Imagine you decided to buy 1000 tokens in a decentralized desert with 12 traders and a market maker who stepped out for lunch. You hit 'Buy', and... bam! You bought at 20% higher. Congratulations! You just became a victim of liquidity with a minimum 😅
📌 What is liquidity?
It's not water, although it sounds similar. Liquidity is the ability of an asset to be quickly bought and sold without significant impact on its price. You may have a top altcoin, but if there’s no demand for it — it’s just a precious dead weight in your wallet 🧟♂️
📉 Slippage is an invisible thief.
When there are few participants in the market or low volume — you enter a trade at one price, but receive a completely different one. And, as always, worse. It's especially fun on DEXes where the 'liquidity pool' is not a pool, but a puddle after the rain ☔
🧐 How to assess liquidity?
· Check trading volumes and the spread between buy/sell prices.
· Peek into the order book — if it's empty, run away!
· On DEXes — check the pool size, because sometimes in that 'pool' there are three frogs and one fish.
🛡️ How to avoid slippage?
· Use limit orders on CEX.
· Set the maximum slippage manually on DEX (and not 49%, as they say on the internet 😤)
· Choose assets with good capitalization and stable trading volume.
· Don’t go all-in on the SHIB/UFO/Luna 3.0 pair 🤡
📣 And finally:
Liquidity is like having an exit at a nightclub. As long as everything is fun — you don’t care. But when panic sets in — you’re stuck without it.