How Much Liquidity Should I Add to My token: A Complete Guide with a Table
Without sufficient liquidity, you may face issues such as slippage, price volatility, and bots attacks bots affect the token value. In this post, I'll explain how much liquidity you should add based on your project type.
Although more liquidity is better for the stability of the project, it also implies risks such as opportunity cost and impermanent loss that you must take into account, but I will not go into that now.
Below, I explain to you, in my experience, the liquidity categories that apply on the main blockchains and the recommended figures for Solana, Base and Ethereum.
Liquidity categories
No matter which blockchain launched your liquidity pool on, you’ll need to place your token one of these categories. The range you choose will have a direct impact on investor perception, price stability, and the risk of bots attacks.
- Very low liquidity: Experimental or very low budget projects, almost always memecoins or shitcoins. In this range, the slippage is high and the risk of manipulation by bots is significant.
- Low Liquidity: This category comprises nascent projects with a small, active community. While the risk is lower than in the preceding category, the token's stability is not yet guaranteed and remains susceptible to fluctuations.
- Moderate Liquidity: Projects with a solid user base that anticipate consistent trading volume. At this level, the token price is much more stable, and large transactions do not drastically affect the price.
- High liquidity: This is where serious projects begin. With this level of liquidity, price fluctuations are minimal and investors have more confidence in the project.
- Very high liquidity: Reserved for established projects or those backed by significant investments. Pools of this size are capable of handling transactions of any volume without affecting the token price.
How much liquidity to add to your token based on each blockchain
Each blockchain has unique characteristics that affect the liquidity ranges required for a token. Below, we present the recommended liquidity ranges for Solana, Base, and Ethereum (L1) across each of the previously explained categories.
| Category | Solana Raydium) | Solana (PumpSwap) | Base | Ethereum | SUI |
|---|---|---|---|---|---|
| Very low liquidity | 1 - 100 SOL | 1 - 25 SOL | 0.1 - 5 WETH | 0.5 - 10 ETH | 80 - 500 SUI |
| Low liquidity | 101 - 500 SOL | 26 - 125 SOL | 6 - 25 WETH | 11 - 50 ETH | 500 - 3000 SUI |
| Moderate liquidity | 501 - 2,000 SOL | 126 - 500 SOL | 26 - 100 WETH | 51 - 250 ETH | 3000 - 15,000 SUI |
| High liquidity | 2,001 - 10,000 SOL | 501 - 2,500 SOL | 101 - 500 WETH | 251 - 1,000 ETH | 15,000 - 80,000 SUI |
| Very high liquidity | More than 10,000 SOL | More than 2,500 SOL | More than 500 WETH | More than 1,000 ETH | More than 80,000 SUI |
How does liquidity affect your project?
Regardless of blockchain choose, the amount of liquidity in your pool will affect the stability and success of your token. Here’s how common liquidity issues can impact your project:
- Slippage: If your pool has very low liquidity, the token price can vary drastically during a transaction, which negatively impacts the user experience. With more liquidity, you can minimize this risk.
- Bot sniping: Pools with low liquidity are especially vulnerable to attacks by bots seeking to take advantage of rapid price fluctuations. With greater liquidity, it is less likely that bots will be able to manipulate your pool.
- Impermanent loss: This phenomenon occurs when the value of the tokens in your pool changes considerably. With more liquidity, you can mitigate the impact of impermanent loss, but it is still a risk that must be monitored, especially in volatile markets.
Should I allocate 100% of the tokens to my liquidity pool?
When you learn how to create a cryptocurrency, you allocate an initial supply. Generally, between 40% and 70% of the total token supply is reserved for the liquidity pool, and the remainder is allocated to other areas such as staking incentives, rewards, or future Airdrops.
Conclusion
The amount of liquidity you add to your token is a key factor in its success in the market, or at least in not failing. On Solana, Base and Ethereum, liquidity ranges vary, but the principle is the same: the more liquidity, the more confidence and stability for your token. However, be sure to plan well the distribution of your token supply and reserve a portion for future incentives, make airdrops and project developments.
Industrial Engineer. Member of the Smithii's marketing team. Solana trader. Collaborator in the $SHRIMP memecoin launch.