CoinMarketCap Introduces New cryptocurrency ranking standards

Coinmarketcap made changes in its ranking methodology to ensure crypto assets have been fairer ranked. The new approach will help to make a comparative assessment of crypto-asset. As a result, CMC would need additional data from exchanges.

The new standards apply to both the exchange ranking pages, as well as the markets tab for individual cryptocurrencies, where exchanges are listed by their contributing volume to that cryptocurrency.

Exchanges who fulfilled the requirement will continue to include in the ranking calculations of volume-weighted average price and adjusted volume by CoinMarketCap. Those who have not submitted the required data will list below those that have done so.

Why new standards

Given the unreliable data submitted from exchanges (inflated volumes) which as per Bitwise research report is as high as 95%, the rankings are ineffective to use for tracking general performance. Therefore, Since Q2 2019, Coinmarketcap is working on a new ranking method.

In addition, Coinmarketcap will incorporate ‘liquidity-based metric’. The combination will hopefully remove the weight of inflated or fake volumes from the calculations. It is expected that on 12th Nov 2019, the liquidity metric will be ready.

To account for real trading data from exchanges, Coinmarketcap has asked exchanges to submit the mandatory data which includes live trading and order book data. The collected data will go through several new data cleaning and verifications to ensure data integrity.

New Eligibility Criteria For Coinmarketcap Top 200 Ranking

Coinmarketcap top 200 will exclude crypto assets from their ranking calculation if projects and exchanges did not meet the following criteria –

• Ability to verify the project’s supply information with no incongruities.
• Strengths in a number of areas. These include factors such as trading volume, community interest, traction, team, product-market fit, impact, uniqueness and time in the market.
• Significant liquidity/trading activity with normal bid-ask spreads across sufficient sources of market data.
• Absence of significant price discrepancies across CMC-supported exchanges.
• The asset should possess the following attributes and should be traded on at least three non-decentralized exchanges:
  1. DATA Partner
  2. Regulated/Licensed
  3. Publishes granular API endpoints
  4. Active product development and communication from the team
  5. Active/engaged community
  6. Accredited/Audited by a credible 3rd party

Coinmarketcap first notified new mandatory data requirements to exchanges in May 2019. As many as 70.3% of cryptocurrency exchanges listed on their site submitted data that fulfill the requirements of mandatory data collection.

“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.”

Coinmarketcap said in its blog post.