Image: Supplied Fake cryptocurrency trading volume is deceptively multi-faceted, so fighting it requires more holistic exchange metrics.
Fake trading volume is the most open secret in cryptocurrency , with estimates of fake volume ranging from about 90% to 95% .
But knowing is only half the battle.
In the absence of centralised market controls and a tight global regulatory framework, there’s little to be done to actually prevent fake volume on exchanges. So in true cryptocurrency fashion, the solution has to come from the community.
Once you know where the real trading volume is, the theory goes, it’s easier to find the real market among the noise. This puts trading information sites such as CoinMarketCap , LiveCoinWatch , CoinLib , Messari and CoinGecko at the centre of these efforts.
So, the problem which lands on the shoulders of these kinds of sites is to devise a system for identifying real trading volume in a scalable way. Myriad causes
There’s no perfect answer. One of the problems is that there are several different reasons an exchange would have fake volume.Consider BitMax, says CoinGecko co-founder Bobby Ong. It supposedly has about 14 times more trading volume than Binance, if you believe it’s self-reported metrics."Is it really the case that they’re 14 times more liquid than Binance?" he asks, quite rhetorically.Its problem is a so-called "trans fee mining system" where traders can earn the exchange’s native token from making trades, which compensates any trading fee incurred.This system is not necessarily bad in itself, in that it’s […]
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