They've admitted that their previous metric isn't enough to combat the problem of volume inflation and that they are thinking/hoping that this "Liquidity metric" will be the solution.
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.
They mentioned the details/methodology
here but it appears blank page when I open it. Here are the key highlights though:
To highlight a few key points:
- Liquidity refers to the ease of being able to trade in and out of an asset, or in this case cryptocurrencies.
- The Liquidity metric by CoinMarketCap takes into account a wider range of key variables from the order book, such as the distance of the order from the mid-price, the size of the order and the relative liquidity of the asset in question.
- The metric has been designed to measure liquidity in an adaptive manner and the calculation is made by polling the market-pair at random intervals over a 24-hour period and averaging the result. This takes into consideration differences in global time zones and the fact that order-book depth changes constantly due to immediate market conditions.
What do you guys think about this move by coinmarketcap? I would guess it's a move to salvage their losing credibility/reputation and bring back serious traders to use their platform again.
I am not sure where to post this, please move if posted on the wrong board.
