What Zero Liquidity Means for a New Token
What does zero liquidity mean for a new token? It means no DEX pool holds a base asset such as BNB, ETH or a stablecoin to trade against the token. Without that pool there is no reliable price and no buyer on the other side, so anyone holding the token may be unable to sell it at all. What is token liquidity and where does it come from? On a decentralized exchange, a token does not trade against an order book full of people. It trades against a pool. The pool holds two assets side by side: the new token and a base asset such as BNB on BNB Smart Chain or ETH on Ethereum. When you buy, you put base asset into the pool and take tokens out. When you sell, you do the reverse. The value of the base asset in that pool is what people call liquidity. It is usually shown in US dollars. A deep pool can absorb a sale with only a small move in price. A shallow pool moves sharply on every trade. An empty pool cannot absorb anything. Liquidity does not appear by itself. Someone has to add it, and on ...