Introducing ApeSwap’s New Liquidity Health Dashboard, Now In Beta
As covered in ApeSwap’s recent article on the past, present, and future of decentralized finance, the DeFi landscape has changed drastically over the last two years, and today ApeSwap is excited to announce a brand new product designed to empower users and projects while navigating the new normal.
ApeSwap is focusing on three primary efforts in order to help foster growth throughout DeFi: 1) liquidity education, 2) DeFi credentialing, and 3) data proficiency. It is crucial for users and projects to understand how unsustainable DeFi currently is, how the lack of liquidity is killing the industry, and how the industry does not leverage on-chain data nearly enough.
ApeSwap strives to become a pioneer in establishing best practices for liquidity health, tokenomics, and treasury diversification. ApeSwap aims to simplify these complex concepts for the public, while also developing the first-ever credentialing system for the entire industry. The tools ApeSwap has developed are grounded in three core values: objectivity, uniformity, and user-friendliness. This begins with a laser-like focus on liquidity as the primary building block to comprehend, and expands from there.
In pursuit of those values, ApeSwap has created new opportunities for users and projects to evaluate crypto assets for themselves, and is proud to announce the launch of the Liquidity Health Dashboard.
What is the Liquidity Health Dashboard and what does it do?
The Liquidity Health Dashboard is a groundbreaking tool that aims to make crucial on-chain liquidity information easily accessible to everyone. Initially focused on well-known crypto projects across major EVM-compatible chains, this dashboard will expand its coverage to include more chains and tokens in the future. It is an educational tool designed to simplify the complexities of DeFi liquidity, making them easier for users to understand.
ApeSwap’s Liquidity Health Dashboard aims to address a critical missing piece in the DeFi marketplace by offering comprehensive risk ratings for various crypto assets utilizing valuable on-chain data. As the DeFi space continues to evolve, it becomes increasingly important to draw inspiration from TradFi, specifically in terms of fundamental analysis. By incorporating fundamental analysis techniques alongside existing technical analysis methods, the DeFi ecosystem can achieve a higher level of maturity and understanding.
Furthermore, ApeSwap has strategic plans to establish standardized practices and facilitate the sharing of those practices. This initiative seeks to assist new projects in addressing essential questions, such as the optimal liquidity amounts during the launch of a new token. Additionally, it seeks to provide clarity on whether a token is supported by adequate capital and the risks inherent to holding a particular token. By promoting transparency and knowledge-sharing, ApeSwap strives to empower participants in the industry and foster a more secure and informed environment for all stakeholders.
How do I use the Liquidity Health Dashboard?
ApeSwap has been working for months to aggregate and synthesize liquidity data from over 1500 crypto projects around the world. Contributors across ApeSwap have collaborated to create a metric by which users can assess the status of a project’s liquidity: the Liquidity Health Score.
The Liquidity Health Score is designed to be consistent, in that it can be used to compare projects of all shapes and sizes; objective, in that it is not inherently biased towards or away from any particular characteristics of a crypto project; and accurate, in that the data used to create it is pulled directly from the blockchain or reputable, up-to-date sources.
The formula that dictates the Liquidity Health Score consists of three primary factors: Liquidity Strength, Liquidity Ownership, and Liquidity Concentration. Each score is measured on a scale of 0–100, with 0 representing the weakest score and 100 representing the strongest.
Finally, a weighted average of the three individual scores provides an overall score: the Liquidity Health Score.
Liquidity Strength (LS) measures the ratio of the available liquidity of a token to its current market capitalization (full glossary of LHD terms available here). 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 (circulating supply * token price). This metric is designed to see if a project is maintaining enough liquidity for its market cap. In other words: is there enough capital backing the token you are holding, or are you holding an empty bag that you cannot sell?
Simply put, LS looks to answer the following question: Does this project have enough liquidity based on its MCAP?
Liquidity Ownership (LO) measures the ratio of the amount of token liquidity that a project owns to the amount of liquidity they should own. This metric is designed to look at a project’s “liquidity debt”: the difference between a project’s owned, extractable liquidity and a baseline level of sustainable liquidity.
Simply put, LO looks to answer the following question: Compared to other projects of a similar MCAP, does this token have enough liquidity?
Liquidity Concentration (LC) measures the degree to which the liquidity for a project’s token is concentrated to a certain number of liquidity pools. This metric is simple — the fewer pools you have scattered across the blockchain, the more concentrated your liquidity is and the more accessible that liquidity will be with lower slippage and price impact when trading.
Simply put, LC looks to answer the following question: Is this project’s liquidity too spread out?
ApeSwap utilizes a custom-built formula to assign weights to these three category scores. These category scores are then combined to generate an aggregate Liquidity Health Score, ranging from 0 to 100. The Liquidity Health Score serves as the primary metric displayed when sharing information from the Liquidity Health Dashboard.
When you click on a specific project in the List View, you will see a detailed breakdown for that project’s liquidity in the Project View. Within the Project View, you can see the following information:
Token Info (1): Includes token price, price change over the last 24 hours, chains, market cap, and social links for the project.
Liquidity Health Score (2): Shows the project’s liquidity subscores for each category as well as the overall score, along with a Share feature (3) that allows users to share live LHD data about this project to Twitter.
Liquidity Strength Summary (4): Provides detailed liquidity information for the selected project’s token.
Token Liquidity Strength (5): Shows the token’s relative liquidity strength in terms of the Extractable Liquidity to Market Cap ratio. Users can zoom for more refined info and can hover over token logos for additional details.
Liquidity Concentration (6): Shows a list of the status of all liquidity pools/chains, the extractable liquidity held within those pools, and the block explorer links to each pool.
Liquidity Ownership (7): Shows the relative share of owned vs. non-owned liquidity for the project, along with a list of whitelisted addresses (8) for protocol-owned liquidity.
What can I do with the information available on the Liquidity Health Dashboard?
If you are new to the concept of liquidity and liquidity health, the Liquidity Health Dashboard is an excellent starting point. It offers easily understandable information about whether a specific project has sufficient and high-quality liquidity to support its token. This can assist you in assessing the potential trajectory of the token in the future.
It is important to note that the Liquidity Health Dashboard is not intended to advise you on which tokens to purchase. As always, ApeSwap does not and never will provide financial advice! Instead, it serves as a tool for users and projects to evaluate the long-term health of a token. It is most effective when used alongside other independent research about a project.
With that said, the scores obtained from the Liquidity Health Dashboard can certainly help steer your research in the right direction. Consider them as risk ratings, where a lower score indicates a potentially riskier token to hold, while a higher score suggests a token that is likely more stable and sustainable.
How do I access the LHD beta?
All users will need a password to access the beta launch for the LHD. When users visit the URL, a popup module will display asking for the password.
If you’re reading this announcement, you’re welcome to try the LHD beta using this password: LHDBeta
Users will only need to enter the password once to get unlimited access without seeing the prompt asking for the password. ApeSwap and its partners will be posting passwords through social media, and users are encouraged to share their passwords with the rest of the community!
Next Steps for Users
With the Liquidity Health Dashboard, users are now able to access and act on liquidity information about crypto projects that have been hiding in plain sight on the blockchain. By leveraging the LHD, users can gain a deeper understanding of whether their favorite projects have been making liquidity decisions that align with the long-term interests of their users, token holders, and the tokenomics data shared on their site or documentation. It brings visibility to liquidity practices, empowering users to make well-informed decisions about their favorite projects.
If your favorite project has a high liquidity score, feel free to brag about it! Utilize the LHD’s share function to create a custom Liquidity Health Score card that you can proudly share on Twitter. Tag the project and @Ape_Swap to let them know how great they’re doing!
In case your favorite project receives a low liquidity score, there is still hope. Share the score with the project and inquire whether all the information is accurate. If any discrepancies are found in the data, the project can easily submit a pull request via their Project View page to update the information. If the data is correct, encourage the project to explore ways to enhance liquidity sourcing for their token. Remember, liquidity health can always be improved, and it’s never too late to start. ApeSwap is here to help, just a message away!
Furthermore, all users are invited to utilize the LHD’s Feedback feature located on the right side of the page. This allows you to share your thoughts and opinions on this new tool with ApeSwap. Your feedback is greatly appreciated!
Next Steps for Projects
If you are a crypto project owner or contributor, you are encouraged to explore your project’s Liquidity Health Score on the LHD and provide ApeSwap with your feedback using the Feedback feature. If you come across any inaccurate or outdated data, please reach out! You can utilize the Submit Data Update feature located at the top left of the LHD page or the bottom of your Project View page to submit a GitHub pull request with the correct and updated information. ApeSwap is always here to help you in better understanding your score and discovering ways your project can enhance it — don’t hesitate to reach out for further support!
What’s Next for the LHD?
This is only the beginning of an exciting journey for ApeSwap and the Liquidity Health Dashboard! There are plenty of opportunities to continue refining and expanding the capabilities of the LHD. This product’s roadmap is filled with plans to incorporate additional fundamental analysis data, which will be carefully tracked and integrated into the overall score. You can find a list of upcoming formula features that will soon be introduced here.
Furthermore, ApeSwap is actively seeking thought leaders to join in improving this system. If you appreciate this product and wish to contribute to advancing industry credentialing and fundamental analysis in the crypto space, reach out and to collaborate!
For a more comprehensive and technical explanation of the Liquidity Health Dashboard and how the metrics are prepared, please refer to the documentation.
This is just the beginning of ApeSwap’s renewed commitment to liquidity education! If you are eager to expand your knowledge further, please don’t hesitate to reach out on Twitter, Discord, or Telegram.