K33 Research Unveils Underreported Liquidation Volumes on Major CEXs

Data on liquidations from centralized cryptocurrency exchanges are “bogus” and significantly underrepresent actual volumes, according to senior analyst at K33 Research, Vetle Lunde.

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Liquidation data from exchanges are bogus and a vast underrepresentation of actual liquidation volumes in the market.

To provide a “fair trading environment” (Bybit, Sep 2021) and to “optimize user data stream” (Binance, Apr 2021), Binance and Bybit changed their… pic.twitter.com/QeGsSVdT0a

— Vetle Lunde (@VetleLunde) August 29, 2024

According to his research, since 2021, Binance, OKX, and Bybit have altered their API to conduct one liquidation per second instead of reporting all. Consequently, data from the past three years is understated, and Lunde believes this was done deliberately.

“It’s a PR move. Constantly being at the top of liquidation rankings did not align with the strategy of attracting clients to trade the maximum possible volume,” he wrote.

Lunde noted that transparent liquidation data is the simplest way to assess risk appetite and better understand leverage ratios on exchanges. It is also a reliable source for understanding the impact of sudden volatility and how much the market has been cleansed of excessive borrowed capital.

As an alternative metric, the analyst suggested evaluating events by the reduction in leverage, tracking changes in open interest in notional amounts relative to the previous day’s figures.

“While this approach simplifies comparing past leverage states with current ones, it does not account for traders opening new positions amid the turmoil,” he warned.

According to Coinglass, the market saw $160.57 million in liquidations over the past day.

Earlier in May, a researcher from Privacy Scaling Explorations identified a vulnerability in Binance’s reserve audit mechanism.