Solana & memecoins
What is liquidity in crypto?
Liquidity is how much you can buy or sell before you move the price against yourself. In a decentralised pool it is literally the assets sitting in the pool, and it is the number that decides whether a position is exitable. A token can show a large market cap and still have so little liquidity that selling a modest position collapses the price.
How a pool prices things
A standard pool holds two assets and prices them by their ratio. Buying takes one side out and puts the other in, so the price moves with every trade. The larger the pool relative to your order, the less it moves. That relationship, not the ticker, is what determines the cost of getting in and out.
The rule of thumb worth internalising
Compare your intended position to total pool liquidity. Around 1 percent of the pool is usually a tolerable fill. Around 10 percent and you are the price. Any strategy that involves entering quickly needs a liquidity floor written down in advance, because that check will not happen reliably in the moment.
Liquidity is not permanent
- Providers can withdraw unless the liquidity is locked or burned.
- It falls fastest exactly when you want to sell, because everyone else does too.
- A token with heavy volume and thin liquidity is churn, not depth.
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