Order book liquidity refers to the depth and ease with which an asset can be bought or sold on an exchange without significantly affecting its price, as reflected in the volume of available buy and sell orders. A high level of order book liquidity indicates a healthy market with narrow bid-ask spreads. It is a key metric for assessing market efficiency.
Context
Order book liquidity is a crucial factor for traders and institutions participating in digital asset markets, influencing execution quality and overall market stability. Fragmentation across numerous exchanges and the prevalence of thinly traded assets can lead to poor liquidity, resulting in higher slippage. Efforts to consolidate liquidity and improve market making strategies are ongoing.
The hybrid AMM and order-book architecture of StandX is capturing significant capital, establishing a new primitive for regulatory-aware decentralized derivatives.
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