Like a lot of people, I've long been frustrated by the obviously fantastical volume figures reported by crypto exchanges and passed on by the aggregator sites like CoinMarketCap.
There are many reasons why these incredibly exaggerated figures are harmful to the crypto environment, not least that of general credibility.
Wash trading has become the norm, listing fees are based on lies and investors/traders are deceived into using "bucket shops" with all the risks involved in that.
So, for me anyway, it was high time CMC as market leader got their act together and provided more than the reported/adjusted volume stopgap.
And they seem to have done it, in the shape of the recently deployed
Liquidity Metric. 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.
I find this particularly encouraging
The Liquidity metric by CoinMarketCap is designed to eventually replace volume as the default metric when ranking market pairs and exchanges.
The top exchanges by liquidity now look like this
and some back of the envelop math totals the
liquidity of the top 50 Exchanges ~$342m today.(outside the top 53 exchanges, I have more liquidity in my back pocket).
My question for you is: How does that sound in relation to a total market cap of ~
$234bn and a 24hr volume of ~
$58bn?
What inferences, if any, can be drawn regarding the large differences in liquidity/volume ratios in exchanges listed that image above?
And, of course, how can it be gamed?
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