This thread is an offshoot of the thread on Exchange listings for API3 tokens. The discussions there were moving across two related but different topics - 1. Listing on new Exchanges, 2. Liquidity on current exchanges
@AP13 had a good suggestion, to separate the two and move #2 to a dedicated discussion. Therefore starting it as a thread here, and basis the community’s views we can later graduate it to a specific sentiment check.
Within this topic there are 2 aspects to discuss (community can add more)
Whether we need to increase the liquidity on exchanges where API3 is currently listed
How should this liquidity be sourced / funded
I am pasting below my views on the need to increase liquidity (from the thread on exchange listing). The community could continue discussions this specific topic in this thread
The topic of low liquidity problem has been raised a couple of times, by @AP13 and @UgurMersin , but perhaps been overshadowed by the listing discussion. I was curious to delve a little more into it. Sharing a quick list of what I saw, details are in the later part of this reply (apologies in advance, it will become a long post because of the data). For the comparison I mainly looked at Band as it is in a similar space
- API3 has generally been more volatile than Band and Link
- API3’s volume is concentrated with few exchanges. Across days I saw >50% daily volume with 1 exchange (OKEx) and >80% with top 4. Coincidentally all 4 are CEXs
- API3’s Liquidity appears to be low across marketplaces, incl OKEx
- I checked average trade size to see if that is creating price volatility. But API3 actually has a lower average trade size
There can of course be several reasons for this performance, low liquidity being one possibility.
My suggestion: We should first focus on increasing liquidity on exchanges where API3 is already available
How we fund it can also be discussed. The treasury is one option. Another one perhaps is the staked tokens. If we take the later route, only impermanent losses could be compensated, so the inflation through this route will be lower than one with open LP staking rewards.
Will be glad to hear the community’s views
Higher volatility: 1 Jan to 30 Jun, 21 considered, to remove any impact of API3’s staking. Source intotheblock.com
API3’s price volatility
Band’s price volatility
Link's price volatility
& 3. Low liquidity & Sales concentration
a) We can look at: 1. The depth at 2% / 24 hour trading volume; 2. Liquidity score, 3. Top exchanges, at CoinMarketCap (API3 , Band ). Coingecko’s data is a little different but shows same trend
b) Exchange-Onchain Market Depth. Source intotheblock.com
- Low trade sizes