How Does a Lack of Fungibility Impact a Token’s Liquidity?

A lack of fungibility severely reduces a token's liquidity. Non-fungible tokens (NFTs) are unique, meaning each one requires individual pricing and a specific buyer, leading to a much smaller market and slower sales.

Fungible tokens, by contrast, can be traded instantly against a common liquidity pool, as every unit is the same, which facilitates high trading volume and deep liquidity.