We all have heard about the Binance Effect, as now many prominent crypto experts started debating the notion that it has a huge influence over CoinMarketCap after it got acquired in March last year so let’s find out more in our Binance news.
For a few years, CoinMarketCap was the main analytic website for cryptocurrencies and exchanges. There were a number of competitors but this website was still the main source of choice for users despite the major discrepancies in the data published. The CEO of FTX derivatives exchange Alameda Research Sam Bankman Fried, opened a new topic on whether the Binance acquisition and the Binance effect were beneficial for the CMC platform.
1) Unpopular take: @cz_binance partially saved @CoinMarketCap.
— SBF (@SBF_Alameda) October 4, 2020
The opening statement claimed that binance actually saved the outlet but it also enhanced its competition. CoinGEcko for example is seen as the leading rival of CMC and got caught up with it because of a reputation bias:
“A perception of bias did the damage. But there was also actual bias.”
The analyst used the example of the Binance rival OKEX which was ranked at 37th where in reality it is one of the world’s biggest crypto exchanges. He continued to say that coinGEcko is a better product but CMC improved quite a bit lately. CMC data was questionable a year ago with 80% of the top exchanges being fake as SBF explained. Binance CEO Changpeng Zhao was critical of the CMC data before he even decided to purchase it himself:
“Why do exchanges fake volumes? @CoinMarketCap is [the] highest traffic website in our space, and biggest referrer for all exchanges. Ranked high on CMC has benefits for getting new users. BUT at the expense of DESTROYING CREDIBILITY with pro users. Many forget the later part.”
SBF continued the narrative saying that CMC improved and became a better product in the seven months after It got acquired by Binance. With that said, the competitors are improving as well and Binance bias is now prevalent on the site. The bottom line is that Binance has a huge influence over the entire industry and it even attempts to become larger. Its recent foray in DeFi and plugs in projects that choose the Smart Chain over the industry standard ETH is also another example of its dominance. CMC could have improved but it is still owned by the biggest centralized exchange in the world so being bias is still possible. CZ commented:
Interesting thread. No much we can do about perception. There is a lot we (@CoinMarketCap team) can do about improving the product.
I also promote other info sites like @coingecko. We need more products/teams in the space.
Still early days. https://t.co/PolXkT2OWO
— CZ Binance (@cz_binance) October 5, 2020
DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]
Discussion about this post