What Is the Primary Risk Associated with Trading Low-Liquidity, Long-Tail Assets on a DEX?

The primary risk is high price impact and slippage. Due to the low liquidity, even a moderately sized trade can significantly move the asset's price, resulting in the trade executing at a much worse price than expected.

This can lead to substantial losses for the trader. Furthermore, low volume also increases the risk of market manipulation and difficulty in exiting a large position.