> For the complete documentation index, see [llms.txt](https://steakhouse.financial/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://steakhouse.financial/docs/risk-management/collateral/layers-pillars-and-criteria/market-rating-layer-3/liquidity.md). # Liquidity Liquidity is one of four criteria in Steakhouse Financial's Market Rating layer, evaluating exit path quality through primary redemption or secondary market swaps. Liquidity is assessed as the ability of the token holder to exchange their token for another store of value. At best, this process is atomic, meaning that the transfer between the two assets happens in the same transaction. Atomic transfers are required in the case of liquidation, which occurs when a borrower’s outstanding loan value exceeds a threshold of its collateral value, known as the Liquidation Loan-to-Value. This parameter, observed in markets, is explained later. Liquidation involves selling the collateral asset in exchange for the loan asset to repay the lender, thus requiring atomicity. Atomic liquidity can be achieved through primary redemptions or secondary market swaps. A primary redemption is executed directly with the issuer, sometimes through a decentralized PSM (Peg Stability Module), which is a reserve of on-chain assets that can be swapped against the issued token. Secondary market liquidity is obtained through liquidity pools, where liquidity providers allow users to swap between the pool’s assets in a permissionless way. {% hint style="info" %} Indicators: * Primary market redemption possibilities * Secondary market depth * Lock-up or notice periods {% endhint %} --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://steakhouse.financial/docs/risk-management/collateral/layers-pillars-and-criteria/market-rating-layer-3/liquidity.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.