Coinmarketcap (CMC), the web’s most popular cryptocurrency tracker website, has responded to accusations that it is implicit in supporting wash trading. This week, a platform called Crypto Exchange Ranks published detailed allegations of how CMC incentivizes exchanges to report fake volume. In a new blog post, Coinmarketcap has detailed its determination to support “transparency and clarity”.
Recently, CoinMarketCap has faced increasing amounts of criticism for failing to alter how they choose to rank cryptocurrency exchanges (i.e., exclusively by 24-hour trading volume). Such negative feedback notably accelerated after the new exchange token distribution model known as trans-fee mining (or, trade-driven mining) controversially gained popularity.
With investors – particularly novice ones – looking to CoinMarketCap for validation, exchanges supporting trans-fee mining mechanisms have often soared to the top of the 24-hour trading volume charts.
Why? Because users of such exchanges are incentivized to trade, as their trading fees are fully refunded into their accounts in the form of the platform’s native token – which the user is said to have ‘mined’ (i.e. trade-driven mining).
In its July 19th post, CoinMarketCap blamed “market makers or bots” for exchange volume inflation, while reiterating that data transparency and clarity were its top priorities. The post reads,
“In order to ensure that their listings remain active on certain exchanges, sometimes projects are instructed to maintain a minimum level of volume. This causes projects to heavily employ market making services and bots to trade their own coin to inflate their volumes,”
In response to “the recent changes in the exchange landscape,” CoinMarketCap shared that will progressively update how they rank cryptocurrency exchanges. In doing so, the popular crypto website hopes to diminish the degree by which 24-hour trading volumes dictate “the impressions that people have about exchanges.”
The recently rebranded five-year old CMC has seen stratospheric growth, reporting over 60 million unique visits this year through May.
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