Located underneath the “exchange” tab, one can easily sort some of the most popular exchanges by liquidity rather than volume and can further understand where an exchange stands on the list by choosing some of the more popular trading pairs on the side of the page. It accomplishes this by using data from over 3000 crypto assets, which is also designed to protect data against market manipulation that may be able to fool other metrics.
The chief strategy officer at CoinMarketCap, Carylyne Chan, further explains that they will be using adaptive data for their liquidity metric:
“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.”
This change comes as a result of the inefficiency of using volume as a metric to gauge the true standing of an exchange or crypto product. As many are already aware of, issues such as wash trading make it difficult to take volume data seriously. Chan states that this is a key reason for their shift of focus over to liquidity:
“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.”
Along with the release of a product earlier this year that analyzes and improves transparency in order-book data from cryptocurrency exchanges, we look forward to seeing what CoinMarketCap seeks to do in the future to provide users with more reliable crypto data.