Crypto Space’s Biggest Acquisition — Why Was CoinMarketCap Purchased by Binance?

At the end of March, a big thing happened in crypto space. CoinMarketCap, a famous cryptocurrency data site, is to be acquired by Binance, one of the Top four cryptocurrency exchanges in China, for $400m. The news stirred up waves like a stone. What? An exchange to buy a website? That’s ridiculous.

Binance, as a cryptocurrency exchange, is supposed to avoid suspicion, and insiders are not too keen on such a combination. Not long after, on April 2, Binance officially announced the acquisition of CoinMarketCap (CMC).

CMC has for a long time been supported by users and projects with transparent data and a neutral position, and its most central content is various rankings, such as digital currency, exchange and so on. However, CMC was once suspected of the authenticity of the exchange ranking, because it was quite plausible that the cryptocurrency exchange would falsify its trading volume in order to improve its ranking in order to attract traffic.

CMC currently has three standards for ranking exchanges, one is adjusted volume, one is reported volume, and the last is a new standard introduced a few months ago: liquidity.

The rankings under the first two standards are like this:

Binance ranked 18th by adjusted volume, and the top 10 exchanges are BKEX, MXC, FatBTC, BitForex, Coinsbit, Hotbit, CoinBene, LBank and EtherFlyer. Big exchanges like Bifinex, ZB, OKEx and Huobi are not in the top ten.

Under the second standard reported volume, Binance ranked in first, way different from the first rankings.

These two rankings are not trusted by many people, but rather criticized by many rating agencies. In a report written by Bitwise, a crypto index and beta fund provide, have submitted to the SEC. Bitwise said its research shows that about 95% of the volume reported on CoinMarketCap is fake. They said:

“Despite its widespread use, the data is wrong. It includes a large amount of fake and/or non-economic trading volume…approximately 95% of this volume is fake and/or non-economic in nature.”

Under the public outcry, CMC had to take measures. At The Capital conference in early December, 2019, CMC’s Chief Strategy Officer Carylyne Chan introduced CMC’s upcoming new standard for ranking digital currencies and exchanges — Liquidity, and explained that the measure of Liquidity would make it difficult for exchanges that love to wash trading volume.

The Liquidity metric looks at several factors, including order-book depth changes and distance from mid-price. Calculations are made by polling the market pair at random intervals over 24 hours and averaging the result.

Ranking under the new standard liquidity:

China’s three major exchanges (Hoobi, OKEx and Binance) are online, including the new first line and its ZB exchanges (ZBG and BW), and the second-line exchanges such as Matcha MXC, Bibox and Kucoin. But in this respect, the ranking is very convincing.

CMC was established in 2013 by a programmer named Brandon Chez in an apartment of a new residential building in Queens, New York, USA. now it has a history of more than six years. At present, CMC has become one of the largest cryptocurrency transaction price query websites in the world, and even bitcoin data sources of Wall Street banks, securities companies, etc. are also read here.

CMC’s reputation and user accumulation make it not only a website for encrypting currency data, but also Binance is bound to know something. Binance’s operation has always been one of its own. Before the event of the big chest and long legs customer service 66 of the previous marketing has not subsided, Binance has purchased the largest cryptocurrency data website with great efforts.

Although the way of Binance is very wild and controversial, it is undeniable that every “operation” of Binance has firmly caught people’s attention. In the current small circle of currency circle, this kind of operation capacity is probably what every project party hopes to have.

What do you think?

Written by Paul Watson

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