Liquidity turnover

Overview

Liquidity turnover measures trading volume relative to total liquidity on the decentralized exchange. It shows how efficiently liquidity is being used to facilitate trades.

Data sources

• Smart contract events and program instructions capturing trading activity and liquidity changes
• End-of-day price feeds for USD valuation
• Asset metadata for decimal normalization

Common calculation approaches

Volume-to-TVL ratio calculation

Daily trading volume is divided by the total value locked (TVL) to produce a dimensionless ratio. For example, trading volume is aggregated from Swap events in Aerodrome's pools, while TVL is derived from the underlying asset balances. Similarly, volume is captured from Tokenlon swap events such as AMMWrapper_Swapped and RFQ_FillOrder to determine the turnover ratio.

Multi-version liquidity tracking

Liquidity utilization is tracked across different protocol versions by aggregating data from multiple contract types. For instance, volume and liquidity data are extracted from PancakeSwap and KyberSwap V2 and V3 contracts, including Swap, Mint, and Burn events. This allows for a comprehensive efficiency measurement across concentrated and standard liquidity models.

Instruction-based efficiency analysis

On Solana, trading activity and liquidity levels are tracked through program instructions. Swap instructions and vault balance changes are parsed from projects like Orca to calculate the turnover ratio. This approach ensures that capital efficiency is measured accurately within the account-based model of the Solana network.

Note: The calculation approaches and protocol examples above are representative patterns. Individual protocol implementations may vary.