Liquidity Metric To Combat “Volume Inflation” Problem
Launch announcement
includes improved pricing algorithm and several new products to empower users in
the cryptocurrency space We just made a series of very important announcements
at our inaugural conference in Singapore! With these announcements, we aim to
continue raising standards in the cryptocurrency industry, and empowering our
users to make informed choices. First, we introduced a new metric called
Liquidity. In the past year, with increasing volume inflation, the
volume metric started to lose its purpose as a reliable way to gauge real
trading interest. Other solutions, such as handpicking only a few “trusted”
exchanges or using unrelated metrics like web traffic, were non-
comprehensive and did not address the root cause of the issue. Our new
metric will focus on what matters most to investors and traders:
liquidity. With our Liquidity metric, we hope to provide
public good to the crypto markets by encouraging the provision of
liquidity instead of the inflation of volumes. With this metric,
our users will be able to find the most liquid market for more than 3000
cryptoassets, so that they can trade even more efficiently, with the least
slippage. The Liquidity metric by CoinMarketCap is designed to
eventually replace volume as the default metric when ranking market pairs
and exchanges. The detailed write-up on how the Liquidity metric
works can be found on our Methodology page. We refrain from using a static
percentage depth to calculate Liquidity, as the absolute liquidity
among different cryptocurrencies is inherently different. The adaptive
methodology will make the Liquidity metric very difficult to
“game” as orders would need to be placed close to the mid-price, or risk being
counter-productive to the Liquidity metric scoring. The Liquidity metric will be
rolled out in three phases on CoinMarketCap’s website; first it will be applied
to influence the ranking of market pairs, followed by exchanges, and finally
cryptoassets. Other exciting products and initiatives we have announced at the
conference that you can look out for include: We are ever thankful for all your
continuous support and patience as we continue to innovate and deliver our best!
Launch announcement
includes improved pricing algorithm and several new products to empower users in
the cryptocurrency space We just made a series of very important announcements
at our inaugural conference in Singapore! With these announcements, we aim to
continue raising standards in the cryptocurrency industry, and empowering our
users to make informed choices. First, we introduced a new metric called
Liquidity. In the past year, with increasing volume inflation, the
volume metric started to lose its purpose as a reliable way to gauge real
trading interest. Other solutions, such as handpicking only a few “trusted”
exchanges or using unrelated metrics like web traffic, were non-
comprehensive and did not address the root cause of the issue. Our new
metric will focus on what matters most to investors and traders:
liquidity. With our Liquidity metric, we hope to provide
public good to the crypto markets by encouraging the provision of
liquidity instead of the inflation of volumes. With this metric,
our users will be able to find the most liquid market for more than 3000
cryptoassets, so that they can trade even more efficiently, with the least
slippage. The Liquidity metric by CoinMarketCap is designed to
eventually replace volume as the default metric when ranking market pairs
and exchanges. The detailed write-up on how the Liquidity metric
works can be found on our Methodology page. We refrain from using a static
percentage depth to calculate Liquidity, as the absolute liquidity
among different cryptocurrencies is inherently different. The adaptive
methodology will make the Liquidity metric very difficult to
“game” as orders would need to be placed close to the mid-price, or risk being
counter-productive to the Liquidity metric scoring. The Liquidity metric will be
rolled out in three phases on CoinMarketCap’s website; first it will be applied
to influence the ranking of market pairs, followed by exchanges, and finally
cryptoassets. Other exciting products and initiatives we have announced at the
conference that you can look out for include: We are ever thankful for all your
continuous support and patience as we continue to innovate and deliver our best!
