Liquidity

The term liquidity generally refers to the volume that counterparties are willing to immediately trade with you, without moving the price.

In the DeFi world, liquidity is usually reported as the USD-value of assets held by the pool, rather than the value of tradeable assets near the current price.

When you choose a pair to trade, Dexorder automatically selects the pool with the most liquidity.

Dexorder calculates liquidity as the USD-marked value of the pool's balance of the stablecoin or "big" token called the quote token. So for WETH/USDC we report liquidity as the pool's balance of USDC. For XXX/WETH, we report the USD value of the pool's WETH balance. For XXX/YYY, we report the liquidity in terms of the YYY balance, but we do not give any USD-marked value if YYY is not on our list of official quote tokens.

Liquidity in Uniswap v3 pools is complicated due to range-staking: the ability of liquidity providers to limit the prices where their liquidity is available. This means Uniswap v3 liquidity is not a single number but a distribution. The pool contract's method liquidity() reports only liquidity at the current "tick," which is frequently not even the peak liquidity, the tick with the most liquidity in it. The amount of liquidity in a Uniswap v3 pool also depends on whether you are buying or selling, and how close the current price is to the tick boundry. For all these complex reasons, liquidity is generally reported as "pool value," but traders should be aware that only a fraction of the reported liquidity will be available near the current price.