CryptoCompare Puts Forwards Benchmark for Cryptocurrency Exchanges
Today, CryptoCompare launched a benchmark which lists 100 active spot exchanges from all over the world, providing a “comprehensive, granular and reliable source of information on the best trading venues.”
CryptoCompare’s Exchange Benchmark was created due to a lack of reliable metrics that can be used to evaluate which cryptocurrency exchanges offer reliable services.
The company has stated:
“Employing both a qualitative (due diligence) and quantitative (market quality based on order book and trade data) approach, the product does not hinge on aggregate volume data but, rather, uses correlation-of-volume-to-volatility and standard-deviation-of-volume as inputs to CryptoCompare’s 30+ metrics. This is due to existing issues with volume manipulation, wash trading and trading incentives.”
The exchanges are ranked based on exchange data for the period May 1–31, the three most reliable exchanges being Coinbase, Poloniex, and Bitstamp in descending order of ranking. The top 10 ranks also include BitFlyer, Liquid, itBit, Kraken, Binance, Gemini and Bithumb also in descending order.
The exchanges are graded in the system from high to low, through AA, A, B, C, D, E, F – based on their total collective score proportionate to the pool of exchanges featured in the rankings.
The benchmark ranks the exchanges according to: “geography, legal and regulatory, investment, team and company, data provision, trade surveillance and market quality.” The firm has explained in a report that their analysis relies on public information.
CryptoCompare’s research has shown that many exchanges were involved in wash trading and have also implemented incentivized trading schemes to manipulate volumes.
According to the firm, the Exchange Benchmark has revealed that the situation was worsening, with lower quality exchanges (ranked C-F1) getting an additional 30 percent of the market share in the past 12 months.
CryptoCompare co-founder and CEO, Charles Hayter, said:
“In response to industry concerns over inflated volumes and the lack of reliable metrics for assessing cryptocurrency exchanges, we are excited to launch the CryptoCompare Exchange Benchmark. We look forward to bringing greater transparency to the digital asset class and improving decision-making for market participants by providing a dataset they can trust.”
CryptoCompare said it will incorporate its Exchange Benchmark into its aggregate indices to generate reference rates for the leading exchanges.
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