Every swap you make in Zerion Wallet involves three invisible forces: liquidity, price impact, and slippage. They determine how much you actually receive when you trade. Ignoring these concepts can cost you real money.
This guide breaks down each term in plain language and shows you how they apply to trading through Zerion.
What Is Liquidity?
Liquidity refers to how much value is available in a token's trading pool.
When you swap tokens in Zerion, you're trading against a liquidity pool of assets held in a smart contract, not against another person placing an order (as you would on a centralized exchange).
A token with $5M in its pool behaves very differently from one with $5,000. Higher liquidity means you can buy or sell larger amounts without affecting the price. Lower liquidity means even a modest trade can move the market.
You can check a token's liquidity (LIQ) directly in Zerion's Feed before making a trade. If LIQ is low relative to the amount you want to swap, proceed with caution.
What Is Price Impact?
Price impact is the change in a token's price caused specifically by your trade.
The larger your trade relative to the pool's liquidity, the more you push the price against yourself.
Here's a concrete example. Say a token has $50,000 in liquidity and you place a $500 buy order. Your trade represents 1% of the pool, the price impact is small. But if you try to buy $10,000 worth, you're taking 20% of the available liquidity, and the price moves significantly against you. You end up paying more per token than the quoted price.
Zerion shows you the estimated price impact before you confirm a swap. If you see a price impact above 1–2%, consider breaking your trade into smaller amounts or waiting for deeper liquidity.
What Is Slippage?
Slippage is the difference between the price you expect when you submit a trade and the price you get when it executes.
This happens because other transactions can land before yours. This changes the pool's state between the moment you hit "swap" and the moment your transaction confirms onchain.
On fast-moving tokens (e.g. when you try to buy new memecoins), slippage can be significant. If multiple people are buying at the same time, the price shifts rapidly and your trade executes at a worse rate than you expected
Zerion lets you set a slippage tolerance before you swap. This is the maximum price difference you're willing to accept. If the actual price moves beyond your tolerance, the transaction reverts and your funds stay in your wallet.
How Liquidity, Price Impact, and Slippage Work Together
These three concepts are closely connected:
Low liquidity leads to higher price impact. Small pools can't absorb large trades without big price moves.
High price impact often comes with higher slippage risk. If the pool is already thin, additional trades landing before yours make things worse.
High liquidity reduces both problems. Deep pools absorb trades more easily and leave less room for unexpected price shifts.
When you're evaluating a token in Zerion Feed, look at LIQ alongside MCap and VOL. A token might show a promising price, but if liquidity is thin, your actual returns on a sell could be far lower than expected.
Practical Tips for Trading in Zerion
Check liquidity before you trade. Zerion displays LIQ in the token details and Feed. If a token has very low liquidity, your trade will have outsized price impact — especially on sells.
Watch the price impact estimate. Zerion shows this on the swap confirmation screen. Anything above 3–5% means you're likely leaving money on the table.
Adjust slippage tolerance thoughtfully. The default setting works for most trades, but volatile tokens may require a higher tolerance to execute. Setting it too high, though, leaves you exposed to front-running bots that exploit large slippage windows.
Split large trades. If your trade size is large relative to the pool, break it into smaller swaps over time. This reduces price impact on each individual trade.
Stick to tokens with healthy liquidity. As a general rule, tokens where LIQ is at least 2–5% of MCap tend to be more tradeable without heavy price impact.
Putting It All Together
Liquidity, price impact, and slippage directly affect how much value you keep or lose on every swap.
Understanding them turns you from a passive trader into one who makes more informed decisions.