Liquidity Depth

Liquidity depth refers to how much trading volume a market (or a DEX pool) can absorb without causing a large price movement.

In other words, it measures how stable the price is when someone tries to buy or sell a large amount. The deeper the liquidity, the smaller the price impact (“slippage”) for a given trade size.

If a pool has high liquidity depth, you can execute big swaps and the price barely moves.

If it has low depth, even a small swap can push the price up or down significantly.

It’s basically a measure of market resilience.