**Measurement of the Liquidity of Trading Pairs**

The order matching system snapshots the liquidity of all trading pairs on the platform every minute at a random time, to compute the liquidity index. The daily liquidity index of a trading pair is the average of all its snapshotted liquidity of the day.

Higher liquidity index indicates a better liquidity in the trading pair’s order book.

A stable and ample market depth together with a tight bid-ask spread are the keys to a satisfying liquidity index.

**Liquidity Index**

Liquidity Index is a snapshotted value on a fixed-time interval recording your quoted liquidity on the book from 00:00 (UTC +8)

Formula: Liquidity Index = lg (liquidity multiplier/ bid-ask spread * trading pair contribution rate)

**Liquidity Multiplier**

**Liquidity Multiplier**

Liquidity multiplier is used to estimate the liquidity of the pending orders near the top of the book (within valid range) of a trading pair. The closer to the top of the book, the higher of the allocated weights in respect to that order size placed on the book

Liquidity multiplier will only consider the orders within the valid range, which is between 70% higher than the highest bid and 130% lower than the lowest ask.

Formula of on liquidity multiplier: Quoted Amount * last trade price * [1-abs (Quoted Price / last trade price -1)]* weighted parameter * Base Currency Converter.

**Bid-ask Spread**

**Bid-ask Spread**

The difference between the highest bid and the lowest ask in the snapshot.

*Trading Pair Contribution Rate*

*Trading Pair Contribution Rate*

Trading pair contribution rate indicates the liquidity provided by the trading pair to OKEx token trading market.

Trading pair contribution rate = Aggregated Valid Quoted Amount * Last Trade Price * Base Currency Converter / ∑ Aggregated Valid Quoted Amount of ALL Tradable Pairs * Last Trade Price * Base Currency Converter

*The formula of liquidity index may adjust depending on the circumstances.

**Example**

The following chart shows the computation of the trading pair GAS/USDT at 23:32 Mar, 2018. At that time, the last traded price of GAS/USDT is 100USDT.

Weighting Factor |
Quantity (GAS) |
Bid Price (UDST) |
Ask Price (UDST) |
Quantity (GAS) |
Weighting Factor |
||

134 | 20 | 90 | Bid1 | Ask1 | 110 | 30 | 201 |

102 | 30 | 80 | Bid2 | Ask2 | 120 | 100 | 340 |

50 | 500 | 70 | Bid3 | Ask3 | 130 | 200 | 20 |

Out of range | 300 | 60 | Bid4 | Ask4 | 150 | 500 | Out of range |

286 | 561 |

The weighted liquidity for Bid 1 = 20*100*{[1 - abs(90/100-1)]*3.3-2.3}*0.1=134

By using the same formula, the weighted liquidity for Bid 2 = 102; Bid 3 = 50; Bid 4 = 0 (not in valid range).

Therefore, the total weighted liquidity of the biding side is 286; selling side is 561. The smaller value of the two: 286 will be taken as the weighted liquidity of this snapshot.

Bid-ask spread of this GAS/USDT snapshot=(110-90)*0.0001*100%=0.2%

The contribution rate of GAS/USDT=0.1%

Therefore, the liquidity index of GAS/USDT at 23:32 Mar 20, 2018 =lg(286/0.2%*0.1%)=2.1553

The liquidity index of GAS/USDT on Mar 20, 2018 is the average of all liquidity indices of the 1440 snapshots of GAS/USDT on Mar 20, 2018.