Posted 2 years ago | by Ben Armstrong
New CoinMarketCap Rankings Put Binance on Top
CoinMarketCap has created a new exchange ranking system that awarded Binance the best score possible. Changpeng Zhao (CZ), the CEO of Binance, addressed some of the ideas surrounding the new ranking system in Twitter format.
CoinMarketCap was bought by Binance with a rumored $400 million a month ago. CZ mentioned that many traders had expressed concerns about exchanges artificially inflating volumes to make the exchange seem more prominent, which is known as wash trading.
We listened. @coinmarketcap updated exchange rankings by incorporating web traffic factor. Checkout the update rankings at URL below and let us know what you think.https://t.co/00jEVwiC6c https://t.co/WGmyM0MkCj
— CZ Binance ??? (@cz_binance) May 14, 2020
CoinMarketCap's new metric focuses on web traffic. In a recent blog post, the price site argued that metrics, including page views, time-on-site, and bounce rates were a "good intermediate proxy" for determining how much of an exchange's activity was being done by real humans.
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Binance is Tops on CoinMarketCap
Binance achieved a perfect web score factor with 1,000 out of a possible 1,000 in the new rankings. This also means that CoinMarketCap believes 100% activity on Binance is human while rivals Coinbase Pro and Kraken achieved a web score factor of 972 and 856, respectively.
According to CoinMarketCap's old exchange metric system, Binance had been ranked 15. The new rankings only show volumes supplied by the exchanges themselves although the system had shown adjusted volumes to exclude potentially skewed or suspicious data.
The new metrics put Binance in first place with reported volumes at just under $8 billion USD in 24 hours while both Kraken and Coinbase's volumes are reported at roughly $450 million per day.
Some Questions Remain
Per its blog post, CoinMarketCap also said that it is designing a new algorithm that would use liquidity and orderbook depth to detect disparities between actual and reported volumes.
Carylyne Chan, the CEO of CoinMarketCap, said on Twitter that web traffic would be, "only one of many factors that will make up the final algorithm. I have said more recently that speed is imperative, hence we're iterating instead of waiting months."
When asked if Binance had been involved in the decision to alter the ranking system, the CEO replied that the site “used CZ’s Twitter presence and feed as a channel to gather feedback."
Whenever a company is rated by its own subsidiary, there will be questions that pertain to its objectivity. As more time goes by, it will be easier to see if the new ranking metrics are accurate, or if there is potentially something less than honest happening at the new CoinMarketCap.