Is CoinMarketCap's New Ranking System Better or Worse?
Many cryptocurrency enthusiasts have been wary of CoinMarketCap since it was purchased by Binance, one of the largest cryptocurrency exchanges in April.
It seems that their fears were somewhat confirmed as after the purchase a change was made to the cryptocurrency exchange rankings. In that change, new factors were added, such as "Web Traffic Factor" which were given a heavy weight in the calculations of their rankings. Binance has been listed as #1 in exchanges ever since.
BitMex, Binance, & CoinMarketCap
Earlier today many were surprised to see BitMex, a rival exchange that focuses on cryptocurrency derivatives bumped from a leading spot down to #175. This sparked a new discussion on whether CoinMarketCap is truly a balanced aggregator.
CoinMarketCap later attempted to defuse any tensions by
issuing a statement on Twitter regarding their exchange rankings.As per the announcement, they are currently still working
out the rankings system and derivative exchanges will be featured on a
different page in the future. It seems that BitMex didn't appreciate the change in rankings and tweeted a response.
Please see our response tweet here: https://t.co/0woAKrMcEP There will be a separate page for derivative exchanges in the near future. Thanks!— CoinMarketCap (@CoinMarketCap) June 8, 2020
This is not the first time that BiMex and by extension Binance found themselves sparring. Last year they BitMex accused Binance of plagiarizing their documentation on futures trading.
Deribit & Strange Rankings
Another exchange that seemingly got a low ranking is cryptocurrency Futures & Options platform Deribit. The Netherlands-based platform made note of their low ranking on Twitter.
We are glad to inform you that @CoinMarketCap has ranked Deribit exchange at #179 with a liquidity score of 0. We want to take this moment to congratulate all the exchanges on the list that we've never heard of.— Deribit (@DeribitExchange) June 8, 2020
This is great work guys. 🤡
As a more established Futures and Options exchange to be ranked at #179 does seem a bit strange at first. It is plausible that the ranking system will be fixed after different types of exchanges will be split into different categories.
Deribit has pointed out an interesting fact however, CoinMarketCap seems to be littered with exchanges that no on has seemingly heard about. A conservative estimate might be around 1/6th of all exchanges listed might be manipulating data in one way or another. Some may be money-traps, others might be posting fake volumes to draw in clientele, but either way they should probably not be trusted.
This problem has existed long before Binance's purchase of CoinMarketCap. Lets hope that new updates to exchange rankings will make it fairer and more transparent. If not, users might migrate to other platforms.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado