What Liquidity Means
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Liquidity = how much money is in the pool (DEX) available for swapping tokens (SOL <-> token).
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High liquidity (e.g. $500K+) → trades execute smoothly, small price impact.
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Low liquidity (e.g. $30K–$80K like Lucy/DUSD) → price moves wildly even with small buys/sells.
❌ Problems With Low Liquidity
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High Slippage:
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When you buy/sell, your order “eats” into the pool.
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Example: In a $50K pool, even a $500 trade can move the price by several %.
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Pump & Dump Vulnerability:
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Whales or devs can pump the price with just a few SOL, then dump back down, leaving small traders holding losses.
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Harder to Exit:
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In a low-liquidity pool, when you try to sell, the price can crash instantly because there aren’t enough buyers.
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You might see on-screen PNL +20%, but when you hit “Sell” → it executes at -10% because the pool is thin.
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Rugpull Risk:
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If liquidity is very low and controlled by the dev, they can pull liquidity → token price = 0 instantly.
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This is the classic memecoin rug.
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✅ When Low Liquidity Can Be “Good”
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If you’re early and catch a pump before volume floods in → profits can be massive (2x–10x fast).
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But it’s pure gamble unless you track wallets or see organic growth.
Rule of Thumb for You
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Above $300K liquidity → safer for swing trades.
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$100K–$250K liquidity → scalp zone only, set tight stops.
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Below $100K liquidity → pure degen risk, only tiny entries you can afford to lose.
