CoinMarketCap announces update to market ranking criteria

Market capitalization ranking in the world of cryptocurrency is a complex measure influenced by various data points, including total supply, circulating supply, and price differentials. In order to provide more accurate data, CoinMarketCap claims that it will soon review market capitalization rankings with stricter criteria.

CoinMarketCap has been quite active this year. ABM previously reported that on June 26, the organization announced the acquisition of the cryptocurrency trading fund Hashtag Capital to expand its Data Accountability & Transparency Alliance (DATA).

This move may be in response to doubts about the authenticity of its data. A report by asset management firm Bitwise on March 22 stated that 95% of the trading volume on unregulated exchanges is suspicious, citing CMC's data as containing a significant amount of questionable data, thus presenting a false impression of the market's true size.

Prior to this, market capitalization rankings could be manipulated through trading, such as projects trading with themselves at higher prices to artificially boost their market cap.

One of the main data sources in the market, CoinMarketCap, is working on addressing this issue. According to the official blog post, a new metric will be officially announced on September 2 and implemented on November 12 this year.

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://t.co/oOFfcliqG5 😃 We look forward to your feedback!

— CoinMarketCap (@CoinMarketCap) August 30, 2019

Carylyne Chan, the Chief Strategy Officer, stated:

In July, we introduced a new criterion. Projects that do not meet the standards outlined in criterion 10 of our methodology will be excluded from the top 200 rankings.

As a result of this criterion, cryptocurrencies that do not meet the standards will see a more severe drop in their market cap ranking than expected.

Solution

Projects that meet the following criteria will be included in the top 200 market cap rankings:

1. • Ability to verify the project's supply information with no resistance.
   • Advantage in the evaluation framework in section C.
   • Significant liquidity and trading volume from diverse sources.
   • No significant price differences on exchanges supported by CMC.
   • Projects must meet at least three of the following conditions:

1. Data Accountability Alliance (DATA) partner
2. Compliant and legal
3. Release of API endpoints
4. Active product development and team communication
5. Active community participation
6. Third-party audit for reliability

If a project fails to meet these criteria, even with a large market cap, it will not be included in the top 200 rankings on CMC.

After this update, market cap rankings will be classified into three categories:

• 1-200: Cryptocurrencies with market cap, excluding those that do not meet the criterion 10 standards and projects with low 24-hour trading volume.
• 201+: Cryptocurrencies with market cap.
• Others: Projects with no market cap or unknown market cap.

A report indicates that CoinMarketCap will release more information on liquidity metrics at their first global conference, The Capital, where CEO Brandon Chez will make his first public appearance.

Further Reading

• ETH Locked in DeFi Applications Reaches Annual High
• Taiwanese Payment Giant Ventures into Blockchain, Extending the Application of Cryptocurrency

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