Liquidity aggregation refers to the process of combining liquidity from various sources to create a larger pool of available capital for trading assets. This is essential in environments where asset trading can be fragmented across multiple exchanges and platforms. By aggregating liquidity, traders can access better prices, reduced spreads, and improved execution speeds.In practice, liquidity aggregation typically involves using tools and technologies that connect multiple exchanges and liquidity providers. These tools analyze the available market data to source the best prices for trades, ensuring that buyers and sellers can execute transactions with minimal slippage.This functionality benefits traders by enhancing market efficiency and making it easier to enter or exit positions without significantly impacting the asset’s price. Additionally, liquidity aggregation can help smaller exchanges compete by providing them access to larger liquidity pools, promoting a more balanced and fair trading environment.