We have introduced a new liquidity metric, displayed on each coin page as well as on our coin lists, using colorful asterisks. Our goal is to highlight coins that have either very low daily trading volume or most of their trading volume is concentrated in very few exchanges.
To understand why this might be a useful metric to look at, let's consider two motivating (fictional) examples:
To address the above we've come up with the following:
C0 and C1 are weight balancing constants. Currently we use Alexa for traffic ranks.
Note that we try to base our exchange scoring formula on inputs (twitter followers, traffic rank) that cannot be easily faked. We can obviously use more signals but we found that the above formula produces pretty reasonable results.
We score each coin's trading liquidity using the following formula:
Σ for every exchange [ min(exchangeX_total_volume24h, total_coin_volume24h / C2, C3) * exchangeX_score ]
C2 and C3 are constants. C2 represents an acceptable minimum threshold for the number of exchanges a coin is traded on and C3 puts a cap on how much any single exchange can influence the liquidity score.
The main thing the above formula tries to do is place a high score on coins that have:
A coin might appear to have potentially low liquidity on Coinlib because we might have not listed yet one or more exchanges that it is trading on. We do our best to keep adding new exchanges, however keep in mind that an exchange with low score will not contribute significantly to the liquidity of a given coin. Also, the exchanges traffic rank and twitter followers might not be the best signals for scoring an exchange, but it produces very reasonable results for the most part. We are open to suggestions.