> For the complete documentation index, see [llms.txt](https://arbydex.gitbook.io/arbydex/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://arbydex.gitbook.io/arbydex/arbydex-technology/liquidity-analysis.md).

# Liquidity Analysis

### Understanding Available Liquidity

A price difference alone does not determine whether an arbitrage opportunity is executable.

Liquidity Analysis evaluates the available liquidity within the relevant markets.

The objective is to determine whether the required transaction size can interact with available liquidity without creating excessive price impact.

#### Liquidity Evaluation

{% code expandable="true" %}

```
Detected Opportunity
↓
Liquidity Pool Analysis
↓
Available Liquidity
↓
Price Impact Evaluation
↓
Execution Feasibility
```

{% endcode %}

The engine considers the relationship between available liquidity and the intended execution size.

Higher liquidity can provide better execution conditions, while limited liquidity can increase price impact and reduce the viability of an opportunity.

#### Why Liquidity Matters

A theoretical arbitrage spread may disappear when an actual transaction interacts with the liquidity pool.

ARBYDEX therefore evaluates liquidity before execution rather than relying only on displayed market prices.


---

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