Liquidity management is crucial in a Coinbase clone because it ensures users can buy and sell cryptocurrencies without significant price fluctuations or delays. High liquidity means there's a substantial volume of trading activity, which translates to smoother transactions and tighter spreads. To achieve this, a Coinbase clone can use various strategies, such as integrating with multiple liquidity providers, establishing liquidity pools, and implementing market-making techniques. Liquidity providers are entities that supply liquidity by trading actively on the platform, while liquidity pools are reserves of cryptocurrencies that facilitate instant trades. Additionally, market makers help maintain liquidity by placing buy and sell orders at various price levels. Effective liquidity management contributes to a better user experience and helps attract more traders to the platform.

source: https://www.blockchainappfactory.com/coinbase-clone