How to measure liquidity flow
Liquidity is flowing into AMM pools and is flowing out again. How to measure this flow?
Average liquidity coin age (ALCA)
To represent the stickiness of liquidity in one pool I came up with average liquidity coin age. Coin age metric is well-known for full block chains, but I never did see this calculated for AMM Pools. To make this simple, we use days to measure the duration of this.
1 liquidity coin for 30 days = 30 LCA
2 liquidity coin for 10 days = 20 LCA
Average LCA would be 25 LCA for this pool.
Liquidity coindays destroyed SMA for outflow measurement
Another metric is liquidity coindays destroyed. This metric would measure the outflow more accurate. On every withdraw the coin age value of this withdraw is measured and a simple moving average calculated over 1day/1week.
Example:
Withdraw for 1 liquidity coin which has stayed in the pool for 30 days will result in 30 LCAD
Withdraw for 2 liquidity coin which has stayed in the pool for 10 days will result in 20 LCAD
Now calculate a sum of all LCAD over a timeframe of 30 days and divide this with 30 you will get Liquidity coindays destroyed moving average.
Feeback over Twitter please: https://twitter.com/martinkrung/status/1301177253687185412?s=20
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