CashboardGlossary · Trading
What is liquidity?
Liquidity is how easily you can buy or sell an asset near its current price. It comes from order book depth or from the size of an AMM pool.
How does liquidity work?
A liquid market takes big orders without moving much. On an order book that means a thick stack of bids and asks near the price. On an automated market maker it means a big pool. Either way the test is the same: how far does a given trade push the price?
Liquidity, market cap and volume are three different numbers, and mixing them up is expensive. A token can have a big market cap and almost no liquidity, which makes its quoted price fragile. A pool can show big volume from a handful of traders cycling the same money. On-chain, pool liquidity is usually the first thing experienced traders look at.
Put made-up numbers on it. A constant-product pool holds $100,000 of a token and $100,000 of USDC. Buying with $10,000 pushes the pool price up about 21 percent, and your average fill is about 10 percent worse than where you started. The same buy into a pool with $10 million per side moves the price about 0.2 percent.
Liquidity also leaves fast. LPs withdraw and market makers pull their quotes when things get volatile. In a rug pull the creator drains the pool in one go.
Also called: market liquidity, market depth.
Where does liquidity show up in Cashboard?
Raydium pools ranks Raydium's standard and concentrated pools by volume, liquidity or APR and hides anything under $250k of liquidity. Trending on-chain shows 24h volume and liquidity for active pools on every supported network except Arc.
Frequently asked questions
Why does liquidity matter for small tokens?
Because even a modest trade moves a thin pool a lot, and getting out costs more than getting in. The quoted price of a thin token is often not a price you can actually sell at.
Where can you read more about liquidity?
Related terms
Last reviewed . Market data in Cashboard comes from the providers named on each widget and may be delayed. Nothing here is financial advice.