CoinMarketCap prepares for cat and mouse game with exchanges

CoinMarketCap has announced a new iterative approach to providing exchange ratings following extensive community feedback and criticism.

As part of an announcement made on May 13, the crypto currency price aggregator is set to implement the first of its new steps tomorrow, May 22.

The first step will be relatively minor as it removes the „adjusted volume“ tab on each currency page. This was done to avoid any misunderstanding, as the metric simply excludes volumes from certain types of exchanges. These include derivative exchanges, platforms with no per-transaction fees, or those that use trade mining.

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These tend to be naturally larger, especially in the case of derivatives that never trade the underlying. CoinMarketCap said this metric was confusing because people assumed it eliminated false volumes.

Confidence indicator

The biggest change will be the confidence score, which will be introduced from 29 May. Each market pair will have a confidence indicator to signal suspicious behavior. It will be based on an „automatic learning algorithm“ that will take metrics such as liquidity score, web traffic factor, order book depth and order timestamps to determine if and how much volumes are inflated.

This factor will be used to rank the market pairs, rather than based on reported volume. CoinMarketCap interim CEO Carylyne Chan told Cointelegraph that the plan is to eventually use similar metrics when classifying the exchanges, rather than the current method which only takes into account web traffic.

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„This is part of our iterative plan, and we will announce these changes as we make them, on our blog,“ he added.

When asked why the aggregator is not simply adjusting volumes believed to be Bitcoin Trader, Bitcoin Code, Bitcoin Era, Bitcoin Circuit, Bitcoin Revolution, Bitcoin Profit, Bitcoin Billionaire, The News Spy, Immediate Edge, Bitcoin Evolution false, Chan responded:

„It’s not a straightforward way to simply adjust volumes, as you can imagine, or we would have solved this a long time ago!“

He added that CoinMarketCap will not attempt to censor or silence the data in any way. Instead, the confidence score will serve as an interpretation of the exchange numbers.

Cat and Mouse Game
Bobby Ong, the chief operating officer of CoinMarketCap rival CoinGecko, told Cointelegraph that the confidence score is „just a simpler version of the algorithm we’ve been doing at CoinGecko for more than a year.

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According to him, the three factors used by CoinMarketCap are elementary, with Ong adding that his rival will have to „go deeper to get a more holistic picture of things.

Ong shared that exchanges are already positioning themselves to play the similar Trust Score metric introduced by the company:

„This is a cat and mouse game and we intend to add more metrics to improve the tracking of exchanges. We have already started to notice that since the launch of Trust Score, certain exchanges are already starting to fill their order book and buy fake traffic“.

When asked if web traffic could be a reliable measure against false data, Chan responded:

„Our next confidence indicator […] will go far beyond just web traffic, to include a comprehensive, amalgamated analysis of liquidity, traffic and volumes using our algorithm.“