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Coingecko Introduces A New Rating System For Exchanges

By Jofor a.k.a. Cyberczar - 2019-05-17

There have been insinuations that many exchanges display fictitious volumes that are far more that what they actually trade in the quest to create false impression of high liquidity. This has been one of the challenges of the coin market in which the books of the platforms are not easily accessible to regulators.
This has prompted Coingecko one of the leading data aggregators in the industry to launch a new algorithm that would rate exchanges based on the actual volume traded not on what they display on their sites.
The company is working on this project to make sure that its users have access to reliable and reproducible information that will enable them make informed decisions about any asset listed in specific exchanges.
The new algorithm called “Trust Score” which was implemented on the platform’s website on May 13 takes cognizance of the web traffic, reported features of the order book and the volume reported by the exchange.
The concept is to rate exchanges based on factors that they cannot control such as web traffic which is provided by third party services and make comparison with the information provided on the exchange’s platform regarding what volumes of coins that are traded on it.
CoinGecko Trust score
“Trust Score” in action
This would contribute in making sure that rogues do not lure investors with false data, thereby creating a false sense of security when they use such exchanges. The Coingecko order book analysis comprises (i) Bid/Ask Spread and (ii) ± 2% Depth Cost which in combination with the volume the exchange publishes give better insight on the liquidity of any pair traded on the exchange.
The priority given exchanges will be based on the spread and the depth of the order book and not just on the volume. The essence is to make manipulation of the volume by exchanges of little essence.
The Trust Score will be reflected on the Coingecko platform as either Good, Fair or Poor with colors Green, Yellow and Red respectively giving users clear insight into what pairs are desirable in any exchange.
This is one of the many strategies that Coingecko is working on to improve transparency of the Coinmarket.
More about "Trust Score": https://blog.coingecko.com/trust-score