ApeSwap
  • Welcome
    • 📣ApeSwap has rebranded to ApeBond
    • 👋What is ApeSwap?
    • 🌱I'm New Here
      • 📖DeFi Glossary
    • ⚡QuickStart Guide
    • ℹ️Disclaimers
    • 🍌ApeSwap Tokens
      • BANANA
        • BANANA Tokenomics
        • ⚡How To Buy BANANA
      • GNANA
        • GNANA Utility
        • ⚡How To Convert To And From GNANA
    • 🔍Mission & Vision
    • 🗣️Community
    • 🤝Partnerships
    • 🆘Support
  • Products & Features
    • 👨‍🚀ABOND Migration
      • 🚀How To Migrate
      • 🤔Migration FAQ
    • ⛓️Cross Chain
    • 🌐Wallets & Adding Funds
      • ⚡How To Connect Your Wallet
      • ⚡How To Use ApeSwap On Mobile Devices
      • Add Funds
        • ⚡How To Add Funds
      • Using Zap
    • 🔁Exchange
      • Swap
        • ⚡How To Swap Tokens
      • Liquidity
        • ⚡How To Add Liquidity
      • Pro Trading
        • ⚡How To Use ApeSwap Pro
    • 💰Bonds
      • Liquidity Bonds
        • ⚡How To Buy A Liquidity Bond
      • Reserve Bonds
        • ⚡How To Buy A Reserve Bond
      • ApeSwap Bond Pricing
      • Benefits to Partners
    • 💧Liquidity Health
      • Dashboard Methodology
        • Liquidity Strength
        • Liquidity Ownership
        • Liquidity Concentration
      • LHD Glossary & Tags
      • LHD For Projects
    • 💎Staking
      • Staking Pools
        • ⚡How To Stake Tokens
      • Yield Farms
        • BNB Chain Farms
        • ⚡How To Yield Farm
      • Hard Cap Migration - MasterApeV2
    • 💱Lending Network
      • ⚡How To Lend Tokens
      • ⚡How To Borrow Tokens
      • Lending & Liquidations
      • Lending Market Info
    • 🐵ApeSwap NFTs
      • NFA (Non Fungible Apes)
        • NFA Auction House
      • NFBs (Non Fungible Bananas)
  • ApeSwap DAO
  • ⚖️Governance
    • Governance Proposal Types
  • 📗History
  • 📋Priorities
  • 🏦Financials
    • Protocol Revenue
    • Burn Mechanics
  • ⚙️Disclosures
  • Partners
    • ✅Partner Benefits
  • Where Dev?
    • 📃Smart Contracts
    • 🔮Info & Analytics
    • 🔐Security
      • Audits
Powered by GitBook
On this page
  • Liquidity Strength Formula
  • Scoring

Was this helpful?

  1. Products & Features
  2. Liquidity Health
  3. Dashboard Methodology

Liquidity Strength

Liquidity Strength (LS) measures the ratio between the available liquidity of a token compared to its market capitalization. This is calculated by dividing a project’s total valid extractable liquidity (the sum of the hard assets in all valid liquidity pairs across all pools) by the project’s market capitalization (the circulating supply of the token multiplied by the spot price of the token). This metric is designed to look at if a project is maintaining enough liquidity compared to how large the market for the project’s token is. In other words: is there enough capital backing the token you are holding, or are you holding an empty bag that you cannot actually liquidate because the token is illiquid?

Simply put, LS looks to answer the following question: Does this project have enough liquidity based on its MCAP?

Liquidity Strength Formula

LS=Z∗t1LS = Z * t1 LS=Z∗t1 for Z<=thresholdZ <= thresholdZ<=threshold

LS=1LS = 1LS=1 for Z>thresholdZ > thresholdZ>threshold

where:

Z=(eX/s−e−X/seX/s+e−X/s)β∗YαZ = (\frac{e^{X/s} - e^{-X/s}}{e^{X/s} + e^{-X/s}})^β * Y^αZ=(eX/s+e−X/seX/s−e−X/s​)β∗Yα

threshold=1/t1threshold = 1 / t1threshold=1/t1

Boundaries for plots ("sus" region):

LB(X)=(0.7/t1)1/α∗(eX/s−e−X/seX/s+e−X/s)−β/αLB(X) = (0.7/t1)^{1/α}*(\frac{e^{X/s} - e^{-X/s}}{e^{X/s} + e^{-X/s}})^{-β/α}LB(X)=(0.7/t1)1/α∗(eX/s+e−X/seX/s−e−X/s​)−β/α

UB(X)=(1/t1)1/α∗(eX/s−e−X/seX/s+e−X/s)−β/αUB(X) = (1/t1)^{1/α}*(\frac{e^{X/s} - e^{-X/s}}{e^{X/s} + e^{-X/s}})^{-β/α}UB(X)=(1/t1)1/α∗(eX/s+e−X/seX/s−e−X/s​)−β/α

Constants configs.:

For MCaps <= $250M:

t1=14.4t1=14.4t1=14.4

s=1,062,000,000s=1,062,000,000s=1,062,000,000

β=0.31β=0.31β=0.31

α=0.69α=0.69α=0.69

For MCaps > $250M:

t1=18.4t1=18.4t1=18.4

s=3,000,000,000s=3,000,000,000s=3,000,000,000

β=0.37β=0.37β=0.37

α=0.63α=0.63α=0.63

Variables description:

XXX: Market cap. in usd

YYY: Extractable liquidity to market cap. ratio

Scoring

Anything below the range entirely is considered unsustainable liquidity. Those projects score between 0 and 70. If you are on the lower bound of the sustainability range you would have a score of 70. As you move higher into the range, you can reach a score of 100. Anything above the range is also defined as 100 for now.

In a later version of the LHD credentialing system we will start to look at what is ‘too much’ liquidity that it is capital inefficient. But for now we are focusing on what's the minimum amount of liquidity a project needs as most of the industry is undercapitalized from a liquidity perspective.

Last updated 1 year ago

Was this helpful?

We look at the relationship between (from rented + owned) and the upper bound.

💧
total valid extractable liquidity
sustainability range