Glossary
Liquidity
The ability to buy, sell, or redeem value without a large delay or price change.
Related guide: Stablecoin Reserves and Depeg Risk. Updated 2026-09-08.
Liquidity in context
Market liquidity is specific to a size, price, venue, and time. The price of the first available unit does not tell you the price of an entire order. Past trading volume is not a list of orders available now.
Important boundary
Liquidity describes execution capacity; reserve value describes assets reported as backing obligations.
A narrow quoted spread does not prove that a large order can be completed near the displayed price. Depth determines how much size is offered at each level.
Worked example
The first 70 units do not price the next 130
In our Order Book Lab's Balanced depth preset, 70 units are offered at $25.04, 130 at $25.20, and 300 at $25.55. A hypothetical purchase of 200 units consumes the first two levels. Its total cost is (70 x $25.04) + (130 x $25.20) = $5,028.80, giving an average price of $25.144.
That average is $0.104 above the best ask, about 0.415%, or 41.5 basis points. At the displayed best bid of $24.96, the quoted spread is only $0.08. The spread and the extra cost of taking more depth are different measurements.
Try the same 200-unit order with the Thin depth preset. Only 165 units are displayed, leaving 35 unfilled in this model. An average over the 165 filled units must not be reported as if all 200 were purchased. The lab freezes the book and ignores fees, cancellations, hidden orders, latency, and real market responses.
Continue in the guide
Reading a reserve claim without stopping at the headline
Read the complete applied scenarioKnowledge check
Check the distinction
In the Balanced depth preset, what happens if the order is only 50 units?
All 50 fit inside the 70 units available at $25.04, so the model's average is $25.04 and depth slippage from the best ask is zero. That does not remove the spread relative to the bid or any costs the model excludes.
Source trail
Check the source or calculation
Reproduce these calculations with the Balanced depth and Thin depth presets. This is our own fixed-book model, not external evidence about a live market.