Auto-liquidity refers to a mechanism used in decentralized finance (DeFi) protocols that enables automatic adjustments to liquidity pools. It ensures that there is always available liquidity for trading pairs on decentralized exchanges.When a transaction occurs, auto-liquidity mechanisms can redistribute a portion of transaction fees to liquidity providers. This adds funds to the liquidity pool automatically, enhancing the pool’s resilience and reducing the risk of slippage for traders. In some tokens, a percentage of every transaction can be diverted to a liquidity reservoir. This not only supports price stability but also incentivizes users to hold the token longer, as they benefit from increased liquidity and potential appreciation in value. Many innovative projects utilize auto-liquidity features to foster a more efficient trading environment and build community trust. By streamlining the process of maintaining liquidity, these protocols help create a smoother user experience and encourage broader participation in the ecosystem.