The cryptocurrencies prices tracker and trade classifier site, CoinMarketCap.com, is making significant changes to its method for listing trades, in light of concerns about biased trading volume information, according to an official announcement.
As of July 16th, the site has eliminated the minimum volume requirements it had been using to limit the number of exchanges listed. According to CoinMarketCap, this represents the first step, among others, to be introduced gradually to address widespread concerns about the integrity of trade volume figures in trade.
While the CoinMarketCap site’s officials say the portal transparently aggregates volume data based on access to exchange APIs, they recognized that several factors are emerging that may compromise the data accuracy.
These include a new “mining transaction fee” model, recently adopted by some exchanges, which reimburses transaction fees in the form of native exchange tokens. As CoinMarketCap points out, this can increase volumes, making it profitable for users to switch back and forth to accumulate more tokens, a phenomenon that is complicated if bots are used to automate the process.
CoinMarketCap reconditions trading volume lists in response to biased volume disputes
The website also mentions the deficient fee models that are used to encourage commerce, noting that they often fluctuate and can be staggered by account type and transaction volume, a variable that remains opaque both to CoinMarketCap and to users who consult their data.
Finally, the site notes that artificial volumes and so-called “laundry trade” are still ubiquitous in certain exchanges, which often rely on “market creation services or bots” to exchange native tokens for the sole purpose of maintaining a minimum volume level.
Recognizing the “complexity” of the problem, the CoinMarketCap’s officials have begun to introduce more ways for users to filter volume data and take into account variations in tariff models or other parameters. The site will soon add new metrics, such as 7-day and 30-day listings, to allow for better assessment of volume consistency.
In January, the site made a controversial choice to remove South Korean exchanges from its lists at a time when the Korean “cryptocurrency frenzy” was causing a significant increase in the price of specific crypto coins, skewing the average figures for the site.
The recently redesigned CoinMarketCap website has experienced astronomical growth, reporting more than 60 million unique visits this year, up until May.
Jackson Bey was born and raised in Lethbridge Alberta but moved east when he was 22. Apart from running his own consulting firm. Jackson spends his time canoeing the many lakes of Ontario. As a financial journalist Jackson has published stories for CBC Business Online, as well as Buzz Feed and Motherboard. As a contributor to Billionaire 365, Jackson mostly covers markets and trade.