Liquidity in DeFi refers to the availability of assets in a particular market or liquidity pool that can be easily bought or sold.

In the context of decentralized finance (DeFi), liquidity is often provided by users who deposit their assets into a liquidity pool. These pools power decentralized exchanges and allow users to trade one asset for another directly from the pool. Providing liquidity is often incentivized with rewards such as trading fees or liquidity provider (LP) tokens.