minimize these costs to enhance user experience and facilitate wider adoption of decentralized finance.
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