Liquidity & price impact

Find the thin pool that limits a multi-hop quote

Diagnose whether a thin connecting pool limits a multi-hop swap despite deep liquidity at the beginning and end.

A multi-hop quote can be constrained by a small connecting pool even when the input and output tokens each have large markets elsewhere. Inspect every pool actually used by the route rather than only the best-known pair.

A hypothetical weak middle leg

Imagine a route A → B → C. The A/B pool is deep, but B/C has little capacity at the required size. The first conversion produces a substantial quantity of B, and exchanging that B into C creates most of the route's deterioration.

A token-wide TVL total for C does not resolve the issue if the route cannot use those other pools. Likewise, A/B's favorable quote does not establish the full path's output.

Use a size ladder to locate the constraint

Request several comparable route sizes and inspect the per-leg amounts if disclosed. A rapidly worsening later leg is evidence of a bottleneck. If per-leg information is unavailable, the complete output curve can reveal limited capacity, but it cannot uniquely identify which pool caused it.

The Uniswap v2 library passes each hop's output into the next hop's calculation. This dependency explains why later-leg capacity matters to the entire route.

Check shared constraints across alternatives

Two routes with different first hops can still converge on the same thin final pool. Counting them as independent capacity can overstate available execution. Compare their combined use of that shared state rather than summing separate initial-state quotes.

Possible responses include a different path or a smaller trade, but their economic merit requires fresh net-output comparisons. A longer route is not automatically worse, and a short route is not automatically deep. The diagnostic goal is to identify which resource limits the requested conversion, then state whether the evidence supports that conclusion or only indicates a route-level depth problem.

Sources & verification (1)

Source-check date is recorded in the article details. URLs are provided for manual verification. Use Copy to keep this page open.

  1. UniswapV2Library.sol

    Reference amount-out and amount-in arithmetic; integer rounding.

    https://github.com/Uniswap/v2-periphery/blob/master/contracts/libraries/UniswapV2Library.sol

Continue reading

Does splitting one trade into several swaps reduce pool impact? When can waiting between smaller swaps change the result? How unequal pool sizes affect the value of additional liquidity