In the context of an asset, liquidity refers to the ability to exchange an asset without significantly changing its price, as well as the ease with which an asset can be converted to cash. The more liquid an asset is, the easier it is to convert it to cash. Liquidity in markets refers to the amount of trading activity in a market. The more trading volume there is in the market, the more liquid it is. Liquid markets tend to increase asset liquidity.
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