Cryptocurrency indices and data provider CryptoCompare has been working hard so users can easily spot good and bad cryptocurrency exchanges.
Announced on Wednesday, the organization has created a benchmark ranking of more than 100 active exchanges located all over the world, providing users with a
“comprehensive, granular and reliable source of information on the best trading venues.”
The Exchange Benchmark of CryptoCompare was created to address the need for trustworthy metrics to assess the large number of crypto exchanges now offering their services across the globe.
The firm explains:
“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 first analysis, centered on exchange data from May 1–31, these data shows that the top 3 most trusted exchanges are Coinbase, Poloniex and Bitstamp in descending order. The others are BitFlyer, Liquid, itBit, Kraken, Binance, Gemini and Bithumb, they all make up the top 10 trusted exchanges in the world.
Using the benchmark system, crypto exchanges are rated from high to low – using any of this ratings AA, A, B, C, D, E, F – this is based on their cumulative score when compared to other exchanges involved in the rankings.
The components of the ranking includes: legal and regulatory, geography, team and company, investment, trade surveillance, data provision and market quality. The company’s analysis is centered on public information, and its procedures has been clarified in a report.
The benchmark information will be presented to the public on the organization’s website from Thursday this week, a spokesperson told CoinDesk.
CryptoCompare refers to research showing that many exchanges are just wash trading and using incentivized trading schemes to pump up volumes.
CryptoCompare says The Exchange Benchmark, shows the problem has been worsening as time goes on, with lesser quality exchanges (ranked C-F1) growing market share by a surprising 30% in the last twelve months.
CEO and co-founder of CryptoCompare 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.”
Bitwise Asset Management in recent times published a list of the ten crypto exchanges that it found are experiencing real volume.
It said in a report released in March that around 95% of volume is faked, and that the real spot market for BTC basically exists on 10 crypto exchanges carrying out nearly $300 million in trading volume daily. The released list also takes in Bitfinex, Coinbase, Gemini and Binance, along with Bitfinex and Bittrex, which are not part of CryptoCompare’s top 10.