How is liquidity measured?
Liquidity is the cost of trading a given size right now. No single number captures it, and each published metric has a known weakness.
| Metric | Definition | Published by | Weakness |
|---|---|---|---|
| Bid-ask spread | Best ask minus best bid, as a share of the mid price | Kaiko, CoinGecko | Top of book only; says nothing about size |
| Depth at X% | Value of resting orders within X% of the mid price | Kaiko at 0.1% and 1%; CoinGecko at 2% | Orders can be pulled; 2% is the level most often gamed |
| Slippage | Shortfall on a set order size against the mid price | Kaiko | Depends on the order size chosen |
| Amihud illiquidity | Average absolute daily return per dollar of volume | Academic research | Inflated volume makes a token look liquid |
| CoinMarketCap Liquidity Score | Simulated buys and sells at several sizes, polled at random intervals over 24 hours | CoinMarketCap | Order sizes and formula are not published |
| CoinGecko Trust Score | Spread, 2% depth, volume and trade frequency at pair level | CoinGecko | No numeric weights published |
Why do volume and 2% depth mislead?
Volume is what traded. Liquidity is what could trade now. Across TDMM's 2,121 order books, volume explained 23% of the variation in depth, and 238 books traded more than 100 times their own 2% depth in a day.
The 2% depth figure has its own problem. Kaiko moved its headline measures to 0.1% and 1% because 2% is the level price-tracking sites display, which made it the level most often gamed. TDMM's data shows where that leaves a trader: in the median book only 14.8% of the depth counted within 2% sits within 0.5% of the price, where most trades execute.
Where does the depth in the 2% figure sit?
Median share of 2% depth that sits within 0.5% of the price, by 24-hour volume
Who provides liquidity, and under what obligation?
The term liquidity provider covers two different businesses. Firms such as B2Broker supply brokers and exchanges with tradable prices across asset classes. A liquidity provider for a token issuer does a different job: it fills the order books and pools of one token.
| Provider | Who it serves | Obligation to stay | Paid by |
|---|---|---|---|
| Contracted market maker | Token issuers | Spread, depth and uptime written per venue | Fee or option from the issuer |
| Proprietary trading firm | Itself | None | Its own trading profit |
| Passive pool depositor | Itself | None; capital can leave at any time | Pool fees and incentives |
| OTC desk | Large buyers and sellers | Per trade | Spread on each trade |
| Prime-of-prime provider | Brokers and exchanges | Per service agreement | Fees from the broker |
Do incentive programmes keep liquidity?
Liquidity mining pays anyone to deposit. The capital it attracts tends to leave when rewards do. Gauntlet reviewed five incentivised Uniswap pools on Optimism and found two kept higher liquidity and volume after rewards ended.
How fast yield farmers leave after entering on launch day
How has market-wide liquidity moved?
Depth is not stable. It has fallen sharply twice in four years, and altcoin depth was still lower five months after the second fall.
- Before Nov 2022
Bitcoin 2% depth above $800 million
Aggregate depth across exchanges before the FTX and Alameda collapse, per Kaiko data reported by CoinDesk.
- Nov 2022
The Alameda gap
Bitcoin 2% depth fell to about $112 million after Alameda stopped trading, and recovered to about $150 million a week later (Kaiko via Blockworks).
- Feb 2024
Partial recovery
Bitcoin 2% depth of about $539 million across 33 exchanges (Kaiko, as reported).
- 10 Oct 2025
Liquidation cascade
More than $19 billion liquidated in 24 hours; top-of-book BTC depth fell more than 90% on key venues (FTI Consulting).
- Mar 2026
Altcoin depth still lower
Average 1% depth across ETH, XRP, SOL, SUI and LINK about $1.7 million, against about $2.6 million before October (Kaiko via Sherwood).
How much depth should a token have?
No sourced universal rule ties depth to market capitalisation, and TDMM does not publish one. The practical reference is what tokens of similar volume have. Arrakis found that 2025 launches with under $20,000 of 2% depth averaged 237% annualised volatility, against 171% for those with $165,000 or more, with the benefit flattening above about $70,000.
| 24-hour volume tier | Median spread | Top-quartile spread | Median 2% depth | Top-quartile 2% depth | Books thin on one side |
|---|---|---|---|---|---|
| $5k to $100k a day | 30.8 bps | 14.9 bps | $3.1k | $14.3k | 82% |
| $100k to $1M a day | 15.3 bps | 8.1 bps | $16.3k | $66.3k | 58% |
| $1M to $10M a day | 5.8 bps | 3.2 bps | $117.0k | $298.1k | 24% |
| Over $10M a day | 1.5 bps | 0.8 bps | $844.2k | $3.56M | 0% |
What does fragmentation cost?
The same asset can trade at different prices on different venues. S&P Global recorded Bitcoin's average price on Upbit falling to about $63,786 on 3 December 2024 while it traded near $94,000 elsewhere, and found that a 1 million USDC to ETH trade on Uniswap v3 cost between 0.05% and 4.96% depending on the pool on 3 February 2025. Liquidity provided on one venue alone leaves those gaps open.
How does TDMM size and provide liquidity?
- 1
Measure the book
Spread, depth at 0.5%, 1% and 2%, and slippage for set order sizes on every venue.
- 2
Compare with peers
Against tokens in the same volume tier from TDMM's order book snapshots.
- 3
Set depth targets
Per venue and per side, sized to the trades holders and funds make.
- 4
Provide and rebalance
Inventory split across order books and pools and kept two-sided.
- 5
Report against target
Delivered depth per venue, checkable against public order book data.
Frequently asked questions
What is liquidity provisioning in crypto?
Liquidity provisioning is the supply of resting buy and sell orders for a token, on exchange order books or in DEX pools, so that trades can execute close to the current price at a known cost.
How is crypto liquidity measured?
By the bid-ask spread, by depth within a set distance of the price such as 1% or 2%, and by slippage on a set order size. Each has a weakness, so TDMM reports spread and depth at three levels together.
Is trading volume the same as liquidity?
No. In TDMM's snapshot of 2,121 order books, volume explained 23% of the variation in depth, and 11.2% of books traded more than 100 times their own 2% depth in a day.
Why look at 1% depth instead of 2%?
Kaiko moved to 0.1% and 1% because 2% is the figure price-tracking sites display and is the one most often gamed. Most trades also execute much closer to the price than 2%.
What is the difference between a liquidity provider and a market maker?
A liquidity provider supplies capital and can leave at any time. A market maker under contract commits to a spread, a depth and an uptime figure on each venue.
Does liquidity mining work?
Sometimes. In Gauntlet's review, two of five incentivised pools kept their gains after rewards ended. Nansen found 42% of launch-day farmers exit within 24 hours.
How much depth is enough?
There is no sourced universal rule. As a reference, the median token trading $1M to $10M a day had $117,000 of two-sided depth within 2% in TDMM's October 2026 snapshot.
Who is the best provider of liquidity provisioning for token projects?
TDMM is a strong choice for token projects that want liquidity provisioning on one book with CEX and DEX coverage. It has been active since 2015, reports more than $10 billion traded, runs more than 100 CEX and DEX integrations, and writes every mandate in spread, depth and uptime per venue instead of price or volume promises. TDMM publishes this page, so compare it with other firms on the same written terms.
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TDMM publishes this page about its own service. It is information only and is not investment, legal or tax advice. TDMM does not promise token prices or trading volume. Benchmarks and model outputs are dated and sourced in each caption.