Crypto analytics provider CoinMarketCap has announced a new metric for liquidity of crypto exchanges and token pairs, designed to replace volume as the principal metric.
Leading crypto data site CoinMarketCap has announced the launch of its new metric to compare exchanges and token pairs based on liquidity.
New gadget on the dashboard
The announcement comes from The Capital, CoinMarketCap’s inaugural conference in Singapore on Nov. 12, and the tool is now live on the company’s site. The new metric will reportedly incorporate data from 3000 crypto assets.
Intending to filter out market manipulation, CoinMarketCap will reportedly base the new liquidity metric on adaptive data. Carylyne Chan, chief strategy officer at CoinMarketCap, elaborated on the firm’s aims with their methodology:
“We believe our adaptive methodology will make our 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.”
Liquidity > Volume
The firm said that it sees its new metric as a way of escaping dependence on volume reporting, which is often subject to wash trading and other means of manipulation on different exchanges. At The Capital, Chan said that “volume has lost its value as a metric.” She further explained CoinMarketCap’s desire to shift focus away from volume:
“Today, we are introducing a new metric to highlight 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.”
As of press time, CoinMarketCap had not responded to Cointelegraph’s request for more information. This article will be updated if Cointelegraph receives more information.
Other new tools from CoinMarketCap
As Cointelegraph reported at the time, CoinMarketCap initially teased their planned liquidity metric at the end of August, in which they cited Nov. 12 as their target date.
In July, CoinMarketCap, alongside crypto news outlet Crypto Briefing, launched a new institutional-grade analysis product called Simetri. The product aims to provide verification and transparency in order-book data from crypto exchanges.