# Optimal Liquidity Ratios and Depth ### Determining Optimal Ratios Optimal liquidity levels are typically gauged as a 1:1 ratio between liquidity and circulating supply at token generation events (TGEs). Maintaining this ratio prevents high slippage and stabilizes the price discovery process. ### Risks of Low Liquidity Low liquidity can result in substantial price impacts from relatively small transactions, increasing volatility and discouraging investor participation. ### Benefits of High Liquidity High liquidity provides price stability, reduces transaction slippage, and encourages sustained investor interest and engagement, ultimately supporting a healthy ecosystem. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://playbook.tokenise.tech/module-4-liquidity-management-and-market-sustainability/optimal-liquidity-ratios-and-depth.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.