Steem may have lower liquidity because of STEEM Power and bitshares monthly liquidity may be better than you realize!

Many of us have been thinking about the challenges of liquidity of cryptocurrencies. Some have even asked me to think about this in detail being the virtual being that sometimes tries to live in and on the blockchain, so thought maybe I should try thinking this through. So please feel free to read and help us find forward moving solutions to help improve liquidity and understand why liquidity may not always be the major concern that many of us think it is.

Liquidity of Cryptocurrencies

Daily Cryptocurrency Liquity

Name	Liquidity	Market Cap	Volume (24h)
Bitcoin	1.59%	$71,562,915,781	$1,137,360,000
Ethereum	1.16%	$28,535,347,334	$331,305,000
Ripple	0.58%	$7,594,419,667	$43,805,200
Bitcoin Cash	1.73%	$7,309,477,949	$126,708,000
Litecoin	4.53%	$2,912,340,358	$131,915,000

Name	Liquidity	Market Cap	Volume (24h)
Tether	25.52%	436274961	111317000
Qtum	18.72%	660239500	123583000
ChainLink	16.15%	151323550	24440900
AdEx	14.80%	64567540	9553210
SALT	12.64%	40474732	5115320

Name	Liquidity	Market Cap	Volume (24h)
GXShares	0.01%	102416977	10860
Byteball Bytes	0.07%	142310173	96143
Aidos Kuneen	0.07%	41274096	29130
FairCoin	0.08%	41142077	31325
DigixDAO	0.08%	158893400	132844

Let's start with bitcoin... Bitcoin has a recent daily volume of $1,137,360,000 and a market cap of $71,562,915,781 which appears to result in liquidity of about 1.59%. But that is only true if no one sent and received some amount of bitcoin in the same recent day. So it is in fact even lower than this as is with any others mentioned too.

Ethereum is also close to 1% liquidity at 1.16% liquidity compared to Litecoin for example with a higher daily liquidity recently of 4.53%. Then there are a few at less than 1% liquidity such as NEM at 0.19%, BitConnect at 0.91%, and ARK at 0.95% daily liquidity levels. Daily liquidity of STEEM at 2 %, Steem Dollar at 3.65%, and bitshares at 2.87%. Some had higher levels of (daily) liquidity in just one day such as Qtum at 18.72% and ChainLink at 16.15%. Then some lower levels of liquidity although being in the top 100 market caps recently, Byteball Bytes @ 0.07% and GXShares at a low 0.01%! So we find some cryptocurrencies in the top 100 with daily liquidity almost as high as one fifth (20%) and low as 1/10,000th (0.01%).

Daily liquidity seems low with many at or below 1%. Next let's look at liquidity levels over longer periods of times of bitcoin and others to give us a better idea.

Many monthly liquidity level reach up around 100% which may suggest that liquidity is not that bad after all. First we will explore weekly levels to get a better look at things.

Weekly liquidity percentages: Bitcoin @ 11.52%, Ethereum @ 9.7%, BitConnect at a higher level of 63.34%, Steem at a lower level @ 4.56%, and bitshares @ 22.01 %. Then some having lower levels such as NEXUS @ 1.01 % and Aragon at only 0.09%.

However monthly liquity levels were much more normalized across the board within approximately the top 100 cryptocurrencies by market cap with bitcoin at 74.73% with highest levels found with Litecoin at 209.34%, IOTA at 197.63%, and Ripple at 196.38%. Then some of the lowest levels with Aeternity at 55.79%, Monaco at 56.48%, and Particl at 56.82%.

Weely Cryptocurrency Liquity

Name	Market Cap	Volume (7d)	week
Bitcoin	71562915781	8246018944	11.52%
Ethereum	28535347334	2768811168	9.70%
Ripple	7594419667	591247840	7.79%
Bitcoin Cash	7309477949	1245900808	17.05%
Litecoin	2912340358	1113622184	38.24%

Name	Market Cap	Volume (7d)	week
Tether	436274961	1009906512	231.48%
Zcash	640441537	581504444	90.80%
Qtum	660239500	549021732	83.15%
AdEx	64567540	53600342	83.01%
Walton	129479489	105529950	81.50%

Name	Market Cap	Volume (7d)	week
GXShares	102416977	53693	0.05%
Bytom	102418029	932380	0.91%
NEM	2126106000	20845547	0.98%
PIVX	173087060	2681963	1.55%
Augur	234482600	6499147	2.77%

Monthly Cryptocurrency Liquity

Name	Market Cap	Volume (30d)	month
Bitcoin	71562915781	74.73%	53478303168
Ethereum	28535347334	79.88%	22794244992
Ripple	7594419667	45.03%	3420121086
Bitcoin Cash	7309477949	152.33%	11134788920
Litecoin	2912340358	512.10%	14914082904

Name	Market Cap	Volume (30d)	month
Tether	436274961	1397.41%	6096557656
Litecoin	2912340358	512.10%	14914082904
Ethereum Classic	1244235516	378.81%	4713248190
BitShares	221836248	372.90%	827232388
NAV Coin	58974367	232.27%	136980628

Name	Market Cap	Volume (30d)	month
PIVX	173087060	18.18%	31474429
Augur	234482600	18.04%	42289288
Gas	224462351	15.56%	34919184
Steem	372303210	14.37%	53488789
NEM	2126106000	7.28%	154773699

Forex Market Liquidity

Since cryptocurrencies have a market where exchanges can happen 24 hours a day, seven days a week like the Forex market unlike many other markets that trade less than seven days a week or 24 hours a day.

Looking at the big Forex market for comparison. The U.S.(A.) Dollar is the most traded and of dominant liquidity to comparison to others much like that of bitcoin to compared to other cryptocurrencies.

**Because two currencies are involved in each transaction, the sum of the percentage shares of individual currencies totals 200% instead of 100%

Fair to compare Liquidity of Cryptocurrencies to other things

Not sure it even fair to compare bitcoin and cryptocurrrencies to other liquidity measures that we consider. Cryptocurrencies are not currencies. They are protocols. Cryptocurrrencies are not meant to be liquid as a main point like currencies that we are used to. Cryptocurrencies are meant to be held in your own wallet where you own and control the private keys so the cryptocurrency that you hold is truly under your custody. Cryptocurrencies are meant to have store of value & transfer of value properties along with added value based on the cryptocurrencies protocol design. Then there are some properties that make it more valuable to hold or use cryptocurrencies in a variety of different ways depending on the blockchain such as Proof of Stake, Delegated Proof of Stake, Smart Contracts, and more such as STEEM POWER as our very own example with the Steem blockchain. These properties ass to the value in some new ways thanks to these new technologies we are discovering. So liquidity is important to improve but may not need to be the high liquidity levels that we are more familiar with compared to other things when we think of traditional liquidity.

Rewarding Market Makers

There is this idea to reward market makers. How might be the way to do this? We could reward people for making profits from trading. But this really rewards profitable competitiveness and not an overall market improvement effect that we may be seeking. This will help to some degree. One of my next wondering questions is about might we reward more of the users just for participating and not being competitive as that is a small percentage and we really want everyone to benefit from rewards for being part of our markets.

Market Makers make more sense in a bigger market. Crypto still has small markets that need to grow in overall size. The size of markets may be noticed by the market's depth. Market depth comes from order books and their depth. In order to have order book depth we need people to have orders in place. This is especially true on the internal market of STEEM and the decentralized exchange of bitshares. With the recent mention by @ned of Smart Media Tokens (SMTs) there will be a new market with very interesting properties which I may get more into another time.

Announcing: Smart Media Tokens (SMTs)

Smart Media Tokens: Why We're Doing It [VIDEO]

These Smart Media Tokens will greatly reward users with tokens related to themes of unique projects that may have a smart token much like that of the STEEM token with it's curation, Vested Steem Power, and upvoting characteristics.

Back to bitshares and OpenLedger decentralized exchanges that have BTS, and OBITS tokens that reward users in their respective ways. Months back some of us had discussed the idea of a trading contest for bitshares on #beyondbitcoin Hangouts hosted by @Fuzzy that was also mentioned by @chris4210. This got to me more thinking about how we may find a reward solution and I created btstradingcontest and PRIZE token to start to further explore these ideas.

Reward Users for Trading Value Gain Over Time, Volume, Open Orders, and More

The main thing we think about in regards to trading contests and how to incentive and reward users and their interactions is for gains for trading. This is more for a small group of people and the goal is to reward many users. So maybe we may look at many ways to reward them. This may include "Trading Value Gain Over Time, Volume, Open Orders, Balances, Trading Volume, and More". Maybe a better solution could be found that could reward users for many levels of interactions that may benefit smaller and bigger users as well higher and lower skilled users.

Perhaps we may better look at actions that are better for the long term as opposed to short term that we initially think of and consider. Increases in liquidity of exchanging and use volumes, balances on decentralized exchanges, and internal markets that we are starting to see emerge in new technologies the past few years. These along with cryptocurrency tokens in protocol ready for action and use like that of order books in (decentralized/internal) markets and also for use in applications or locked up in longer term holding benefits like DPOS with vesting, voting rights, bandwidth, and so on.

P.O.C.K.E.T. may be rewarded for simply interacting with this post

P.O.C.K.E.T. may be reward for simply interacting by upvoting, resteeming, and/or commenting. Such distribution will help spread tokens which is one of the main goals. Then a matter of amounts to be distributed for the users short and long term interactions that help them and everyone grow on these blockchains.

POCKET Announcement & Pocket Protocol by @biophil

Leave your bitshares name in a comment reply to possibly get some PRIZE tokens

Please leave your comments, feedback, suggestions, and/or your bitshares name to possibly get some PRIZE tokens that may be given out in some fashion to add to testing to some ideas thought of while thinking the fore mentioned words. This may be for mentioning your name and intertwined with more criteria such as rewarding for your user accounts participation in a variety of ways yet to be decided.

In closing I hope this has helped better think and see more ideas as many of us think better how to reward users and distribute cryptocurrency tokens as distribution and rewards are two major factors to success of each and every one of these projects and users ultimately. As always thank you for reading since if you're reading this you've made it this far or jumped to the end to upvote or leave a comment possibly and hopefully.

Best,