Finance, at its heart, is the movement of capital. It is the art of channeling idle assets to where they can generate the most value. From this perspective, the history of financial markets is, in essence, a history of improving liquidity. From ancient money changers in bustling marketplaces to modern high-frequency algorithms executing millions of trades in microseconds, liquidity has always been the lifeblood of finance, the invisible force that keeps economies flowing and markets aliveYet this seemingly simple concept, namely, the ability to buy or sell assets quickly and fairly, has profoundly shaped the global economy, influencing everyone from individual investors to multinational banks. The 2008 global financial crisis revealed just how fragile liquidity can be. When Lehman Brothers collapsed, markets froze almost overnight. Even the U.S. Treasury market, once deemed the safest and most liquid, became difficult to trade. Banks stopped lending, money market funds faced runs, and the commercial paper market nearly collapsed. The crisis forced regulators, scholars, and market participants to ask anew: What is liquidity? Where does it come from? And why does it matter so much?Seventeen years later, we stand at another turning point. The rise of cryptocurrencies and decentralized finance (DeFi) has brought a new liquidity paradigm: a 24/7, borderless, algorithm-driven market where the creation, management, and risks of liquidity are evolving in unprecedented ways.This article aims to provide a comprehensive and in-depth answer to a central question: Why is liquidity so vital in financial trading?We approach this question from five key dimensions.First, we trace the historical evolution of financial trading, from the 17th-century Dutch East India Company’s over-the-counter stock dealings, to the New York Stock Exchange’s specialist system, to NASDAQ’s electronic revolution, and finally to the rise of modern cryptocurrency exchanges. This journey is not just the story of how trading venues evolved, but also a record of humanity’s relentless innovation to overcome liquidity challenges. From the telegraph to the internet, from open outcry to algorithmic trading, every technological breakthrough reflects the same pursuit: deeper, faster, and more efficient liquidity.Second, we review the development of liquidity-related regulations. From their absence to their current sophistication, these frameworks reveal the ongoing interplay between market participants, regulators, and technological innovation. The establishment of market-making systems, the adoption of decimal pricing, the launch of Regulation NMS, and the strict liquidity requirements under Basel III have all reshaped market microstructures, influencing both the supply and demand for liquidity. In emerging crypto markets, these regulatory norms are still taking shape, providing a rare window into how financial oversight continues to evolve.Third, we analyze the importance of liquidity from both theoretical and empirical perspectives. Through frameworks such as the three-dimensional liquidity model, liquidity-adjusted asset pricing, and liquidity spiral theory, we explore how liquidity affects asset prices, transaction costs, and market efficiency. Real-world cases such as the LTCM collapse and flash crashes, or the COVID-19 market turmoil and the failure of the UST stablecoin, vividly illustrate the tangible costs of liquidity risk.Fourth, we identify the key liquidity providers and their roles in financial markets. Traditional market makers, high-frequency traders, institutional investors, central banks, and decentralized finance (DeFi) automated market makers (AMMs) together form a complex liquidity ecosystem. Their motives, strategies, and risk management approaches differ, yet all play a crucial role in keeping markets functioning smoothly. Understanding these roles is essential to grasping the finer mechanics of market microstructure.Fifth, we highlight MEXC’s liquidity advantage in cryptocurrency trading. As a leading global digital asset exchange, MEXC stands out not only for its rapid token listings, wide range of trending assets, and industry-low trading fees, but also for its unmatched liquidity depth. By providing traders with rich market choices and efficient execution, MEXC significantly reduces trading costs and enhances overall market access.It is worth noting that financial markets, crypto markets in particular, are evolving at a remarkable pace. In an increasingly complex and interconnected global financial system, liquidity is not just a technical concern but also a matter of trust; it reflects not only market efficiency but also systemic stability. We hope this article helps readers build a holistic understanding of this essential concept, empowering them to make more informed decisions in investment, research, and policy.1. The Evolution of Financial Trading: From OTC to Exchanges, From Spot to Derivatives1.1 The Era of Over-the-Counter Trading (Pre-17th Century)The origins of financial trading can be traced back to ancient civilizations, where goods and currencies were exchanged long before formal markets existed. In medieval Europe, money changers set up booths on bridges, in markets, and at ports to provide currency exchange for merchants. These early financial intermediaries were, in essence, the first liquidity providers.By the 12th century, merchants in Genoa and Venice were already engaging in sophisticated credit and bill-of-exchange transactions. However, these were conducted privately, without standardization or centralization.The trading of shares in the Dutch East India Company marked the dawn of modern securities trading. In 1602, the company became the first to issue publicly tradable stock, and investors began buying and selling shares in Amsterdam’s coffeehouses and on street corners. But this early over-the-counter (OTC) trading had major flaws: prices were opaque, counterparty risk was high, contracts were unstandardized, and liquidity relied heavily on personal networks.1.2 The Birth and Growth of Formal Exchanges (17th–20th Centuries)The establishment of the Amsterdam Stock Exchange in 1602 ushered in the era of centralized trading. For the first time, buyers and sellers could meet in an organized market to trade Dutch East India Company shares. Although early rules were still primitive, this laid the foundation for modern exchange-based trading.In 1792, the Buttonwood Agreement marked the institutionalization of exchange trading in the United States. Twenty-four brokers gathered under a buttonwood tree at 68 Wall Street, agreeing on fixed commissions and trading priorities, the beginning of what would become the New York Stock Exchange (NYSE). By the mid-19th century, the NYSE had established a membership system, seat trading, and basic trading rules.The founding of the Chicago Board of Trade (CBOT) in 1848 marked the start of standardized derivatives trading. Initially focused on grain futures, it provided farmers and merchants with tools to hedge price risk. CBOT’s innovations included:Standardized contract terms (quantity, quality, delivery date)Margin requirements to reduce default riskCentralized clearing systemsOpen-outcry trading for transparent price discoveryThe 20th century saw an explosion in financial derivatives. In 1973, the Chicago Board Options Exchange (CBOE) began trading standardized stock options, while the Chicago Mercantile Exchange (CME) introduced foreign exchange futures the same year, followed by stock index futures in 1982. These innovations dramatically expanded financial instruments and created unprecedented demand for liquidity.1.3 The Digital Trading Revolution (1971–Present)In 1971, the launch of NASDAQ, the world’s first electronic stock market, paving the way for modern electronic trading. Markets began shifting from physical exchange floors to digital execution, transforming trading worldwide. Key shifts include:Trade execution times dropped from minutes to secondsGeographic barriers disappeared: investors could trade globally in real timeTransaction costs fell sharplyMarket transparency increasedLiquidity aggregation became faster and more efficientThe rise of high-frequency trading (HFT) further reshaped market microstructure. In the early 2000s, advances in computing and network infrastructure enabled algorithmic traders to execute thousands of trades in microseconds.By 2010, HFT accounted for over 60% of U.S. equity trading volume. While these traders became essential liquidity providers, their dominance also raised concerns about market stability. Since 2010, the emergence of cryptocurrency exchanges has marked the latest stage in trading evolution. In July 2010, Mt. Gox became widely known as the first Bitcoin exchange. By 2017, platforms like Binance and Coinbase had rapidly risen to global prominence.24/7 global tradingBorderless access across jurisdictionsA mix of centralized (CEX) and decentralized (DEX) exchangesExtreme volatility, demanding high liquidity resilience1.4 From Spot to Derivatives: The Logic of EvolutionThe limitations of spot trading naturally gave rise to derivatives. Spot markets allow only immediate asset exchange and cannot hedge against future price uncertainty. For example, farmers worry that grain prices might drop at harvest, while processors fear rising prices could raise production costs. Their opposite needs for risk protection led to the creation of futures markets.The evolution of derivatives reflected the increasing sophistication of financial engineering:Layer 1: Futures and forwards—locking in future pricesLayer 2: Options—offering asymmetric returns with limited riskLayer 3: Swaps—exchanging cash flows and risk exposuresLayer 4: Structured products—combining multiple derivatives for customized payoffsLayer 5: Derivatives of derivatives—such as options on futures and volatility productsThe derivatives market now dwarfs the spot market. According to the Bank for International Settlements (BIS), by 2024, the global notional value of OTC derivatives exceeded $700 trillion, while the world’s total GDP was about $100 trillion. This enormous multiple highlights the central role derivatives play in risk management, speculation, and arbitrage, and underscores just how critical liquidity is in these highly leveraged markets.2. The Evolution of Liquidity Regulation2.1 The Early Seeds of Liquidity Management (17th–19th Century)In the early days of financial markets, liquidity management relied mostly on spontaneous market behavior. There were no formal, systematic rules. The prototype of market-making emerged in the 18th-century London Stock Exchange, where certain brokers began quoting both buy and sell prices, earning profits from the spread while maintaining continuous market activity. These were voluntary efforts, not yet formal obligations.Meanwhile, the centralized auction system began to take shape. By the mid-19th century, the New York Stock Exchange (NYSE) had introduced an open outcry system, requiring traders to announce bids and offers publicly on the trading floor. This improved price discovery and transparency, though true systematic liquidity management was still limited.2.2 The Rise of the Modern Market-Making System (Early 20th Century–1970s)The NYSE’s specialist system was officially established in 1872 and refined in the early 20th century. Specialists were exchange members designated to act as market makers for specific stocks. Their responsibilities included:Maintaining fair and orderly marketsUsing their own capital to buy or sell when markets become unbalancedManaging the limit order bookEnsuring price continuityFor decades, this system was the cornerstone of liquidity provision at the NYSE. However, it also created conflicts of interest: specialists were both traders and market regulators.In 1971, NASDAQ introduced a competitive market-maker model, allowing multiple market makers to quote the same security simultaneously. Unlike NYSE’s single-specialist setup, this system encouraged competition, which:Narrowed bid-ask spreadsDistributed risk among multiple participantsEnhanced market depthHowever, during the 1990s, NASDAQ market makers were accused of collusion to keep spreads artificially high. This led to the 1997 Order Handling Rules, which required market makers to display customer limit orders publicly, a major step toward greater transparency.2.3 Liquidity Regulation in the Electronic Era (1990s–2000s)The full implementation of decimal pricing in 2001 replaced the old 1/16-dollar tick size with 1 cent, sharply reducing bid-ask spreads and improving efficiency. However, it also raised concerns about reduced market depth, as smaller tick sizes made it easier for new orders to "jump the queue."In 2005, the U.S. SEC introduced Regulation NMS (National Market System), a landmark reform for liquidity and market structure. It included:Order Protection Rule: Prohibits executing trades at worse prices than those displayed on other venues.Access Rule: Ensures fair access to quotes and limits excessive fees.Market Data Rule: Improves data distribution and transparency.Sub-Penny Rule: Prevents execution at prices smaller than $0.01 increments.Reg NMS intensified competition among exchanges, but also led to market fragmentation and the rapid growth of high-frequency trading (HFT).The Circuit Breaker mechanism also evolved. After the 1987 "Black Monday" crash, the NYSE introduced market-wide trading halts based on index declines. Following the 2010 "Flash Crash," the SEC implemented single-stock circuit breakers, and by 2012 adopted a tiered halt system:Level 1: 7% drop → 15-minute pauseLevel 2: 13% drop → another 15-minute pauseLevel 3: 20% drop → market closes for the dayThese measures aim to preserve liquidity and prevent panic-driven sell-offs from draining market depth during extreme volatility.2.4 Liquidity Regulation in the Post-Crisis Era (2008–Present)The 2008 global financial crisis exposed how fragile liquidity could be. The collapse of Lehman Brothers triggered runs on money market funds, froze the commercial paper market, and caused interbank lending rates to skyrocket. Regulators realized that micro-liquidity (of individual assets) and macro-liquidity (system-wide funding flows) are deeply interconnected.Under Basel III, two key liquidity standards were introduced:Liquidity Coverage Ratio (LCR): Banks must hold enough high-quality liquid assets to cover 30 days of net cash outflows under stress conditions.Net Stable Funding Ratio (NSFR): Requires stable funding sources to match long-term assets, ensuring a balanced funding structure.These reforms reshaped bank balance sheets and limited the extent to which banks could serve as market makers, driving a retreat from illiquid and higher-risk assets.In 2018, the EU’s MiFID II further tightened liquidity standards:Market makers must maintain continuous quotesPre- and post-trade transparency requirements strengthenedDark pool trading restricted, pushing more orders into public venuesMandatory best-execution reporting introducedIn the cryptocurrency market, liquidity regulation is still evolving. Given its global and decentralized nature, traditional frameworks don’t easily apply. Current trends include:Self-regulatory measures by exchangesProof of reserves transparency: MEXC regularly publishes reserve reports to ensure user asset safetyAlgorithmic innovation in decentralized exchanges (DEXs), where automated market makers (AMMs) continually improve liquidity efficiency3. Why Liquidity Matters: Theory and Evidence3.1 The Many Dimensions of LiquidityLiquidity isn’t a single concept; it’s multi-dimensional. In 1985, University of Chicago economist Albert S. Kyle identified three key dimensions of liquidity.Width: The size of the bid-ask spread. The smaller the spread, the better the liquidity. In a highly liquid market, the difference between buy and sell prices is minimal, allowing traders to transact near fair value instantly. The spread reflects:Order processing costs (market makers’ operational expenses)Inventory costs (compensation for price risk)Adverse selection costs (risk of trading against informed traders)Depth: The amount of volume that can be traded without significantly moving prices. A deep market can absorb large trades without causing sharp price swings. Depth is often measured through the order book: the more orders near the best bid and ask prices, the deeper the market.Resilience: How quickly prices recover after shocks. In a resilient market, temporary imbalances between supply and demand are quickly corrected by arbitrage. This dimension has become especially important in the age of algorithmic and high-frequency trading, where reaction time defines market stability.3.2 Liquidity Premium: Theoretical FrameworksIn 1986, Yakov Amihud (NYU Stern) and Haim Mendelson (Stanford) proposed the Liquidity Asset Pricing Model, showing that assets with higher transaction costs must offer higher expected returns to compensate investors, the so-called liquidity premium. Their research found that stocks with the widest spreads earned about 8% higher annual returns than the most liquid ones.Later, in 2003, Lubos Pástor and Robert Stambaugh from the University of Chicago introduced the liquidity risk factor, finding that stocks more sensitive to market-wide liquidity changes demanded higher returns. Liquidity risk, they concluded, is systemic: it cannot be diversified away. When markets are under stress, liquidity tends to vanish across all assets simultaneously, amplifying losses.The Liquidity Spiral Theory, proposed by Markus Brunnermeier and Niels K. Pedersen in 2009, explains how market and funding liquidity reinforce each other in downturns:When market liquidity declines, asset prices begin to fall.As prices drop, margin requirements rise, forcing investors to sell their holdings.These forced sales further drain liquidity, deepening the price decline.The process repeats itself, creating a self-reinforcing downward spiral.This model helps explain extreme events such as the 2008 financial crisis and the March 2020 COVID-19 market meltdown.3.3 How Liquidity Shapes Market EfficiencyPrice Discovery: Ample liquidity allows new information to be quickly reflected in prices. Highly liquid stocks tend to react faster to news, with informed traders pushing prices toward their true value.Lower Trading Costs: According to Joel Hasbrouck (Hasbrouck, 2009), reduced bid-ask spreads saved U.S. investors $5–10 billion annually between the 1990s and 2000s. This improvement came largely from electronic trading and increased competition among market makers.Efficient Capital Allocation: A 2005 study by David Levine (UC Berkeley) found a strong positive link between market liquidity and economic growth. More liquid markets reduce equity financing costs, encouraging companies to invest in productive ventures. On a national level, a one-standard-deviation rise in stock market liquidity correlates with an average 0.5% increase in GDP growth.3.4 Real-World Lessons in Liquidity RiskThe 1998 collapse of Long-Term Capital Management (LTCM) illustrates the danger of liquidity evaporating under stress. The highly leveraged hedge fund suffered catastrophic losses after Russian bond defaults drained market liquidity. Unable to unwind massive positions, LTCM required a $3.6 billion rescue coordinated by the Federal Reserve.Leverage amplifies liquidity riskModels fail under extreme conditionsLarge players’ distress worsens overall liquidityThe Flash Crash on May 6, 2010, revealed the fragility of liquidity in the era of algorithmic trading. Within minutes, the Dow Jones Industrial Average plunged nearly 1,000 points (about 9%) before rapidly rebounding. Investigations by the SEC and CFTC found that a large sell order from a mutual fund triggered a chain reaction among high-frequency trading algorithms, causing liquidity providers to temporarily withdraw from the market. This event led to the introduction of stricter circuit breakers and volatility control measures.A more recent example occurred in March 2020, when the COVID-19 pandemic triggered a liquidity crisis that affected nearly all financial assets. Even the normally highly liquid U.S. Treasury market experienced severe dysfunction, with bid-ask spreads widening to historic levels. The Federal Reserve was forced to launch an unlimited quantitative easing (QE) program, buying tens of billions of dollars in Treasuries each day to restore market function. This crisis showed that:Under extreme stress, liquidity across all assets can dry up simultaneously.Central banks are increasingly acting as market makers of last resort.Regulatory reforms (such as higher bank capital requirements) may restrict liquidity supply during crises.The impact of depegging events in the cryptocurrency market has also been significant. In May 2022, the collapse of the UST stablecoin led to a sharp deterioration in market liquidity. Within days, UST fell from $1 to just a few cents, while its associated token, LUNA, lost nearly all its value. The crash wiped out about $60 billion in market capitalization and triggered a broad sell-off across the crypto market. It highlighted the fragility of algorithmic stabilization mechanisms under stress and the high concentration and vulnerability of liquidity in the crypto ecosystem.4. The Role of Liquidity Providers in Financial Markets4.1 Traditional Market MakersDefinition and Function: Market makers are financial institutions or individuals committed to continuously providing buy and sell quotes for specific securities. They earn profits from the bid-ask spread while taking on inventory risk.How It Works: Market makers hold an inventory of assets and are always ready to trade with market participants. When there are more buy orders, they sell from their inventory; when sell orders dominate, they buy to replenish it. They adjust quotes dynamically, lowering prices to attract buyers when inventory is high and raising prices when it’s low.Main Types:Designated Market Makers (DMMs):The NYSE’s modern version of the old specialist system. DMMs are responsible for:Supporting price discovery at market open and closeMaintaining fair and orderly tradingProviding liquidity during market imbalancesManaging halts and resumptionsIn return, DMMs receive fee discounts and certain advantages, such as access to the full order book.NASDAQ Market Makers: Operate under a competitive model where multiple firms quote the same stock. Major players include Citadel Securities, Virtu Financial, and Jane Street. They use advanced algorithms and technology to manage risk and optimize pricing.Bank Market Makers: Dominate bond, forex, and derivatives markets. Leading institutions include Goldman Sachs, J.P. Morgan, Bank of America, and Deutsche Bank. They provide liquidity for large institutional trades and manage multi-asset inventories across trading desks.Risk Management: Market makers face several key risks:Inventory risk: Price movements may devalue their holdings.Adverse selection: Trading against informed participants can lead to losses.Technology risk: System failures or cyberattacks.They manage these through:Hedging: Using correlated assets or derivatives to offset exposure.Spread adjustment: Widening spreads during high uncertainty.Position limits: Setting maximum inventory caps.Real-time monitoring: Continuously tracking exposures with advanced risk systems.4.2 High-Frequency Traders (HFTs)Technological Edge: HFTs rely on extreme technological advantages, including:Low-latency networks: Using microwave or laser communication to cut transmission time between New York and Chicago from 17 ms to 8 ms.Co-location: Placing servers inside exchange data centers to achieve microsecond latency.Algorithm optimization: Constantly refining strategies to boost execution efficiency.Main Strategies:Market Making:Many HFTs act as electronic market makers, operating at far higher speeds than traditional ones. They quote simultaneously across multiple venues, adjusting prices within milliseconds. A large HFT typically holds positions for less than a minute and executes millions of trades daily, ending the day nearly flat.Arbitrage:Exploiting tiny price gaps using speed advantage:Cross-exchange arbitrage: same asset, different venues.ETF arbitrage: between ETFs and their components.Futures–spot arbitrage: between futures and underlying assets.Order Anticipation:Some HFTs try to predict large order flows and position ahead of price movements — a controversial tactic that has sparked debate among academics and regulators.4.3 Institutional Liquidity ProvidersLong-term investors such as pension funds and sovereign wealth funds can provide crucial liquidity during market stress. For example, the Norwegian Government Pension Fund, the world’s largest sovereign fund, increased equity holdings during the 2008 crisis, buying when others sold.Private equity and hedge funds also provide liquidity in specific situations:Crisis traders: Buy distressed assets during market turmoil.Distressed investors: Purchase illiquid, undervalued securities.Active value investors: Buy quality stocks that have temporarily fallen out of favor.Corporate Buybacks: Company share repurchase programs also stabilize markets during downturns. Major firms like Apple and Microsoft conduct large-scale buybacks that serve as steady sources of liquidity.4.4 Central Banks as Lenders and Liquidity Providers of Last ResortTraditional Tools:Discount Window: Allows banks to borrow short-term funds from the central bank to meet liquidity needs. However, using it is often seen as a sign of distress, limiting its use.Open Market Operations: Buying or selling government securities to adjust system-wide liquidity — a primary monetary policy tool.Post-Crisis Innovations:Quantitative Easing (QE):After 2008, major central banks purchased trillions of dollars in government bonds and other assets to inject liquidity and lower long-term rates. The Federal Reserve’s balance sheet grew from under $1 trillion pre-crisis to nearly $9 trillion by 2022.These measures were reintroduced during the 2020 COVID crisis to stabilize markets.ECB’s Long-Term Refinancing Operations (LTRO):Provided low-interest loans of up to three years to eurozone banks, playing a key role during the European debt crisis.Crypto Market Liquidity Providers:While crypto markets lack central banks, certain mechanisms that function as liquidity stabilizers have emerged:Stablecoin issuers like Tether (USDT) influence liquidity through minting and redemption. According to data from Coingecko, as of Oct 28, 2025, stablecoins had a combined market cap of over $310 billion, with fiat-backed coins like USDT and USDC making up $303 billion. Stablecoins now function as a core liquidity layer in the crypto ecosystem.Exchange reserves:Leading exchanges maintain reserve or insurance funds to absorb shocks during periods of extreme volatility. For instance, MEXC maintains a $100 million Guardian Fund, fully on-chain and transparent, to safeguard users and support market stability.4.5 Automated Market Makers (AMMs) in DeFiBasic Principle: AMMs are the core of decentralized exchanges (DEXs). Instead of using an order book, they employ algorithms to enable continuous liquidity. The most common model is the constant product formula introduced by Uniswap:X × Y = K, where X and Y represent token reserves in a liquidity pool, and K is a constant. Trades change the X and Y reserve balance, and prices adjust algorithmically.Incentives for Liquidity Providers (LPs):Anyone can deposit tokens into a pool to become an LP and earn:A share of trading feesAdditional liquidity mining rewardsImpermanent Loss:LPs face the risk of impermanent loss when relative token prices diverge. In such cases, the value of their pooled tokens may be lower than simply holding the assets.For example, in an ETH–USDC pool, if ETH doubles in price, an LP’s return would generally be lower than if they held ETH outright.AMM Evolution:Modern AMMs have introduced greater flexibility and efficiency:2021 (Uniswap v3): Introduced concentrated liquidity, letting LPs provide liquidity within specific price ranges for better capital efficiency.Curve Finance: Optimized algorithms for stablecoin trading to minimize slippage.Balancer: Enabled multi-token pools and customizable weightings for more flexible liquidity structures.5. MEXC’s Liquidity Advantage in Cryptocurrency Trading5.1 Why Choose MEXC?MEXC focuses on the core needs that matter most to users:Most Trending Tokens: A strong lineup of trending and emerging assets, giving traders early exposure to new opportunities.Everyday Airdrops: Regular reward and airdrop initiatives that encourage participation and capital formation across the ecosystem.Xtremely Low Fees: Industry low-trading fees designed to support active trading strategies and high-volume users.Comprehensive Liquidity: Strong order-book depth across major and long-tail assets, supporting efficient execution even during volatile periods.Together, these principles form the foundation of MEXC’s core values, making it a trusted partner for traders around the world.5.2 MEXC’s Liquidity ArchitectureGlobal Market Maker Network: MEXC maintains partnerships with a wide range of professional market makers across the globe, including:Traditional market makers: Firms with experience in TradFi (traditional finance) that have expanded into the crypto market.Crypto-native market makers: Specialized digital asset firms such as Pulsar, GSR, and FlowdeskProject-provided liquidity: Newly listed token projects often supply initial liquidity to support stable trading.This multi-layered market-making structure ensures that liquidity remains strong and consistent — even during high market volatility.5.3 Liquidity Mining and Incentive ProgramsSpot Trading: All Maker orders in Spot markets enjoy zero fees, while Taker orders paid with MX tokens receive a 20% discount. Users holding at least 500 MX qualify for an additional 50% trading fee discount, significantly reducing costs and encouraging liquidity participation across the platform.Futures Trading: MEXC offers additional rewards for Futures traders through its newly launched Futures Earn product: a yield-generating solution for Futures users. Eligible funds in users’ Futures accounts are automatically allocated to exclusive Earn products, generating daily yield without affecting open positions. This ensures efficient capital utilization and passive income growth.Market Maker Commission Program: MEXC provides competitive incentives for professional liquidity providers:Zero or negative fees for limit orders: with rebates as high as -0.0075%.Additional rewards based on liquidity depth and consistency.VIP Market Makers receive customized fee structures and dedicated API access for optimized trading performance.6. Summary6.1 The Central Role of LiquidityThroughout the history of financial markets, liquidity has always been at the core of market infrastructure. From 17th-century coffeehouse trading in Amsterdam to 21st-century algorithmic trading and DeFi platforms, every major leap in financial innovation has been driven by new mechanisms for providing liquidity.Technological progress continues to enhance liquidity. Electronic trading, high-frequency strategies, and smart order routing have significantly reduced transaction costs, narrowed bid-ask spreads, and improved market efficiency. In the future, AI and machine learning may further optimize liquidity management, predicting when and where liquidity will be needed and dynamically adjusting market-making strategies in real time.Balancing regulation and innovation remains a key challenge. Regulators must protect investors without stifling market growth. Overregulation, such as the Volcker Rule’s restrictions on proprietary trading, can suppress liquidity, while underregulation can lead to systemic crises, as seen in 2008. In the crypto market, regulatory frameworks are still evolving, and the right balance between innovation and protection is yet to be found.6.2 The Future of Liquidity in Crypto MarketsInstitutionalization of crypto: As traditional financial giants such as BlackRock and Fidelity enter the crypto space, for example, through Bitcoin spot ETFs, the market is becoming increasingly institutionalized. This trend is expected to bring deeper liquidity, lower volatility, stronger compliance standards, and a more mature structure dominated by professional market makers.Convergence of DeFi and CeFi: Centralized finance (CeFi) and decentralized finance (DeFi) each have their strengths, and their integration will define the next phase of crypto evolution. We may see CEXs integrating DeFi liquidity protocols, DEXs adopting order book-style trading, standardized cross-chain interoperability, and seamless transitions between custodial and non-custodial systems, all contributing to a more unified global liquidity network.Liquidity as a Service (LaaS): Professional liquidity providers may increasingly offer "Liquidity-as-a-Service" to DeFi protocols and new projects. Examples include standardized liquidity contracts, cross-protocol liquidity sharing, and insurance mechanisms that cover impermanent losses, making liquidity provision more efficient and resilient.6.3 Words of Wisdom for InvestorsLiquidity has a price. Investors should recognize liquidity as an asset in itself. Highly liquid assets often yield lower expected returns, while illiquid ones offer a premium to compensate for their risk. This dynamic tends to persist across market cycles.Diversify liquidity exposure. Avoid concentrating funds in low-liquidity assets. During market stress, liquidity risks can surface simultaneously across assets, making diversification less effective than expected.Beware of false liquidity. In crypto markets, displayed order book depth can be misleading. Large trades may experience significant slippage during execution. Use limit orders and closely monitor actual fill prices rather than quoted depth.Understand the role of market makers. Market makers are not altruists: they profit from spreads and information advantages. In periods of high volatility, they may withdraw from the market altogether. Investors should be prepared for these liquidity shocks and manage their positions accordingly.About MEXCFounded in 2018, MEXC is dedicated to being "Your Easiest Way to Crypto." Known for its extensive selection of trending tokens, airdrop opportunities, and low fees, MEXC serves over 40 million users across 170+ countries. 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