The Great Repeal Of China

It’s been nearly eight months since the Bitwise report proved more than 95% of volumes in the crypto industry are fake. Since then, there has been little progress to fight back against this exorbitant amount of wash trading. In fact, it seems to have gotten worse.

Messari crypto has been one of the first to act with their ‘Real 10’ indicator, which shows the volumes of the 10 exchanges that were deemed by Bitwise to be wash free. Hats off to Ryan Selkis and the team for recently revamping the site but I’m still waiting for the chart you promised me showing the ‘Real 10’ graph over time.

Another website that is far more visited has now adjusted their algorithms to try and weed out the wash trading.

By introducing a new metric called ‘liquidity’ Coin Market Cap hopes to more accurately display which exchanges have larger real volumes.

Some of you may recall that I’ve had my grievances with CMC before and in January 2018, even tried to lead a one-analyst boycott of the site. I’ve since rescinded somewhat and have visited the site on occasion, mostly to see what they’re up to and have even used some of their stuff in my analysis a few times since then. I would like to offer warm applause for at least trying to clean up their reporting.

However, while a good effort, the introduction of this new metric is a far cry from rectifying the issue. What’s to stop the bad actors from simply adjusting their algorithms to game the new liquidity measure?

I understand that CMC would rather simply report the data they receive and not interfere. However, this tactic of creating new measures will almost certainly lead to a red queen effect, in which players are forced to run as fast as they can only to stay in the same place.

Exchanges and will update their algos to suit the method of reporting and then the reporting sites will need to update their algos again and so on and so forth ad nauseam.

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