NFT liquidity refers to the ease with which a non-fungible token can be converted into other assets, typically cryptocurrency or fiat, without significantly impacting its price. High liquidity means an NFT can be sold quickly and at a fair market value. Low liquidity, conversely, means sales may be slow or require substantial price concessions.
Context
This is a major discussion point in the NFT market, as many NFTs are inherently illiquid compared to fungible tokens. News reports frequently address efforts to improve NFT liquidity through fractionalization, lending protocols, or new marketplace designs. The challenge of illiquidity remains a barrier to broader institutional adoption and price stability for many digital collectibles.
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