Cryptocurrency trading has become the new fad in the last couple of years. With the help of the DeFi system, traders can exchange tokens easily.
Unlike centralized systems that connect buyers and sellers of digital assets, decentralized systems leverage liquidity pools for every pair that is traded.
These liquidity pools are essentially a collection of funds from where traders receive a token in return for depositing a token.
It goes without saying that liquidity pools are far from ideal.
However, they do allow a decentralized mechanism for trading cryptocurrencies without the need for a third (centralized) party.
Yet, DApp users often run into problems and a common one is the “Insufficient Liquidity for This Trade” error message.
If you are a user who has encountered this error, you have come to the right place.
In this blog, we will discuss how to fix the “Insufficient Liquidity for This Trade” problem.
- 1 What is Liquidity?
- 2 What Does “Insufficient Liquidity for This Trade” Mean?
- 3 How to Fix “Insufficient Liquidity for This Trade”
- 4 Final Thoughts
What is Liquidity?
Before we list the different ways to fix the issue, it is imperative that you understand what liquidity is, in the first place.
In simple words, liquidity refers to how fast you can sell an asset without depreciating its value. If an asset is more liquid, it can be sold more quickly.
In this case, cash is the most liquid out of all assets since it can be easily exchanged for other assets. Hence, assets can either be liquid or illiquid.
Let us draw you an example so you can better understand what liquidity entails. Suppose you wish to purchase a $1000 TV.
We all know that cash is the fastest way to acquire a TV. However, you don’t have any cash on you. All you have is a rare stamp collection that is valued at $1000.
But, it will take you ages to find someone who would like to exchange a TV for your stamp collection or someone who would like to purchase your stamp collection and pay the full price for it.
It would have been acceptable if you had some time on your hands, but you only have a couple of days.
In such a case, you have to sell your stamp collection at a depreciated value, i.e., at a discount.
Here, rare stamps become an instance of an illiquid asset since it is not easy to exchange them for other assets.
Similarly, with regards to the crypto market, liquidity is the ease with which you can convert a token into cash or some other token.
What Does “Insufficient Liquidity for This Trade” Mean?
Before you fix the error, it is important that you know the error that you are facing.
As mentioned previously, decentralized platforms such as Pancakeswap or Trust Wallet facilitate cryptocurrency trades with the help of liquidity pools.
Prior to any cryptocurrency being available for trading on a decentralized exchange, the creator has to develop a liquidity pool where there will be a particular amount of two different cryptocurrencies that are in a pair.
For instance, for the BTC/ETH pair, the liquidity pool has to contain a particular amount of both Bitcoin and Ethereum.
When a transaction takes place in these exchanges, the token that the user leverages to trade with gets included in the liquidity pool, whereas the token that he gets in return is deducted from that pool.
Now, a common reason for why you receive the “Insufficient Liquidity for This Trade” error is because there simply isn’t sufficient liquidity for you to trade.
That means the liquidity pool for the specific cryptocurrency doesn’t contain enough tokens for trading.
Yet another cause for receiving this error message when trying to trade tokens on an exchange is that you are using some other version of that exchange.
If you see this message, it is most probably because that cryptocurrency has not yet been shifted to the specific version of the exchange that you are using.
For instance, in case you are attempting to trade a coin on the PancakeSwap V2 exchange that was only included on the V1 exchange, it is most likely that you will run into the error since there is not enough liquidity for the pair you are trying to trade on that version.
The same error might occur on Uniswap as well since both exchanges work similarly.
How to Fix “Insufficient Liquidity for This Trade”
Fixing the insufficient liquidity does not call for much confusion. There are a few tricks that can help you to trade your tokens easily again.
Follow the tips in the next section.
Change Your Exchange
The first solution to fixing the “Insufficient Liquidity for This Trade” issue is to change the version of the exchange you are using.
As mentioned above, if you are using a version of an exchange that does not offer the trading pair you are looking for, you will face this issue.
Hence, it is best to switch to the previous version of whichever exchange you are trading on.
For instance, PancakeSwap works on the default V2 version whereas UniSwap works on the default V3 version.
Follow the steps below to see how you can change the versions of the exchanges.
Step 1: Navigate to the official website of PancakeSwap. In case you are using Trust Wallet, you can just go to the DApps section and find the PanckeSwap app.
Step 2: Next, you will come across a screen which will be asking you to connect PanckeSwap with your Wallet.
Just click on the Connect tab and you will be good to go.
Step 3: As mentioned above, your app will be working on the V2 version by default.
Hence, if you are looking to fix the problem, you need to switch to the old V1 version.
In order to do that, just scroll down to the end and you will find a toggle with the options for V1 and V2.
Step 4: Shift the toggle to V1. Upon doing that, you will be greeted with a pop-up message notifying you that the V1 is outdated.
They will also recommend you to use the V2 version since it offers better prices.
Simply select the checkbox on the bottom that says, “I understand that V1 is no longer supported, and I may experience significant slippage, resulting in lost capital.”
Next, click on “Continue to V1 Anyway”.
Step 5: Next, you have to reconnect to your wallet just like you did previously. If you are using Trust Wallet, select Trust Wallet but if you use some other wallet, select that respectively.
Changing the version on Uniswap is even easier than PancakeSwap. All you have to do is type in “?use=V2” along with the URL for UniSwap.
This will take you to the V2 version. But, if you are looking to switch back to the V1 version, just type in “?use=V1”.
https://app.uniswap.org/#/swap is the general URL of the UniSwap exchange which will take you to the V3 version since it is set by default.
Simply add “?use=V1” or “?use=V2” at the end of that link depending on which version you wish to use.
Increase Your Slippage Tolerance
The next effective solution that you can use to fix the issue is to increase your slippage tolerance.
But, before you do that, make sure you understand what it entails. It basically means that you are willing to lose some amount when trying to trade.
Slippage and Liquidity are entirely different terms and it is important that you do not mix the two up.
Insufficient liquidity essentially means that there is insufficient “depth” to complete your transaction.
Suppose, you wish to purchase $10,000 worth of Bitcoins, but the exchange you are using only has $9,000 worth of Bitcoins.
This is an example of insufficient liquidity where there are not enough tokens to go ahead with your order.
Slippage is something different. For instance, you are looking to purchase $10,000 worth of Bitcoins, but the exchange does not have sufficient liquidity.
If you change your slippage tolerance to 10%, it means that you will receive $9,000 worth of Bitcoins and are looking to sacrifice the rest for the sake of the trade.
Step 1: Navigate to the PancakeSwap website or DApp on Trust Wallet and connect to your wallet just like we showed you above.
Make sure that you are using the default V2 version before you go ahead with this process. Next, go to settings on the top of the screen.
Step 2: Under “Swaps & Liquidity”, you will find a section called “Slippage Tolerance”. Just add 12% to increase your Slippage Tolerance.
Once you enter 12%, you will come across a message stating “Your transaction may be frontrun”.
Just ignore that message and tap on the X icon on the top. This will most likely help to fix your issue of insufficient liquidity.
Step 1: Navigate to the UniSwap website. Make sure that you are using the default V3 version before you go ahead with this process.
Connect your wallet of choice to UniSwap. Next, go to settings on the top of the screen.
Step 2: Under “Transaction Settings”, you will find a section called “Slippage Tolerance”. Just add 10% to up the Slippage Tolerance.
Once you enter 10%, you will come across a message stating “Your transaction may be frontrun” similar to what you received on PancakeSwap.
Just ignore that message and click anywhere on your screen in order to close the box. This will most likely help to fix your issue of insufficient liquidity.
Check Your Internet Connection
Sometimes, the internet connection that you are using can be the cause of this problem.
In order to determine whether it is your bandwidth connection that is causing you the trouble, try restarting your router and see if that helps.
Alternatively, you can also try using your mobile data if your WiFi is not helping.
If your mobile data also refuses to help, you can try switching to the secondary mobile data (in case you use a device that enables several SIM cards).
Next, turn off your VPN if you are using one. Oftentimes, VPNs can restrict you from trading your tokens seamlessly.
While you are checking your own internet connection, it also helps if you check whether it is the server of the exchange you are using that is the real culprit.
Centralized servers can often fail and be temporarily down for everyone.
In such a case, visit websites like UniSwap Server or PancakeSwap Server to determine whether it is you or the server of the exchange.
In case it is a problem on the exchange’s end, there is not much you can do other than wait. The problem is likely to get fixed by itself.
Use a Different Exchange
If all else fails, the last resort for you is to switch to a different exchange that offers the trading pair you are looking for.
PancakeSwap or UniSwapp are not the only exchanges you can use.
Other than these two, you can use exchanges like DODO Exchange, Bogged Finance, HoneySwap, SushiSwap, TraderJoe, and others.
Sometimes decentralized exchanges face such issues owing to the fact that the liquidity pools do not contain enough tokens.
Regardless, we sincerely hope the above-mentioned solutions for “Insufficient Liquidity for This Trade” have been helpful in resolving it.