CoinmarketCap has been at the centre of a few controversies, but these have only gotten more damning since Binance decided to buy out the blockchain data site as concerns mounted that there may be some favouring of the major exchange.
The first major changes from CoinmarketCap under new ownership did indeed incite these concerns as the measure for the top-ranked exchange on the site was changed to web traffic, a metric that has been discussed as a poor one to determine a good exchange. However, this decision suddenly saw Binance elevated to the top spot.
The word from CoinmarketCap was that their intention was to start fighting against fake volume numbers and other wash trading allegations that have plagued the cryptocurrency space. The next move from CoinmarketCap in addressing the concerns about fake volume has seen some more changes to the ranking system.
The site has now introduced new metrics that involve ranking exchanges as well as market pairings. The intention here is still supposedly intended to reduce the impact of fake volume on the platform’s data.
But, the concern is that these new metrics are building upon the controversial additions that saw Binance leapfrog to the top. It has now introduced what is being called a ‘confidence metric’ which uses a machine-learning algorithm to examine all data coming into CoinmarketCap “to determine if the volumes reported by exchanges are inflated, and to what extent”.
There are also new default rankings for market pairings across the data site which have replaced the current metric of volume for default sorting.
CoinmarketCap has said that in the future it will utilize a single algorithm that considers the Liquidity Score, Web Traffic Factor, and volume of each pairing — again heavily weighted towards web traffic. They also state that there are plans to introduce the factor as default sorting for exchange rankings on its platform as well.
It is also interesting to note that just last week CoinmarketCao removed its ‘adjusted volume’ metric. This excluded volumes generated by pairings without transaction fees, pairings with transaction mining, and derivatives.
On the right track?
With the intention proclaimed to be at eliminating fake volume reporting and other negatives that impact the cryptocurrency space, CoinmarketCap should be getting praise for its work. However, the way it has gone about things has caught the ire of not only the community, but many other exchanges and commentators too.