Popular cryptocurrency market ranking website CoinGecko announced the addition of a new rating algorithm, which they call the ‘Trust Score’ to their exchange ranking metrics.
In a blog post published by their co-founder Bobby Ong, CoinGecko introduces the new feature on their site which will be implemented universally on the website’s exchange overview and coin listing pages. The trust score will use a combination of analytics methods in an effort to achieve a fairer picture of the market.
In the beginning of 2019, there were several reports suggesting commercial traders and cryptocurrency projects frequently use trading platforms to artificially inflate their trading volumes. Upon these, leading digital currency data aggregators like Coinmarketcap.com has already started implementing features to remove wash trading from their displayed volume data. And with this new feature, of better curated list of exchanges, CoinGecko is trying to deliver a relatively better data to their users.
“As one of the leading crypto asset data aggregators, CoinGecko is committed to doing what’s necessary to empower our users with information to help make better informed decisions. We are fully aware that the market demands transparency and CoinGecko is committed to improving this.” says the blog post by CoinGecko. Wash trading is believed to be widely practiced among cryptocurrency exchanges. By thinking inflated volumes can raise a platform’s reputation and attract new users several platforms keep on showing larger than real daily trade volumes. Analysts find this as something that’s allowing exchanges to generate more revenue in trading fees.
In their effort to curb fake trading volume, CoinGecko is to use website traffic data from a website called Similarweb.com along with other factors. From now on, the website will be taking the daily traffic of an exchange to decide their new rank. To do this, they are collecting monthly web traffic statistics from similarweb for all crypto exchanges listed on their website and divide that by 30 to get an average daily traffic.
Even though this new strategy by CoinGecko sounds like a good idea to come up with better metrics to rate digital currency trading platforms, it is a widely known factor that, traffic and visitors can also be faked. Especially when similarweb doesn’t have direct access to any of the website’s first hand traffic analytics and their data is only a projection.