Liquidity depth represents the amount of BNT tokens that exist in the connector balance, or the circulating supply within the Bancor Network. This value can be used to calculate price slippage when buying and selling tokens through Bancor. A token with a high liquidity depth relative to the size of the transaction will experience a lower price slippage during the transaction.
The effective price slippage for a given transaction can be easily estimated by dividing the size of the transaction by the liquidity depth. For example, say token XYZ has a liquidity depth of $100,000 and a user wishes to buy $5,000 worth of XYZ. The estimated price slippage would be:
In other words, if XYZ token's price before this transaction is $1, the effective price for this purchase will be $1.05.