This issue is a dive into our pricing methodology.
To date, no cryptoasset pricing index has been especially transparent about exactly how they price tokens and where they get their data. We hope to change this with the first of several deep looks at our methodologies.
Please consider all of the content below as part of a conversation we’re having with the cryptosphere about the proper computation methodologies for global cryptocurrency metrics. If you have suggestions or constructive criticism, please leave your thoughts in the comments.
- Prices are determined using the latest trade for each market on each exchange, weighted by 24 volume.
- Prices are refreshed every 10 seconds.
- Volume weighting is done by market, so even on one exchange, a few markets for the same base currency will be used for the base currency price, each weighted by their volumes.
Step 1: Determine The Actual Fiat Price Of BTC and ETH
The USD price is calculated for BTC based on BTC/fiat and BTC/ETH pairs on a volume-weighted basis (based on 24-hour volume). Our methodology does not consider Tether (USDT) as a fiat currency.
Here’s an example (using only fiat pairs):
(Note: Table 1 does not represent a complete example and does not contain all markets used to calculate a price. The table above is merely illustrative of our methodology but does not contain complete data.)
Step 2: Convert Cryptoasset Prices To USD Based On Fiat, BTC, and ETH Pairs
Once the USD prices of BTC and ETH have been established based on fiat pairs and conversion to USD based on recent forex data from Fixer.io, the prices of other cryptoassets can be computed across all markets.
At the moment, all cryptoasset pairs can be priced via a one or both of the following paths (usually a combination is used):
- Any cryptoasset pair quoted in BTC or ETH → fiat equivalent using only BTC/fiat & ETH/fiat market prices.
- Any cryptoasset pair quoted in fiat → quote currency conversion to USD using Fixer.io data
Once the most recent fiat prices for any cryptoasset has been established, this price can be converted to any other fiat currency using the most recent forex data (we get our fiat data from Fixer.io).
Here’s an example for Monero:
(Note: Again, this is not a complete example and does not contain all markets used to calculate a price. The table above is merely illustrative of our methodology but does not contain complete data.)
Please note the following . . .
- This is the beta version of the document; it can be more fully fleshed out in response to your questions and comments.
- We’re making ourselves vulnerable to criticism with this post in an attempt to remain as transparent as possible and to make Nomics’s data the best it can be. We’d appreciate it if you left comments in that spirit.
- Future customers of our API will have raw trade and candle data as auditable primary source data from exchanges and will be able to compute global prices however they wish.
Finally, this is the first in a series of methodology deep dives. What would you like us to cover next (for example, our ATH methodology)?
Let me know in the comments.