Market Making Scoring
In order to improve the transparency that our technology brings, we will open different metrics so token issuers or communitites could assess different parts of the Market Making activity of a given pair.
The metrics that we are building (each individual can chose if they want to disclose this information) are:
The total amount of the asset being traded by the market maker during a specified period. A higher trading volume indicates more active market making.
The total liquidity deployed on a CLOB or AMM
The net gain or loss resulting from the market maker's trading activities. Positive P&L indicates profitable market-making strategies.
The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). Lower spreads indicate tighter markets and better liquidity.
Number of Buy Trades
The total number of buy orders executed by the market maker during a specified period.
Number of Sell Trades
The total number of sell orders executed by the market maker during a specified period.
Buy Trade Amount
The total amount of assets bought by the market maker during a specified period.
Sell Trade Amount
The total amount of assets sold by the market maker during a specified period.
The ratio of the market maker's available liquidity to the total order book depth, indicating the market maker's capacity to facilitate trades. The liquidity ratio is a measure that compares the volume of sell orders to the volume of buy orders. It can give an indication of the level of liquidity in a market, with a higher ratio indicating more sell orders compared to buy orders, which could indicate that the market is more liquid and it is easier to execute trades. The liquidity ratio is not the same thing as balance, as balance is a measure of the difference between assets and liabilities, whereas liquidity ratio is a measure of the relative volume of buy and sell orders.
In financial markets, liquidity is the ability of an asset to be easily bought or sold without significantly affecting the asset's price. A liquid market is one in which there are many buyers and sellers, and it is easy to trade an asset without significantly affecting the price. A market with a high liquidity ratio could indicate that there are many sellers and few buyers, which could make it difficult to trade the asset without significantly affecting the price.