Liquidity and volume
How much money sits in the pool decides whether you can actually sell, and why huge volume can be fake.
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Market cap says what a coin is worth on paper. Liquidity says how much of that you could actually turn back into SOL. Volume says how much trading happened. You need all three, and the last two are where newcomers get fooled.
What liquidity is
On Solana you do not buy a memecoin from another person. You trade with a pool: a pot that holds the coin on one side and SOL on the other. When you buy, you put SOL in and take tokens out. When you sell, you do the opposite. The pool sets the price from the balance between its two sides.
Liquidity is the dollar value sitting in that pool, both sides added together. So a coin showing $20,000 of liquidity has about $10,000 of SOL in its pool. Before a pump.fun coin graduates, it trades against a bonding curve instead of a pool, which behaves in a similar way.
Why liquidity decides what you can sell
Every trade moves the price. A small pool moves a lot, a big pool moves a little. That move is called price impact, and it hits you twice: once on the way in and once on the way out.
A $5,000 bag that sells for $3,330
A pool has $10,000 of SOL on one side. Your tokens show a value of $5,000 at the current price. Here is what happens if you sell them all at once, using the simple formula most pools use, before fees.
- Step 1: Your tokens equal half of the tokens in the pool, so selling them grows the pool's token side by 50%.
- Step 2: The pool keeps its two sides multiplied to the same number, so the SOL side shrinks from $10,000 to about $6,670.
- Step 3: You receive the difference: about $3,330. The screen said $5,000. A third of it vanished to price impact.
- Step 4: Selling in five pieces does not save you unless new buyers arrive in between. Each piece pushes the price lower for the next one.
Liquidity can be pulled
Who controls the pool matters. When pump.fun moves a graduated coin to its own exchange, PumpSwap, its docs say the pool tokens are burned, so nobody can withdraw that liquidity. On a coin someone set up by hand, the creator may still hold the pool tokens and can take the liquidity out whenever they like. That is the classic rug pull. Tools like RugCheck show whether a pool's liquidity is burned or locked.
What volume is
Volume is the dollar value of all buys and sells in a time window, usually shown for 5 minutes, 1 hour, 6 hours and 24 hours. High volume means a lot of trading. It does not mean a lot of people.
Fake volume
Volume is cheap to fake. A bot can buy and sell the same coin from its own wallets all day, paying only fees, and the 24-hour number climbs into the millions. This is wash trading, and the bots are called volume bots. They exist because screeners and trending lists reward volume.
Three checks catch most of it:
- Makers. DEX Screener counts how many different wallets traded. $1 million of volume from 150 makers is most likely a few wallets trading back and forth. The same volume from 3,000 makers is a crowd.
- Trade sizes. Scroll the list of trades. Hundreds of near-identical buys and sells a few seconds apart are a machine, not people.
- Holders. Real attention brings new wallets. If volume is huge and the holder count is not moving, someone is trading with themselves.
The split between buys and sells helps too. Many buys from many makers in the last hour is real demand. Lots of small buys and a few very large sells usually means small buyers are paying for someone big to leave.
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This guide is for learning. It is not financial advice. Most memecoins go to zero and most people who trade them lose money. Only ever trade what you can afford to lose.