# Liquidity & Price Sources ## Liquidity Liquidity refers to the ability to buy or sell an asset quickly without causing significant price fluctuations. * High Liquidity: Ample buy/sell orders, where large trades have little impact on price. * Low Liquidity: Sparse buy/sell orders, where large trades may cause sharp price changes (greater slippage). * Source: Liquidity primarily comes from pools on decentralized exchanges (DEXs) such as Uniswap, PancakeSwap, etc., contributed by liquidity providers in the form of token pairs. ## Price Sources In aggregation trading, prices are not determined by a single exchange. Instead, they are derived by comparing multiple liquidity sources to identify the optimal result. * On-chain Prices: Directly from DEX trading pairs and liquidity conditions. * Aggregation Calculation: Aggregators compare prices and costs across multiple DEXs through routing algorithms, selecting the best path for execution. * Dynamic Updates: Prices change in real time with on-chain transactions and liquidity, making quotes time-sensitive. ## Advantages of Aggregated DEXs * Better Prices: Consolidates liquidity across platforms to reduce slippage caused by insufficient liquidity on a single exchange. * Higher Fill Rate: Finds executable trading paths from multiple liquidity sources, lowering the chance of failed transactions. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.transit.finance/start-to-use/quick-start-guide/liquidity-and-price-sources.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.