Liquidity, and why it decides your rate

Liquidity is how much of an asset can be traded without moving the price much. It matters more to a swapper than almost anything else.

What it looks like

A liquid pair has many offers close together. You can trade a meaningful amount at close to the quoted price. An illiquid pair has few offers spread far apart, so even a modest order fills at a noticeably worse price.

Why it varies

• Major assets are liquid almost everywhere.
• Smaller assets are liquid in one or two places and thin elsewhere.
• Liquidity dries up during violent moves, exactly when people most want to trade.

Using this

For an obscure pair, routing through a major asset is often cheaper despite the extra step, because both legs are liquid. If a quote looks unexpectedly poor, thin liquidity is usually the reason rather than a fee.