CoinMarketCap Launches New Ranking Methodology Integrating Exchange Liquidity

Previously, we announced an expanded methodology that detailed the requirements that were factored into the listing (and consequently, ranking) process. As part of this push in July, we introduced an internal feature that would exclude cryptoassets from being eligible to be ranked in the Top 200 if they did not meet the criteria laid out in Section 10 of our methodology.

Due to the segmentation logic of this change, some cryptoassets that did not meet the criteria had harsher-than-intended rank drops. In extreme cases, a cryptoasset dropped 1000 ranks.

This new change that we will announce next Monday will fix and streamline the rankings so that all cryptoassets will be fairly represented in the rankings. This will continue to be congruent with the previously-published methodology.

To make sure this is clear, here is what the ranking segmentation will look like with this change:

  1. Ranks 1-200: Cryptoassets with a market cap, excluding cryptoassets that don’t meet the criteria in section 10, and excluding cryptoassets with low 24h volume.
  2. Ranks 201+: All cryptoassets with a market cap.
  3. Remaining Ranks: All cryptoassets without a market cap / with an unknown market cap.

Additionally, we would like to sincerely apologize for the confusion that was caused as an unintended result of the change. We value the input given to us by projects who professionally and amicably worked with us over email to support the change. Going forward, we will be extremely careful with any changes made on the site. We appreciate the feedback that has been provided, and have taken it to heart.

Addressing the issue of inflated volumes

As unveiled during our first DATA roundtable, we will be releasing new metrics based on liquidity to address the current concerns around inflated volumes. We recognize the limitations of using solely volume as a metric, and will be actively working to level the playing field with liquidity-based metric.

We have found any current solution on the market to be lacking, and hence, have been taking the time to create a statistically-provable and robust solution in contrast. There are a few issues with the solutions out there today:

  • Binary and incomprehensive: Some solutions simply exclude any exchange that they classify as “wash trading”, while keeping any exchange that they classify as “not wash trading”.
  • Includes other non-related metrics (e.g. web traffic): These metrics are not necessarily accurate or reflective of the breadth of use; while there may be some correlation between factors like web traffic, there has been no proof that the data is statistically significant in the context of volumes.
  • Easily-gamed (e.g. simplistic bid/ask and last done thresholds): These solutions can be easily gamed by anyone who knows the thresholds.
  • Lack of replicability: A bystander cannot purport to know how to differentiate fake and real volumes without access to account information.

Our stance, therefore, is to only release a metric that is objective and non-binary. It has to be data-driven, and include all relevant data points from all exchanges that are listed on the site.

Liquidity-based metrics will be launched on November 12, 2019

The new liquidity-based metric that we will release will have these attributes:

  • Numeric: Returns a nominal number
  • 24 Hr Rolling Average: Random time, regular interval polling of order book depth
  • Difficult to game: Dynamic polling depth based on liquidity of the cryptoasset
  • Cross Applicable: Applies to every cryptoasset as variables adapt to its liquidity

Ultimately, this “liquidity factor” will achieve the goals that we have stated above by being:

  • Fair: Level playing field for all
  • Objective: Metric is data-driven
  • Public Good-optimizing: Incentive for more liquid markets

Ultimately, this liquidity metric will factor into market pairs, and will be combined with other metrics that will go into the ranking of exchanges and projects. We are continuing to refine this based on feedback, and welcome more of your thoughts too.

We will release more information about this metric as we get closer to the launch date of November 12, 2019, at our first-ever conference, The Capital! Please remember to follow us here and on our channels for more updates.

Thank you once again for your patience and support, and we continue to be committed to doing our best for the industry.

CoinMarketCap, one of the leading sources of market data and information about the crypto space, has announced a new change in its ranking methodology. The main goal is to offer better information regarding liquidity of exchanges and the ranking of all crypto assets in the platform.

The information was released in a blog post on August 30. Although the official announcement is expected to be on Monday, September 2, CoinMarketCap has informed that they will be testing a change in their systems to “represent crypto assets more fairly.”

You’ve spoken, we’ve heard! We will be testing a change in our ranking methodology on Monday, Sept. 2, to represent all cryptoassets more fairly. Please see the full details here: https://blog.coinmarketcap.com/2019/08/30/updated-ranking-methodology-new-liquidity-metric-soon?utm_source=twitter … We look forward to your feedback!Ranking methodology updated! New metric coming soon – CoinMarketCapNext Monday (Sep 2, 2019), we will be announcing a change in our ranking methodology to ensure cryptoassets will have fairer representation in the ranking when comparing across all cryptoassets….blog.coinmarketcap.com1,1197:05 PM – Aug 30, 2019Twitter Ads info and privacy644 people are talking about this

The platform has also decided to introduce an internal feature that would exclude crypto assets from being eligible to be ranked in the Top 200 if they don’t meet the criteria specified in CoinMarketCap’s methodology. The move aims to verify the project’s supply information with no incongruities, significant liquidity and trading activity with normal spreads across sufficient sources of market data, among other things.

“The sheer variety of monetary and accounting models used by projects adds complexity to the process of verification, which means that there will be occasions where CoinMarketCap will have to exercise its discretion in determining a project’s circulating supply and/or eligibility for a Top 200 ranking,” Section 10 of the methodology reads.

With the new change CoinMarketCap will be fixing and streamlining the rankings in order for all the cryptocurrencies to be fairly represented in the rankings. As the platform has informed in the past, it planned to release new metrics based on liquidity, which would address the concerns related to inflated volumes.

At the same time, CoinMarketCap admits that there are some limitations of using just volume as a metric. For that reason the platform is going to improve its metrics by adding liquidity information to the data provided. The new liquidity metrics are going to be launched as soon as on November 12, 2019, and will be combined with other metrics that will go into the ranking of exchanges and projects.

Please follow and like us:
error

Related Posts

Begin typing your search term above and press enter to search. Press ESC to cancel.

Back To Top
Social Share Buttons and Icons powered by Ultimatelysocial