Crypto exchanges showing staggering trading volumes- is it a good thing?July 10, 2019
New crypto traders beware! If you find a crypto exchange claiming incredible trading volumes, be careful. Leading US crypto fund management company Bitwise has recently published a report to SEC citing 95% of exchanges produce fake data on trading volume. And that’s NOT a good thing. Such kinds of inflated information mislead the traders and draw them to an incompetent platform- only to end up with unyielding results.
As per the market reports, a lot of exchanges today are pumping the trading volume though unethical practices like bot trading or wash trading. In fact, some of them are even presenting the trading volume of other exchanges as their own to leverage their platform through illicit means. They take the help of API or MM or bots to present such fraudulent data.
But why do these exchanges fake their trading volume?
“Inflated volume data make a crypto exchange appear bigger in the market. Such pumped-up data also enables the exchange to show higher liquidity than it truly holds. In fact, a staggering volume even catapults the exchange on top of CMC rankings. And, crypto traders usually prefer to trader with exchanges with high CMC ranks. Put simply, exchanges take the misleading inflated route to pull in more traffic to their portal”, stated Sydney Ifergan, crypto pundit and advisor of Decoin exchange.
A bigger pumped-up profile enables a crypto exchange to charge higher fees for projects that are aspiring to list coins on that platform. According to reports, around 100 million USD have been stolen by unethical exchanges with the help of spiked trade volume data.
Pitfall of centralized structure
As per the experts, the possibility of producing fake volume data is abetted by the typical centralized structure of the exchanges. Unfortunately, most of the exchanges you will find now are centralized. As these exchanges are governed by one single central authority, the facts and figures of these exchanges are always opaque to public.
Decentralized structure eliminates the risk
As per crypto experts, a decentralized exchange is the best possible solution here. A decentralized infrastructure is not controlled by one single authority. Thus, such exchanges are always more transparent with their facts and operations which duly eliminates the risk of claiming an inflated volume data. Put simply a decentralized exchange assures a fairer marketplace compared to a centralized one.
Decoin is a decentralized exchange that promises no threat of fake volume data. In fact, it also offers an exclusive revenue sharing protocol that further prevents any attempt to claim inflated data.
“At Decoin, we believe in slow but steady growth. We sincerely condemn any attempt to produce misleading inflated data and we always stand for a fair and reliable trading environment, added in Mr. Ifergan.