While these new metrics are intended to mitigate fake volume, there are concerns that these developments favour CMC parent company Binance. Binance acquired the CMC on March 31st, 2020, for an undisclosed price.
In efforts to mitigate the impact of fake volume on the platform’s statistics, the leading crypto data aggregator CoinMarketCap (CMC) has developed new metrics for ranking exchanges and market pairings.
The changes are a supplement to previous reworks that were recently implemented, as they were proven controversial for CoinMarketCap’s new parent company Binance.
Just today, the company introduced a new ‘confidence’ metric to automatically detect and flag suspicious volumes reported by exchanges. The tool uses a sophisticated machine-learning algorithm to scrutinize all the data flowing into CMC. This is to determine whether the columns that are being reported by exchanges have been inflated, and to what extent.
In addition, CMC has also worked on a new default ranking system for market pairings throughout the platform. This is replacing its metric of volume for default sorting.
Effective immediately, CMC will be using a single algorithm that considers the Web Traffic Factor, Liquidity Score, and volume of each pairing. CMC plans to introduce the protocol as the default sorting system for exchange rankings in the near future as well.
A week ago, CMC removed the ‘adjusted volume’ metric, which excluded volumes that were generated by pairings with transaction mining, pairings with zero transaction fees, and derivatives.
A recent blog post made on the platform stated that users were confused regarding the nature of the pairing, with many suggesting that the metric sought to combat inflated volumes.
On the 14th of May, CMC launched the ‘Web Traffic Factor’, which looks through user activity on exchanges. This includes the number of page views, the amount of time spent on the site, unique visitors, search engine rankings, and search engine bounce rate.
Binance, the world’s leading crypto exchange that now owns CoinMarketCap, received criticism for introducing this new tool to the platform because Binance claimed the top spot as a result. Prior to this development, as well as the change in ownership, a metric that functioned in a similar fashion was considered for CMC and rejected.
With web traffic now integrated in the new default metric, Binance remains in the number one spot. Whether additional changes will be made to answer concerns of favouritism remains to be seen.
On the 8th of May, CMC released its new ‘improved liquidity score’, which works by identifying the cryptocurrency exchanges that experience the least slippage. This works with a priority on order sizes that are between $100 and $10,000, for the benefit of retail traders.