moonboard.ioResearch & Data
Methodology

Liquidity Momentum Ratio (LMR)

Turnover - how much of an asset's market capitalisation changed hands in 24 hours - log-damped and ranked across the universe.

Scale
percentile Relative scale — the value states rank within the scanned universe, not magnitude.
Formula
log₁₀(volume24h / marketCap + 1) → percentile
Inputs
  • volume24h
  • marketCap

Purpose

Raw trading volume is almost useless for comparison: a large asset trades more than a small one for reasons that have nothing to do with interest in it. Dividing volume by market capitalisation removes the size effect and leaves turnover — the fraction of an asset's value that traded in a day.

Turnover is one of the few figures on the platform that is directly interpretable and requires no model. A turnover of 0.05 means five percent of the asset's market value changed hands. Assets in the same turnover band are seeing comparable trading intensity relative to their size, regardless of whether one is a hundred times larger.

Inputs

Two fields, and no others: volume24h and marketCap. This is the simplest metric Moonboard publishes. Nothing about it depends on social data, sentiment, or any classification model.

Formula

raw = volume24h / marketCap (a fraction, not a percent) damped = log₁₀(raw + 1) LMR = percentile of damped across the universe
The ratio here is a fraction

LMR divides without multiplying by 100. Other parts of the platform — the volume component of the Moonboard Score and the liquidity term in OPS — use the same quantity expressed as a percentage. Same measurement, different units, and a frequent source of confusion when reproducing values by hand.

Why log-damp before ranking?

This deserves scrutiny, because a monotonic transform applied before a rank cannot change the ordering. log₁₀(x + 1) is strictly increasing on the relevant domain, so the percentile it produces is identical to the percentile of the raw ratio. The damping is not what makes LMR work.

What it does provide is a numerically well-behaved intermediate. Turnover ranges over several orders of magnitude and occasionally arrives corrupt — a stale market cap next to a fresh volume figure can produce ratios in the thousands. Compressing before the comparison keeps those from causing floating-point trouble, and gives a value that stays useful if the metric is ever consumed without the ranking step. Stating this plainly is more useful than implying the transform does statistical work it does not do.

Interpretation

LMR is a rank. A value of 90 means roughly nine out of ten scanned assets had lower turnover — not that turnover was 90 % of market cap.

LMRReading
~20Turnover below most of the universe. Thin trading relative to size; large positions would be hard to move without affecting price.
~50Median turnover for the scanned set.
~70Actively traded relative to peers.
~90Top decile. Either sustained high interest, or a single event — a listing, an unlock, a liquidation cascade — concentrated into one day.

High turnover is directionless. Panic selling and enthusiastic accumulation produce identical LMR values, because volume does not carry a sign. Any reading of LMR as bullish or bearish comes from somewhere else, not from this number.

Worked example

Asset A: volume 24 M, market cap 400 M raw = 0.0600 → log₁₀(1.0600) = 0.02531 Asset B: volume 3.6 B, market cap 120 B raw = 0.0300 → log₁₀(1.0300) = 0.01284 Asset C: volume 90 k, market cap 45 M raw = 0.0020 → log₁₀(1.0020) = 0.00087 Ordering: A > B > C — identical to the ordering of the raw ratios.

Asset B trades 150 times more value than A in absolute terms and still ranks below it. That inversion is the entire point of the metric. Asset C would rank near the bottom of the universe: at 0.2 % turnover, converting a meaningful position to cash would take many days of normal trading.

Limitations

  • Turnover is not depth. LMR says how much traded, not how much could trade without moving the price. An asset can post high turnover on a thin order book, which is closer to a warning than a reassurance. See liquidity research.
  • Reported volume is not verified. Volume figures come from venues with varying reporting standards, and wash trading inflates the numerator for assets where it occurs. Moonboard applies no wash-trading filter, and the metric cannot distinguish real turnover from manufactured turnover.
  • Market cap depends on circulating supply, which is an estimate maintained by data providers. A supply revision changes LMR with no change in trading.
  • A single day is a short window. One event can put an asset in the top decile for a day. LMR describes yesterday, not a regime.
  • Universe-dependent. The percentile moves when the scanned set changes.

Data quality

A zero or missing market cap returns 0. Non-finite ratios are excluded from the cross-section before ranking, so one corrupt record cannot distort everyone else's percentile. Because volume and market cap can be collected at slightly different times, very short-lived spikes may appear in one field before the other.

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