1. Market Cap
01Definition
Market cap is the token price multiplied by circulating supply.
02Why it matters
Token price alone tells you very little. A token priced at $0.0001 can still have a large valuation if billions of tokens exist.
03What to check
- Current market cap
- Previous market-cap highs
- Circulating supply
- Whether supply can increase
- Market cap relative to liquidity
04Healthy / Dangerous
Healthy
Compare valuation with verified supply and pool depth.
Dangerous
A large displayed valuation is supported by little executable liquidity.
05Beginner mistake
Assuming a low token price means more upside.
06Takeaway
Judge valuation by market cap, not token price.
Find an exact contract and compare its reported valuation and liquidity. Check input freshness.
2. Liquidity
01Definition
Liquidity is the capital available for traders to buy and sell the token.
02Why it matters
A token can have a high market cap but very little liquidity. Thin liquidity makes price easier to move and exits harder.
03What to check
- Total liquidity
- Market cap versus liquidity
- Whether liquidity is locked or burned
- How much a large sell would move price
- Whether liquidity is growing
04Healthy / Dangerous
Healthy
Growing market cap together with growing liquidity.
Dangerous
Large market cap with extremely thin liquidity.
05Beginner mistake
Assuming a $5M market cap means $5M can be withdrawn.
06Takeaway
Market cap shows valuation. Liquidity shows how easily you can exit.
Compare reported pool liquidity and its timestamp. Use an external executable quote to assess an actual exit.
3. Liquidity vs Market Cap
01Definition
This compares the token's valuation with the amount of real trading liquidity supporting it.
02Why it matters
Two tokens can both have a $1M market cap, but one may have $200k liquidity while another has only $20k.
03What to check
- Liquidity as a percentage of market cap
- Whether liquidity grows as market cap grows
- Sell impact for large holders
- Whether liquidity is concentrated in one pool
04Healthy / Dangerous
Healthy
Compare similarly valued tokens using pool depth and actual quotes.
Dangerous
Treat equal market caps as equal exit capacity.
05Beginner mistake
Comparing market caps without comparing liquidity.
06Takeaway
The same market cap can carry very different exit risk.
Compare market cap and reported liquidity across sampled tokens; the ratio does not predict executable price impact.
4. Volume
01Definition
Volume measures how much trading occurred during a period.
02Why it matters
High volume shows activity, but activity is not the same as genuine demand.
Warning
Bots and wash trading can inflate volume.
03What to check
- Volume relative to liquidity
- Volume relative to market cap
- Whether volume persists
- Buy versus sell activity
- Number of unique wallets trading
04Healthy / Dangerous
Healthy
Activity persists across time windows and is supported by varied participation.
Dangerous
A brief volume spike or repetitive churn is treated as durable demand.
05Beginner mistake
Treating high volume as proof of strong conviction.
06Takeaway
Volume measures trading, not conviction.
Choose the exact contract and a time window. Compare observed buy/sell value and swap sizes; returned swaps are a bounded sample.
5. Holders
01Definition
Holders are wallets currently owning the token.
02Why it matters
Holder growth can show spreading ownership, but one person can control many wallets.
03What to check
- Total holders
- Holder growth
- New holders versus exits
- Holder concentration
- Whether wallets are related
04Healthy / Dangerous
Healthy
Holder count rises while concentration falls.
Dangerous
Holder count grows through dust transfers or wallets controlled by one actor.
05Beginner mistake
Assuming 5,000 wallets means 5,000 independent investors.
06Takeaway
Count ownership, not just wallets.
Check provider-reported holder count and top-10 concentration where available. Counts do not establish independent ownership.
6. Token Supply
01Definition
Supply tells you how many tokens exist, how many circulate, and whether more can be created.
02Why it matters
Supply structure affects valuation, dilution risk, and holder concentration.
03What to check
- Total supply
- Circulating supply
- Burned supply
- Mintable supply
- Team or reserved allocations
04Healthy / Dangerous
Healthy
Supply, reserved allocations, and permission changes can be accounted for.
Dangerous
New minting or unclear allocations can add unexpected sellable supply.
05Beginner mistake
Looking only at current circulating supply.
06Takeaway
Know how much supply exists and whether that number can change.
7. Price Impact
01Definition
Price impact is how much an order moves the token price.
02Why it matters
A trade that looks small in dollar value can move a thin meme market significantly.
03What to check
- Expected price impact before buying
- Expected price impact before selling
- Pool depth
- Position size relative to liquidity
04Healthy / Dangerous
Healthy
The intended order is checked against a current executable quote.
Dangerous
Order size is large relative to pool depth, even if small relative to market cap.
05Beginner mistake
Sizing a trade from account balance instead of available liquidity.
06Takeaway
Your order can become part of the market move.
Level 1 Checklist
Before going deeper, answer:
- What is the market cap?
- How much liquidity supports it?
- Is volume persistent or temporary?
- Is ownership spreading?
- Can supply increase?
- How much would a meaningful buy or sell move price?
If you cannot answer these, you are still reading the surface of the token.