On a decentralized exchange, every token trades against a pool of real money (usually ETH, SOL or a stablecoin). The pool size is the liquidity. It's the most honest number about a token, because it can't be faked by a chart.
Why a tiny pool is dangerous
If a pool holds $5,000, a $500 sell moves the price 10%. A $5,000 sell wipes it out. Your "position" is only worth what the pool can pay, which may be a fraction of what the screen says.
What we flag
- Under $10,000: serious warning. You may not be able to sell at anything near the shown price.
- Under $50,000: caution. Fine for a small position, risky for anything more.
- No pool at all: there is no market. Either the token hasn't launched or it's dead.
Locked liquidity
Serious launches lock their pool for months or years so the creator can't withdraw it. Unlocked liquidity means the creator can pull the pool at any moment, which is the classic rug pull.