Low liquidity for small-cap tokens

As a project owner, you know that getting enough liquidity for your token is crucial for its success in the DeFi ecosystem. While the funding for development is important, without liquidity, your project's token will not be able to attract investors and gain momentum in the market.

When a project does a pre-sale to generate initial funding, they must list their token on a decentralized exchange, which requires liquidity. If there is not enough liquidity available, it creates problems such as slippage, which can discourage users from buying the token, particularly those looking to make larger purchases.

Liquidity providers tend to participate in programs that offer high APY above the trading fees, as impermanent loss remains a concern. This means that they are more likely to provide liquidity to well-established projects or protocols, rather than new or untested ones, in order to minimize the risk of impermanent loss and ensure a more stable return on their investment.

In an effort to solve the liquidity problem, many projects turn to liquidity mining programs. However, these programs can have side effects.

Another option for projects is to connect with a venture capitalist or market maker for liquidity. However, these avenues are not always available or feasible for every project, and rejection can lead to the project being forced to shut down.

Overall, the lack of liquidity for a project's token can significantly hinder its success and cause it to fail in the DeFi ecosystem. Therefore, it's essential for projects to prioritize liquidity as part of their development strategy.