# Liquidity metrics

Liquidity measures the ability to buy/sell an asset without significant impact on price

# Liquidity scoring

The maximum score is 10 points, and the minimum score is 1 point. Higher score means higher liquidity, which is good for an asset. The score is calculated based on 3 variables:

• listing prevalence

• handy liquidity (in BTC)

• turnover frequency (for 24h)

 Variable Score distribution Listing prevalence - 0 points <=0.15- 1 points 0.15-0.3- 2 points 0.3-0.6- 3 points >0.6 Handy liquidity (in BTC) - 0 points - 0-10 BTC- 1 point - 10-100 BTC- 2 points - 100-500 BTC- 3 points - >500 BTC Turnover frequency (for 24h) - 0 points - 0-10,000- 1 points - 10,000-50,000- 2 point - 50,000-100,000- 3 points - >100,000

See the empirical research here.

# Liquidity metrics

The formulas of the selected metrics are shown below.

$BAS = \frac{bestask - best bid}{bestask}$

10 BTC liquidity:

$10 BTCliquidity = \frac{BAS(x)}{BAS}$

where:

• BAS(X) is a bid-ask spread by X units of base currency

• X is 10 BTC or equivalent

Listing prevalence:

$L = erf(\frac{n}{N})$

where:

• erf is the error function

• n is the number of exchanges where an asset is listed

• N = 20