The bid-ask spread is the gap between the best ask and the best bid, usually expressed as a percentage of the mid price: spread % = (best ask − best bid) ÷ mid price × 100. Market depth is the value of resting orders near the price; depth at ±2% adds up all bids within 2% below the mid and all asks within 2% above it. A tight spread makes small trades cheap; deep books let larger trades execute with little price impact (slippage). Market makers are judged on both, plus uptime.
Key takeaways
- Spread % = (ask − bid) ÷ mid × 100.
- Depth at ±2% = value of bids within 2% below mid + asks within 2% above (often reported per side).
- Tight spread with thin depth is a cosmetic market.
- Measure both continuously, not at a single snapshot.
Spread, step by step
| Input | Example |
|---|---|
| Best bid | 0.995 |
| Best ask | 1.005 |
| Mid price | (0.995 + 1.005) ÷ 2 = 1.000 |
| Spread | 1.005 − 0.995 = 0.010 |
| Spread % | 0.010 ÷ 1.000 × 100 = 1.0% (100 basis points) |
Example numbers only.
Depth at ±2%, step by step
- Mid price = 1.000, so the band is 0.98 to 1.02.
- Add up every bid between 0.98 and 1.000: price × size for each order.
- Add up every ask between 1.000 and 1.02.
- Report bid-side depth, ask-side depth, and the total.
Why both matter
| Market | Spread | Depth | What traders experience |
|---|---|---|---|
| Healthy | Tight | Deep | Cheap small trades, low slippage on large ones |
| Cosmetic | Tight | Thin | Looks fine; large orders move price sharply |
| Wide but deep | Wide | Deep | Costly small trades; stable for large ones |
| Broken | Wide | Thin | Hard to trade; exchanges notice |
Using them in a contract
Specify maximum spread, minimum depth at ±2% (and ±5%) per side, the share of time both must be met (uptime), and how they are measured. See market maker KPIs and the agreement checklist.
Frequently asked questions
What is a good bid-ask spread for a token?
It depends on the token’s size, volatility, and venue. Large liquid assets trade at very tight spreads; new small caps are wider. Set targets in the market-making contract relative to your token and venues, and measure them over time.
How do you calculate depth at 2%?
Take the mid price, then sum the value (price × size) of all bids priced at or above mid × 0.98, and all asks priced at or below mid × 1.02. Report the bid side and ask side separately, as well as combined.
What is the difference between depth and liquidity?
Depth is one measurable part of liquidity. Liquidity also includes spread, resilience (how quickly the book refills after a trade), and volume.
Need deeper order books?
We introduce projects to partners offering retainer market making and LP-side liquidity, where the partner deploys its own capital. Free for projects.
Get matched with a market makerFree for projects. CEX Ready may be paid a referral fee by partners. We never guarantee listings, prices, or volume.