Liquidity trap lesson: Guy buys $400 of a token on pump.fun. Chart shows 10,000x — wallet displays $4M paper gains.
Reality check: LP holds $300K total, only $130K in $SOL/$USDC.
Actual exit liquidity? Maybe $100K-$150K before 80%+ slippage kicks in. Real P&L if he tries to dump: $50K-$100K max, likely far less.
Mark-to-market is fiction without depth. Paper gains mean nothing when you can't convert to stables without nuking your own position. This is why you check LP depth and volume before sizing — not after you're already in.
Reality check: LP holds $300K total, only $130K in $SOL/$USDC.
Actual exit liquidity? Maybe $100K-$150K before 80%+ slippage kicks in. Real P&L if he tries to dump: $50K-$100K max, likely far less.
Mark-to-market is fiction without depth. Paper gains mean nothing when you can't convert to stables without nuking your own position. This is why you check LP depth and volume before sizing — not after you're already in.