Ever since Binance announced that it would be taking over the much relied upon and independent data site Coinmarketcap there has been controversy and concerns over the possibility of Binance to impact the data and make it more amenable to the new parent company.
Despite these concerns, Binance has forged along maintaining that Coinmarketcap will remain separate and independent from Binance, but the latest movies from the site seem to have a little too much of a tie back to Binance.
A recent change to the ranking system was announced by the newly owned data site which was purported to be aimed at stamping out fake volumes and improving the general quality of the data. But, the first notable change saw the rankings for exchanges drastically reshuffled and Binance coming out on top.
The decision to make the primary ranking factor in Coinmarketcap based upon web traffic has not only been criticised as a bad metric, but it has been questioned by the community as it seems to be weighted in favour of Binance and may have been influenced by the parent company.
Clay Collins, CEO of CMC competitor Nomics, told Cointelegraph he still believes the latest changes to the CMC metrics could backfire against Binance in the long term:
“Binance could find itself under much more scrutiny if CoinMarketCap was ever found to misrepresent financial data in a manner that (1) directly aided Binance and hurt traders, or (2) leveraged CoinMarketCap’s position to help Binance gain an unfair competitive advantage over other exchanges, especially if traders were also affected. Even if the misrepresentation were the result of a bug.”
Ciara Sun, head of global markets at Huobi Group, told Cointelegraph that CZ’s tweet seems to insinuate his involvement:
“CZ’s tweet stating that they will ‘continue to iterate’ on CMC’s ranking system certainly seems to insinuate his involvement but I’ll leave that up to the community to interpret.”
Sun believes that CMC’s acquisition by Binance “compromises its neutrality,” further noting that an exchange that was hacked for 7,000 Bitcoins (BTC) should never receive a perfect score:
“In addition to the limitations of metrics like web traffic, CMC’s ranking system does not weigh other crucial factors like an exchange’s security, compliance and licensing, and total assets under management (AUM). Any exchange that was hacked for 7,000 BTC should never receive a perfect score. Compliance is perhaps one of the most important indicators of a trustworthy exchange. And AUM says much more about an exchange than web traffic. (Huobi is currently managing more than 5% of the total coin market cap.) I’d even propose community voting as a metric in lieu of a clear framework for assessing real trading volume.”
Lennix Lai, director of financial markets of OKEx, also told Cointelegraph that he finds the new ranking “biased”:
“Website traffic is known to be one of the most biased parameters to rank an exchange – considering the metric would be easily distorted by mobile and VPN-directed traffic. And that’s why most data analytics sites pivoted to a more scientific, robust approach via ranking exchanges by a composite score on volume, liquidity and market depth. It’s sceptical to me that CMC who promoted its data and transparency via its DATA initiatives yet right now backpedalling with a de-facto biased parameter.”