Liquidity Analytics Dashboard - Crypto Exchange Monitoring - Empirica

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Four reasons to use Liquidity Analytics:

Improve trading conditions for your investors by identifying liquidity inefficiencies
Understand how your investors perceive trading conditions in your markets. Analyze and compare liquidity on listed instruments for diverse investor segments.
Assess your market makers and measure their performance
Supervise your market maker on fulfilling their obligations. Do they facilitate liquidity to your investors as agreed? If you don’t have a market maker it’s also important to measure and understand organic liquidity

Volume is a false liquidity measure
Looking at volume doesn’t give you a real picture your investors care about. Apply our sophisticated measures that show real liquidity in order books of your trading pairs.
Compare your liquidity with other exchanges
Analyze conditions on your market in comparison with other exchanges. Know exactly where are the problems and how you are doing compared with your competition.

Liquidity Analytics Dashboard helps you optimize crypto market making activities

With Liquidity Analytics Dashboard you can learn from liquidity inefficiencies on your exchange in order to optimize and tune-up market making activities.

How crypto exchange can steadily grow its investors base?

By taking control over crucial metric of its business – the liquidity. Empirica helps exchanges to gather crucial data, analyze it and make informed decisions that improve trading conditions for their investors.

CORE FEATURES OF LIQUIDITY ANALYTICS DASHBOARD

Monitor all liquidity-related aspects in one dashboard
Real time analysis of whole order book and all transaction
Proprietary liquidity metrics designed by Empirica quant team to answer crucial questions for the exchange
Analysis of all listed trading pairs on your crypto exchange
Easy SaaS setup lowering the entry and maintenance costs

Comparison to trading pairs of competitive crypto exchanges
Immediate information when something wrong is happening with liquidity on certain instruments
Analysis of growth of organic liquidity of crypto exchange
Development team available to instantly connect your crypto exchange

Wash Trading

What is wash trading?

Wash trading is an artificial and misleading generation of sell/ buy trades on particular security in a market. Basically, the trader will place buy or sell orders and will fulfil them himself. There are multiple reasons why an investor would perform this activity. One is to present artificial demand for an instrument since the trading volume of that instrument increases with fake trades. Another common reason for wash trading is to increase the price of an instrument. It is good to mention that wash tradings make no commercial value since trades are cancelling each other out.

One very common purpose we have witnessed in the recent time within Cryptocurrency exchanges is that these exchanges perform wash trading to increase traded volume in their exchange in order to attract new projects that would like to be listed.

Wash Trading in Bitcoin

Unlike the traditional market that wash trading is illegal, the cryptocurrency market has a tremendous share of its trades done in an illegitimate manner. “According to research by the Blockchain Transparency Institute, approximately 80% of the top 25 trading pairs for bitcoin at cryptocurrency exchanges in 2018 were wash traded.”

There are numerous cases exposed to Cryptocurrency community that some of the liquidity shown to them on some given instrument or exchange may not be real. BKEX, a crypto exchange registered in the British Virgin Islands, was reportedly found to be copying Binance’s trade history to the exact number, manipulating trade volumes to create the illusion that it was an attractive platform to buy and sell digital assets.

How to detect wash trading?

One thing to take into account is that volume should be the last factor to understand the liquidity in an instrument or an exchange. Perfectly matched orders, which have the same price, volume and submission time according to the summarized features, guarantee the execution but are obviously easy to be suspected as market abuse trade by the speculators. Therefore, to avoid being easily detected, smart manipulators design the wash trade orders to be mostly matched.

There are few ways to detect wash trading across an orderbook:

Tight submission intervals between the matched buy and sell orders (to minimize the risk of the orders being unintentionally picked up by other traders).
Executable prices (to make the orders an immediate execution).
Mostly matched volumes (to minimize the risk of loss from the unmatched volumes executed with other traders).

Since wash trading is not a legitimate trading activity, each participated trader tend to maintain their own positions unchanged in order to minimize the potential financial loss.