The popular crypto data tracker CoinMarketCap is instituting changes in light of what it called “concerns” over fake volume figures.
In a blog post, published on July 19, the site said that it had already dropped a minimum volume requirement for exchanges listed on the site, a policy it said was originally pursued “in order to filter for more popular exchanges that could be listed on CoinMarketCap.”
The site also plans to introduce new filters and ranking metrics in a bid to give users “the power to experience and use the data in a way that fits their needs most.”
The announcement followed a post on CryptoExchangeRankings, which tackled the question of how relatively new exchanges were able to move up CMC’s volume rankings. “The issue of fake volumes on crypto exchanges is like a UFO: some people claim to witness it but there is no evidence and metrics to prove its existence,” the blog wrote.
CMC’s vice president of marketing Carylyne Chan wrote in the site’s post that it may show high trading volumes due to the way it gathers data from exchanges.
In particular, transaction mining, low fees and wash trading on the part of crypto projects might result in artificially high trade volumes appearing on the site.
“While we have a relationship with most of the exchanges listed on our site, there is no guarantee that any of them will respond or comply to any specific guidelines, but we have to continue showing users the best approximation of price and volume based on all the data we have available. The evolution of new models such as transaction mining also means that there needs to be new ways to account for volume. Compounding it is the fact that they are, in fact, enabling greater liquidity in the way that users are trading more readily on the platforms.”
CMC is designed around aggregating data sent to it by exchanges, and so the numbers on the site reflect “the best approximation of price and volume based on all the data we have available,” she said, explaining that “even though we try our best to verify the data with the exchanges on our site, we are not in the practice of censoring or policing others.”
That being said, she wrote, “we understand that these concerns are valid and have implications on the community and the impressions that people have about exchanges, even more than we are traditionally used to.”
Bitcoin price chart image via Shutterstock