Leading tracker of cryptocurrency valuations and exchange trading volumes, CoinMarketCap, has taken a stand on Thursday, publishing a blog post addressing “the concerns aired by [the] community” in relation to how exchange volumes and rankings are depicted.
Wait, CoinMarketCap Has Issues?
Recently, CoinMarketCap has faced increasing amounts of criticism for failing to alter how they choose to rank cryptocurrency exchanges (i.e., exclusively by 24-hour trading volume). Such negative feedback notably accelerated after the new exchange token distribution model known as trans-fee mining (or, trade-driven mining) controversially gained popularity.
With investors – particularly novice ones – looking to CoinMarketCap for validation, exchanges supporting trans-fee mining mechanisms have often soared to the top of the 24-hour trading volume charts.
Why? Because users of such exchanges are incentivized to trade, as their trading fees are fully refunded into their accounts in the form of the platform’s native token – which the user is said to have ‘mined’ (i.e. trade-driven mining).
By leading the likes of Binance and Huobi Pro on CoinMarketCap’s rankings, these new exchanges have seen their perceived reputation sky-rocket. Consequently, certain individuals have been duped into racing over to these exchanges so as to purchase its native crypto token. Because, after all, if Binance Coin (BNB) and Huobi Token (HT) are good enough to be a top-100 token (by market cap), then surely, this token will surpass them – right?
CoinMarketCap stands for transparency and clarity in data, ensuring that all coins and exchanges are represented fairly. We’ve written a post with regards to exchange volumes and rankings, and how we plan to improve going forward. Read it here: https://t.co/CeP9mHG4d8
— CoinMarketCap (@CoinMarketCap) July 19, 2018
CoinMarketCap Addresses “Increasing Concern”
Thursday’s blog post highlighted “three main concerns…that have been skewing the perception of the data” on CoinMarketCap. One was the surge in exchanges (e.g. CoinBene, FCoin, CoinEx) supporting the aforementioned trans-fee mining model, whilst the other two were low-fee models in general, and artificial volumes (i.e., wash trading).
In response to “the recent changes in the exchange landscape,” CoinMarketCap shared that will progressively update how they rank cryptocurrency exchanges. In doing so, the popular crypto website hopes to diminish the degree by which 24-hour trading volumes dictate “the impressions that people have about exchanges.”
Also, expect to see new metrics appear on CoinMarketCap before too long. As Thursday’s blog post explained, by including metrics like weekly and monthly volumes, individuals will be able to better “evaluate for themselves the consistency of the volume on the exchange.”
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