Popular cryptocurrency aggregation site CoinMarketCap announces changes it will do to combat misleading exchange rankings.
On July 16, 2018, the website Crypto Exchange Ranks (CER) published a story on how new cryptocurrency exchanges can effortlessly move up CoinMarketCap’s exchange ranking, even eclipsing established popular ones. New exchanges such as BitForex, FCoin, CoinEx were all able to rank in CoinMarketCap’s list of top 10 exchanges in a short period of time.
The listing is ranked by daily trade volume on the exchanges. According to CER, some of these new exchanges might be manipulating their 24-hour trading volume through wash trading, the process of the exchange buying and selling on its own platform so that when CoinMarketCap gathers data via the API, it will appear that there’s a high trading volume activity.
CoinMarketCap (CMC) acknowledged that there are 3 issues brought to its attention that the ranking website is closely evaluating. Fee-Free Transaction Mining Models, Low Fee Models, and Wash Trading, which is the subject of the article from CER.
CoinMarketCap admits that some exchanges are gaming the system to go up the rankings. Because of this, CMC announces minimum volume requirement as a factor in getting listed in CoinMarketCap. The ranking website hopes this move will deter newcomers to inflate their volume just to get accepted.
While CoinMarketCap did not promise to ban offenders, it announces new ways to filter data and added 7-days and 30-days exchange volume metrics in addition to the 24-hour volume metric. CoinMarketCap hopes users will use these new features to better evaluate the volume consistency on the exchanges.