In the cryptocurrency ecosystem there is always a lot going on at once from numerous companies announcing updates to changes in the crypto price that a lot of news simply is viewed, digested, forgotten about and the process is repeated the following day. This fast food culture (which exists in all news cycles, crypto is no different or worse) created by an influx of information 24 hours a day makes it very hard to stick to a story / theme, take it a part and get to the very bottom.
So in this post, that's exactly what I am going to do. I will focus on one story after a few days of it breaking, look at it indepth and give my thoughts about it as a (cryptocurrency marketer for over 4 years, working with numerous top 100 projects).
This post is concerning CoinMarketCap's recent changes connected to the Binance's exchange competitors. CoinMarketCap is probably the most well known crypto website on the globe. So let's get started!
"The Kraken Rises again!"
Less than a month ago (May 20th), I wrote an article about the the recent acquisition of CoinMarketCap by Binance for a reported $400 million, and that suddenly Binance moved up to number 1 in the exchange due to a change in their "Website Traffic Factor", even though CoinMarketCap’s Chief Strategy Officer and acting CEO Carylyne Chan, who said in a podcast interview late last year that web traffic was “not a good indicator.”
Sadly, I finished the article stating -
"Sadly CMC cannot be seen as an unbiased website anymore and although there has only been a few changes so far I highly suspect we will see a lot more "improvements" that will help out Binance."
If you want to read the first part you can read it by clicking here.
Round 2 - I Didn't Hear No Bell
CoinMarketCap did receive a backlash about this, so much so that it scared Binance's CEO so much so that they released a statement about the changes. To this day the trust has been cracked, but not shattered with the cryptocurrency community. The most recent changes though, could be the nail in the coffin for that trust.
On June 4th, CoinMarketCap decided to add another factor to rank their exchanges know as the "Average Liquidity Factor". The new algorithm now takes into account exchanges’ spot market pair rankings and the respective spot market pair’s Confidence score.
Some could argue that because of the backlash from the previous update, CMC decided to implement another part to make a less biased ranking.CoinMarketCap’s new scoring seems to have eroded users’ confidence in its impartiality. The metric apparently factors in an exchange’s liquidity, web traffic, and trading volume into one score. Under this new ranking method, Binance sits at the top, with Huobi, Coinbase Pro, Kraken, and Bitfinex following suit.
The major issue is that it seems that a lot of Binance's competitors have been severely damaged in their rankings, while Binance remains on top.
The Casualties
The new ranking system has particularly targeted exchanges that offer crypto derivatives (Which Binance offers).
BitMEX is one of the largest cryptocurrency exchanges in regards to trading volume, which at the time of writing has a 24 hour trading volume of close to $1.7 billion, which would put it 6th in the ratings. Currently because it has a 0 rank of the new algorithm, it is ranked 175th. Strange enough, it was ranked 2nd under the previous update.
Bybit has taken a huge hit as well. If we were to take the trading volume into account, it should be ranked 24th, with the website traffic ranking it should be sitting at 12th. Currently it is ranked 177th.
OKEX should be 4th with daily trading volume, 6th with the website traffic ranking but has been moved to 36th.
Deribit sits at 179. Their average liquidity stands at 0, despite having the 37th highest website traffic ranking and the 60th highest daily trading volume. They took to Twitter to share their outrage, with a smattering of sarcasm.
One thing to also take into consideration is Binance has the highest web traffic rating (1000 out of 1000, the only exchange to have this) and the highest Average Liquidity ranking (418, second is 416).
Malice or Error?
CoinMarketCap has since stated that the rankings have focused on spot markets and that it will update the rankings to factor in the derivatives exchanges. However, this has done little to eliminate doubts in the minds of crypto enthusiasts.
Ever since the Binance acquisition, CoinMarketCap has attracted a bunch of criticism. Following the acquisition, Binance shot up to the top spot on the rankings, aided by the change.
Conclusion
As I stated in the beginning my premonitions came to life, although I didn't expect it to happen so quickly after the recent backlash from the crypto community. Binance is a company that likes to buy out and squeeze the life out of their acquisitions to benefit them. CoinMarketCap is one of the most visted websites on the globe, and usually the starting point for anyone into crypto.
One of the amazing things about the cryptocurrency industry is that currently it is still small and the users are the gold of the ecosystem. If you disagree with what has happened simply use one of the websites above and if you don't agree with Binance or like their system, there are plenty of other exchanges.
I am expecting more hassle for both the platforms and also more changes to benefit Binance sadly. I believe that CoinMarketCap has officially died.
But what do you think about it? I would love to hear what you think about this and the future of CMC. This is an opinion piece and if you want to see more content like this let me know. As always if you enjoyed the consider following me and tipping the article.