CoinMarketCap, a leading site for cryptocurrency market cap data and crypto exchange ranks, has announced that an update of policies and website design to reduce the impact of trading volume fraud on crypto exchange ranks, in a post titled ‘CoinMarketCap stands for data transparency and clarity‘.
The most recent trend which has been inflating crypto exchange volume is “transaction fee mining” where exchanges compensate fees with their native exchange tokens. Transaction fee mining incentivizes wash trading, oftentimes with trading bots, so users can get as many tokens as possible. Wash trading is when a user opens multiple accounts and trades against themselves just to generate more volume. This has resulted in several exchanges rocketing to the top of CoinMarketCap, including CoinBene and Bit-Z. Also, usually crypto exchanges require a cryptocurrency to have a certain amount of volume to remain listed, so some crypto projects conduct wash trading just to remain listed. This inflates the overall volume of the exchange.
Apparently, crypto exchanges have been wash trading just to get listed on CoinMarketCap, because up to now CoinMarketCap has had minimum volume requirements to be listed. The biggest change CoinMarketCap is making is to remove the minimum volume requirement, so there will be no more incentive for inflating trading volume just to get listed. However, CoinMarketCap will evaluate all exchanges before listing them to make sure they are legitimate. This change has already been implemented, and now 212 crypto exchanges are listed on CoinMarketCap.
CoinMarketCap doesn’t want to get into censoring and policing exchanges if they are using transaction fee mining or other features that inflate trading volume, instead they will provide all the data possible and let users decide. They will update their website design to have more filters and toggles so users can see which exchanges are using transaction fee mining, and what other features exchanges have. In general, CoinMarketCap does not want to introduce its own bias but wants users to reach their own conclusions by using all the available data.
CoinMarketCap will be introducing 7-day and 30-day crypto exchange volume statistics, as well as the launch date of crypto exchanges, to give users a better idea of the consistency of each exchange. The weekly and monthly volumes for each cryptocurrency are also being calculated and already available.
Follow BitcoinNews.com on Twitter at https://twitter.com/bitcoinnewscom
Telegram Alerts from BitcoinNews.com at https://t.me/bconews
Image Courtesy: Pixabay