Happy 6th Birthday!

Co-authored by Carylyne Chan and Aaron K.

Humble beginnings

One sunny afternoon on the cusp of May 2013, a lone developer sat in his apartment in Long Island City, Queens and quietly launched his latest side project. Intensely curious about the world, and given to tinkering, he often found he could put his engineering skills to good use to solve some of his own problems. This time, his problem was that there was no easy way to value the increasing number of “altcoins” against the value of Bitcoin, a cryptocurrency he became enamored with after first reading the white paper written by the pseudonymous Satoshi Nakamoto.

After a few months of ruminating about how to best measure these cryptocurrencies, he had come across the financial section of a news site describing the market capitalization of equities. It struck him that such a metric would be useful and familiar for those already comfortable with some of these financial terms, and decided this was how he could best present the relative sizes of altcoins.

He set to work collecting the data on these coins and built a very simple user interface on a site to display it. Having created something that looked uncannily similar in the rhythm games space to track player scores globally (he wanted to measure his own performance against others), the design choice was a no-brainer: Make it a list that people can understand at a glance.

Hence CoinMarketCap, circa 2013, was born.

For four years, he worked on the site alone. He shared his site with similar-minded enthusiasts, and flexed his growing skill with search engine optimization. Along the way, there were times when he faced anger and agitation from projects that felt they were not being represented in the right way. When Ripple was added to the site in 2013, it sparked controversy among users; at one point, he even created two versions of the site so that those who were unhappy with how Ripple was being presented on the site could see a version without. All of this eventually led to the creation of the circulating supply method (again, borrowed from the financial market’s “public float” concept).

Growing the team

Late 2017, as the intensity of the ICO fervor pitched, this lone developer had to find help to manage the site for the first time in its history. He turned to his old colleagues and friends whom he trusted, and started hiring them to join his cause. One by one, they brought expertise to the team: engineering, support, advertising operations, business development, marketing, design, and more. As a first-time founder, he did his best to keep things running smoothly as the company grew in prominence along with the industry. Committed to neutrality, he completely bootstrapped the company, turning down outside funding so as not to let the site’s direction be influenced by investor pressure.

In a similar vein, he preferred not to be in the limelight or attempt to sway public opinion, instead letting the company and product shine. However, not everyone was of the same mind; in January 2018, the Wall Street Journal tracked him down to his apartment, and knocked on his door. The world was introduced to the man behind the then-global Top 100 site, Brandon Chez.

Who watches the watchmen?

“Quis custodiet ipsos custodes?” is a phrase found in the work of Roman satirist Juvenal, which roughly translates to “who watches the watchmen?” It draws attention to the infinite regress of enforcing standards. Such timeless wisdom is instructive in view of increased calls for CoinMarketCap to police the space.

A cursory glance at our Zendesk tickets (which can number in the high hundreds to thousands per day) reveals a bevy of exhortations to delist and/or denounce specific projects/exchanges for misconduct. These usually take the following forms:

• Remove Exchange X because it is faking its volumes!
• Project X is a scam. Please delist it otherwise you are aiding and abetting these crooks!
• Please remove our pairs on Exchange X because we do not want our project to be associated with wash trading.
• Exchange X has stolen my funds! Please issue an alert!

The degree of certitude with which these complainants make their case – however legitimate and well-intentioned they may be – belies the complexity of drawing the appropriate conclusions. Where there is incontrovertible proof (e.g. regulator watchlists or a mea culpa from the team), we have acted swiftly and decisively in issuing factual alerts.

However, more often than not, the evidence provided is circumstantial: He says, she says. A self-selected collection of unverifiable information (e.g. reddit posts or screenshots of chat logs/emails). Consider the following case: A complainant claims that an exchange had stolen his funds and furnishes screenshots of the ‘pending withdrawal’ status dating several weeks back. Even if we were to assume that the screenshots were genuine, it is not easy to ascertain whether the impeded withdrawals were a consequence of malicious intent on the exchange’s part or account termination/freezing policies that the complainant had triggered through his own actions.

FUD (Fear, Uncertainty, and Doubt) is not unique to the crypto space, but there is something about the blend of ideology, vested financial interests, technology, and tribalism that accentuates this phenomenon. Consequently, one has to be mindful that a preponderance of “evidence” does not always confer truth.

Request for us to police an exchange for return of funds

Threats of legal action against us for the activities of others

Outright rudeness

When dealing with so much conflicting and unverifiable information, there is only one viable course of action – defer judgment and let the market decide. This is not without precedent. History is replete with examples of “heretical” ideas that catalyzed scientific progress. There was a period of time when one could get burnt at the stake for suggesting that the Earth revolves around the sun. Such was the fate of Giordano Bruno. Ideas that offend deeply are sometimes the very ones that are worth protecting, for it is the market that is the final arbiter of “right” and “wrong”.

The alternative, a more paternalistic and curated approach as advocated by some, runs the risk of creating misaligned incentives and moral hazard. To wit, observe the role of credit rating agencies in the 2008 financial crisis. Rather than go down this slippery slope, our approach towards “regulating” the space is therefore not through censorship or making arbitrary judgment calls, but by contributing to an environment that supports the free flow of ideas. We cannot predict how these connections will unfold, or which projects will succeed or fail. But they will always leave an idea or a lesson behind, to be modified, taken over, or improved.

Working towards a solution

Underscoring our commitment to remaining neutral by avoiding censorship and judgement of the (de)merits of specific projects, we believe that there is value in publishing a wider array of data points to enrich the decision-making process of our users.

With this in mind, we are delighted to announce that we are working with partners to address this multifaceted issue.

Data Accountability & Transparency Alliance (DATA)

DATA seeks to promote greater transparency, accountability, and disclosure from projects in the crypto space. This initiative is underpinned by our belief that the provision of additional data points would: (i) empower our users to make more informed decisions, and (ii) provide a means for projects to differentiate themselves through enhanced disclosures.

The overarching objectives of DATA are to:

1. Review, align, and enhance reporting standards across the industry.
2. Identify gaps, propose strategies and measures to enhance data accountability and transparency.

Phase 1 (Exchanges): Trade and order book data

[Mandatory by June 14, 2019]

1. Live trading data: Ongoing live trade data provided via API (example)
2. Live order book data: Ongoing order book data provided via API (example)

These data points will enable analyses to determine measures such as liquidity, order book depth, spreads, and other meaningful measures. With these additional data points, users will be better able to contextualize the pricing and volume being reported on the site and API.

Any exchange that does not provide this mandatory data to us via a new or updated summary endpoint will be excluded from all price and adjusted volume calculations on the site.

Phase 2 (Exchanges): Enhanced data and metrics

For phase 2, we are planning to grow the types of data available for analysis and enable filtering to allow deeper analyses and views into the exchanges’ operations.

1. Exchange hot/cold wallet addresses: Proof of Solvency/Reserves/Liabilities, or at least indicative numbers to enable users to determine solvency of selected exchange
2. Live market-pair trading status (example “status” field): More granular trading data at the market-pair level for further analysis
3. Live wallet status (example “can_deposit” and “can_withdraw” fields): Summary status of all possible deposits and withdrawals across currencies
4. Historical trade data (example): All time-stamped historical trades for tracking, and in some cases, compliance

While these are not finalized yet, DATA partners have pledged to observe and fulfill these new conditions if they are required.

Phase 3 (Exchanges & Crypto projects): Self-reported information

To give every project on the site a chance to demonstrate the effort it has put into promoting accountability and transparency, we will be introducing self-reporting channels for projects to provide additional information.

• We stress that these are purely voluntary reporting, and every field is optional.
• The level to which each project self-reports the data will be factored into its ranking. This is in line with DATA’s intent to incentivize greater levels of disclosure and transparency without the need for censorship or arbitrary judgment calls.
• Projects already listed on CoinMarketCap that do not self-report additional information will continue to be listed without prejudice.

These are the fields that will be introduced, for cryptocurrencies and exchanges respectively (subject to changes/additions):

For cryptocurrencies:

1. Industry/Sector
2. Platform (e.g. Ethereum, Stellar, Neo)
3. Consensus Algorithm
4. Team informationLinkedIn URLs, team page
   
5. Investor information
6. Supply schedule (with block explorer links and reserve addresses)
7. Github/Developer Activity
8. Traction/Progress updates/Partnerships/MVP/Independent media coverage
9. Community/Social initiatives
10. LocationProject team
    Company registration – Business registration proof online
    
11. User base breakdown (by geography)Targeted
    Existing
    
12. History of Rebrands
13. History of Swaps
14. Licenses
15. Milestones/News
16. EventsMajor project milestones/news (e.g. halvenings, swaps, announcements)
    Community/conference events
    
17. Available jobs at the project

For exchanges:

1. Launch Date
2. Tagging (e.g. centralized / DEX / derivatives, fiat on/off-ramps, trading incentives)
3. API documentation
4. Summary API endpoint
5. Account Termination/Freezing policies
6. Exchange should support direct links to specific market pairs without the need to log-in
7. CMC ID mapping (to minimize confusion arising from projects sharing identical tickers)
8. Team/Backers informationLinkedIn URLs, team page
   
9. Traction/Progress updates/Partnerships/MVP/Independent media coverage
10. Global page rank/traffic
11. Community/Social initiatives
12. Registered business addressCompany registration – Business registration proof online
    
13. Licenses
14. User base breakdown (by geography)Targeted
    Existing
    
15. Cybersecurity measures
16. Fiat on/off-ramps (please specify the fiat pairs)
17. Fee structure
18. Trading Incentives (e.g. transaction mining, zero fees)
19. KYC (None | Optional/Tiered | Mandatory)
20. OTC/Derivatives (e.g. Options, Futures, CFD, Leverage/Margin)
21. History of Rebrands
22. Milestones/News
23. EventsMajor project milestones/news (e.g. halvenings, swaps, announcements)
    Community/conference events
    
24. Available jobs at the project

Sunlight is the best disinfectant

Membership to DATA is predicated on action taken on an ongoing basis to promote transparency, as opposed to any other metric. The alternative, a more paternalistic and curated approach as advocated by some, runs the risk of creating misaligned incentives and moral hazard. Every exchange has its own set of challenges, and we should take these challenges into account at every level to help inform the path forward in terms of data transparency. Again, having more information, and more heads, is better than less, in our opinion.

Collecting the data is just the first step. With a larger dataset, more analyses can be run, and enable the introduction of new, meaningful metrics.

Now: Join the transparency movement

We welcome you to join our collective effort to drive greater visibility into the data in the crypto space.

1. Exchanges who do not make the mandatory Phase 1 data (live trade and order book data) available will be automatically excluded from price and adjusted volume calculations.
2. The changes will go into effect in 45 days, starting June 14, 2019.
3. To view the current list of exchanges that already provide this data and will remain included on June 14, please see this link.

Partner up

Other than the required and self-reported data, DATA partners will be involved in the following new initiatives:

• Biannual roundtable on suggested updates to the transparency policy, and evaluation of the impact of data transparency
• Harmonization of API standards using CMC ID
• Funding proof-of-concept or prototypes related to transparency initiatives

We are thankful for our partners, who have stepped forward to become the flag bearers for the next phase of crypto data openness, communication, and accountability. We look forward to having you join us too, and driving the transparency movement forward.