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Liquidity in decentralized exchange development refers to how easily users can buy or sell tokens without causing big price changes. Most DEXs use something called liquidity pools, where users deposit two types of tokens (like ETH and USDT). These tokens are then used to help others trade. The more tokens in the pool, the easier and smoother the trades will be. People who add their tokens to the pool are called liquidity providers, and they earn a small fee from each trade. Good liquidity means faster trades, better prices, and a smoother experience for everyone using the exchange.