Liquidity Risk describes the probability of not being able to efficiently buy or sell an asset due to diminished market liquidity.

In the context of crypto and decentralized finance (DeFi), liquidity risk is the risk that a particular asset or investment will not have enough liquidity to allow it to be easily bought or sold on the market.

Liquidity risk is an important consideration for investors and traders in the DeFi ecosystem, as it can impact their ability to quickly and easily buy or sell their assets. Assets with low liquidity may be difficult to sell or may require significant discounts in order to attract buyers, which can impact the value of an investment.

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