Swapping tokens with low liquidity can sometimes be challenging, even if the price appears to have increased significantly. This can be frustrating for users who see potential profits but are unable to complete their trades. Phantom will display a warning when trying to swap any tokens that are an unsupported token pair.
Understanding Liquidity in Token Swaps
- Liquidity refers to the availability of tokens in a trading pool to facilitate swaps. When a token has low liquidity, there are fewer tokens available in the pool, which makes it harder to execute trades, especially larger ones. This can lead to:
- Trade Rejections: If the pool doesn’t have enough tokens to fulfill your swap, the transaction will fail.
Why Price Increases Don’t Guarantee Successful Swaps
Even if the displayed price of a low-liquidity token has increased, several factors might prevent a successful swap:
- Fake Liquidity or Manipulation: The displayed price might be artificially inflated due to small, manipulative trades. These don’t reflect genuine market conditions, so the liquidity required for your swap doesn’t exist.
- Insufficient Liquidity for Large Trades: The pool might not have enough tokens to match your trade size, causing the swap to fail.
- Mismatch Between Displayed and Actual Prices: The price shown may not account for the lack of depth in the liquidity pool, leading to an inaccurate estimation of what you’ll receive in a trade.
What Can You Do to swap the tokens?
If you’re unable to swap low-liquidity tokens, here are some steps you can take:
-
Check the Liquidity Pool: Use a blockchain explorer or the DEX’s interface to see the available liquidity for the token pair. If liquidity is low, your trade may not succeed.
-
Reduce Trade Size: Try swapping a smaller amount. This can reduce price impact and increase the likelihood of your trade being fulfilled.
-
Monitor Price Trends: Wait for more liquidity to enter the pool or for a more stable price. Engaging in trades during volatile or manipulated price spikes can be risky.
-
Use a Different Platform: Some platforms or liquidity providers may have better pools for the token you’re trying to swap. Explore other DEXs to see if they can facilitate the trade.
-
Be Cautious of Inflated Prices: Verify the token’s activity and liquidity using tools like blockchain explorers or market analysis platforms to ensure the price increase is genuine.
Unfortunately, if none of the above steps resolve the issue, you will not be able to swap these tokens, and the funds may be unrecoverable.
Key Takeaways
- Low-liquidity tokens are harder to swap because of insufficient pool depth, high price impact, and potential price manipulation.
- Even if the price has increased, swaps may fail if the liquidity doesn’t support your trade.
- Reducing trade size, monitoring market conditions, and verifying liquidity can help mitigate issues.