A crypto venue publishes its order book: resting bids and offers at each price. Unlike an on-chain pool, where depth is capital committed to a contract, book depth is a set of orders that can be cancelled in the time it takes your order to arrive.
Why it evaporates
Market makers quote continuously and manage risk continuously. When the market starts moving, the rational response is to pull quotes and re-post wider — not manipulation, simply not wanting to be run over.
The consequence is that depth is thinnest exactly when you most want it. A book that looks deep in calm conditions can be a fraction of that during the move you are trying to exit into, which is the same pattern as on-chain liquidity leaving during a move, arriving by a different route.
Spoofing, and why it matters less than people think
Orders posted with no intention of being filled do exist, and reading a large resting order as commitment is naive. But the more common reason depth disappears is the mundane one above — genuine quotes being genuinely withdrawn.
Treating every vanished bid as manipulation leads to a worse model of the market than treating depth as provisional by default.
What it is genuinely good for
Relative comparison. Which of two venues is deeper right now, or how this hour compares with this morning, is a reasonable read even if the absolute numbers are soft.
Sizing. Not “how much can I trade” but “what fraction of visible depth is my order”. An order that is a large share of the visible book will move price regardless of what the ladder promises.
Structure. Persistent clusters of resting size at particular levels are worth noting, in the same qualified way as a liquidation heatmap: a zone of interest, not a guarantee.
The number to trust instead
What your last comparable order actually cost. Realised slippage on your own fills is the only depth measurement that cannot be withdrawn after the fact.