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Token Pair Liquidity Meaning

Token pair liquidity refers to the available depth and capital allocated to a specific trading pair on an exchange or liquidity pool. It determines how easily traders can buy or sell without materially affecting price.

High pair liquidity reduces slippage and supports large trades, while low liquidity increases execution risk and volatility. Liquidity levels are influenced by incentives, market demand, and asset correlations.

Maintaining balanced token pair liquidity is critical for efficient markets and reliable price discovery.

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