CoinMarketCap (CMC), the most popular data aggregator in crypto, offers users the ability to check the performance/price changes of different cryptocurrencies as well as check the volume traded on different trading venues.
In the past, many exchanges opted in for “wash-trading” in order to fake their trading volume and appear liquid. This strategy was also used by small cryptocurrency project owners and a Russian student made a living out of it back in the day.
These different factors and deceptive tricks led CoinMarketCap to introduced an initiative called Data Accountability & Transparency Alliance (DATA); which aims to gather credible information about projects, as well as checking the records of their trading volume.
CMC has performed certain changes to how they rank exchanges. Their new algorithm now takes into consideration the web traffic of an exchange in addition to the trading volumes and liquidity metric.
The interim CEO, Carylyne Chan, stated: “I believe this new ranking of exchanges will provide our users with an accurate reflection of the trading venues, as they are scored on a triage of factors that provide a complete picture. Our machine learning algorithm will improve and adapt to volume, liquidity and traffic changes over time”.
Earlier this year, Binance, one of the leading cryptocurrency exchanges acquired CoinMarketCap for a very substantial sum. There was criticism amongst the crypto-community as CMC actually had rejected this newly introduced metric as Carylyne Chan had mentioned in a podcast that web traffic was not a good indicator; which at the time would have put Binance in the top spot amongst exchange rankings.