The leading crypto data aggregator CoinMarketCap (CMC), has introduced new rules set to combat volume inflation, especially by exchanges and improving the overall ranking of crypto platforms and pairings. The move comes after weeks of actively soliciting and reviewing feedback. The new measures follow the already implemented Liquidity Metric effected last year and a few others that proved controversial for benefiting Binance, the company that owns the platform.
One of the newly introduced measures is the Confidence metric, which will utilize a machine-learning algorithm to analyze all the data received by CMC to determine if the volumes reported by exchanges are genuine or inflated and to what extent.
The platform has also introduced a new default ranking system for market pairings featured on CMC. The new measure will see volume eliminated as the default metric for sorting pairs. According to a statement issued through the platform's blog, CMC will now use a single algorithm that considers the volume of each pairing, Web Traffic Factor, and Liquidity Score and promises to use the same metric as a default sorting for crypto exchange rankings too.
Last week, CMC got rid of its "Adjusted volume" metric, citing user confusion as they thought it was meant to combat inflated volumes; however, it comprised of reported volume excluding volumes without transaction fees, with transaction mining and derivatives.
CoinMarketCap currently features over 5,500 tokens, and this number is likely to increase with time as more tokens like Alpha ERC20 tokens are added. Alpha ERC20 belongs to AlphaPlay, a betting platform that allows players to bet against each other on which cryptocurrency is likely to make the most gains or least losses within intervals of 5 minutes.
Critics Accuse New Metrics Of Favoring Binance
However, not everyone is pleased with the new metrics as some critics have accused CMC of favoring its parent company Binance. One such metric is the "web traffic factor," which seeks to analyze the user activity on crypto exchanges, including the number of unique visitors, page views, time spent on site, search engine rankings, and search engine bounce rate.
When the new metric was introduced, Binance claimed the top spot and seemed to be the overall beneficiary of the rule given that previously a similar metric was considered and rejected before a change in ownership.
Earlier this month, CMC introduced the "improved liquidity score," which helps retail users identify the exchanges with the least slippage with priority on order sizes between $100 and $10,000.
If you are wondering if it's easy to manipulate the new metrics, the answer is no, as CMC incorporates various variables in each algorithm, ensuring it's not easily exploited. For example, for liquidity score, the platform tracks various order sizes over different quantities from $100 to $200,000 instead of single order size.
As for web traffic factor, it doesn't just rely on page views or visitor count but factors in more behavioral data points like time on site and bounce rate, which is crucial in distinguishing between real traffic and bot traffic.