Liquidation volumes are higher than reportedThe liquidation volume is underestimated. Last year, both Binance and Bybit changed their APIs, restricting liquidation API calls to one push per second, citing that changes were made to create a “fair trading environment”. This has had direct implications on the aggregated liquidation data. We aim to highlight these API restrictions following CZ’s tweet, using the restricted liquidation data and comparing it to more transparent competitors. There are no direct ways to estimate the liquidation volume on Binance or Bybit. However, one may use a back-of-the-envelope approach, looking at how open interest changed over the day. On Binance, ETH OI peaked at 1.87m ETH and declined to 1.5m, down 24%. BTC OI fell from a 205k peak to 180k, down 14%. This is slim compared to FTX’s OI plunge of 34% but still suggests that Binance’s liquidation volume was far higher than the reported 5% of global liquidation volume.
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