A token with no order book becomes tradable the moment someone creates a liquidity pool for it. Understanding who created that pool and what they can do with it explains most of what follows.
A pool is what makes a price exist
An automated market maker holds two assets and quotes prices from their ratio. Depositing a new token alongside an established one creates a market where none existed.
The depositor sets the initial ratio, which sets the initial price. Nothing external validates that figure; it is simply what the first deposit implies.
Trading then moves the ratio, and the pool's depth determines how much a given trade moves it, which is why a small deposit produces violent price movement.
Liquidity provider tokens represent the claim
Depositing into a pool returns tokens representing a share of it, and those tokens are what permits withdrawal of the underlying assets.
Whoever holds them can remove the reserve asset, collapsing the market. This is the mechanism behind the pattern commonly described as a rug pull.
Because the risk is well known, projects often lock these tokens in a time-locked contract or send them to an address nobody controls.
Locking and burning are checkable
A lock is a contract holding the provider tokens with a release time, and its terms are readable on chain by anyone.
Burning sends them somewhere unspendable, permanently forfeiting the deposit and making removal impossible rather than merely delayed.
Both claims can be verified directly, so the relevant question is whether the specific tokens for the specific pool were locked, not whether an announcement said so.
Contract permissions matter as much as the pool
Locked liquidity does not help if the token contract permits minting additional supply, since new tokens can be sold into the pool.
Other functions to check include the ability to pause transfers, to apply variable transaction taxes and to exclude specific addresses from restrictions.
Automated scanners flag these patterns, though they read code rather than intent, and an unusual but legitimate design can be flagged alongside a deliberately harmful one.
Fee revenue attracts and then disperses
Providers earn a share of trading fees, which is substantial while volume is high and negligible once attention moves elsewhere.
As fees decline, providers withdraw, thinning the pool and widening the price impact of every subsequent trade.
The result is that depth is highest during the period of greatest activity and lowest afterward, which is the opposite of what a holder trying to exit later would want.