Cryptocurrency exchanges you can trust. Big overview of crypto platforms

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As the market matures, regulation tightens and competition intensifies, the volume of fictitious transactions on leading cryptocurrenc...

As the market matures, regulation tightens and competition intensifies, the volume of fictitious transactions on leading cryptocurrency exchanges gradually decreases. However, the problem remains relevant - most platforms still display fake trading volumes.
CoinMetrics researchers have developed an original approach to assessing the degree of reliability of exchange volume information. With its help, it turned out that the data of just over a dozen trading floors are trustworthy.
We figured out the new methodology and found out on which exchanges the most reliable information about trading volumes.

Key

  • CoinMetrics, an analytical company, has developed a comprehensive approach to assessing the trading volumes of exchanges.
  • Components of the new approach: correlation of indicators between exchanges, comparison of trading volume and traffic on the site, assessment of quality indicators.
  • The indicators of only 13 trading platforms are trustworthy.
Based on quantitative and qualitative indicators,   CoinMetrics' Trusted Volume Framework is designed to improve the accuracy of assessing the trading volumes of exchanges and the objectivity of comparing platforms with each other.
Researchers evaluated popular sites in three stages:
  • determining the degree of correlation of trading volumes between platforms;
  • analysis of web traffic;
  • analysis of a number of qualitative indicators.
The first metric  illustrates how closely the platform price data correlates with the corresponding indicators of exchanges with a long history and well-established themselves in the market.
“In the course of our research, we looked at the hourly trading volume of regulated US exchanges that have been operating for more than one year,” explained CoinMetrics. “These marketplaces support the fiat US dollar, which further enhances their credibility. This list includes Bitstamp, Bittrex, Coinbase, Gemini, itBit, and Kraken. Information on trading volumes was collected for the period from June 1 to June 30, 2020 ".
Experts emphasized that during periods of increased volatility, surges in trading activity on various exchanges should be of approximately comparable "magnitude". Conversely, during a sideways movement, the decline in activity on different trading floors should occur approximately evenly. Consequently, exchanges with fake trading volumes will stand out against the background of platforms that broadcast more or less reliable data.
The image above illustrates the correlation of trading volumes of various exchanges for some popular pairs with the indicators of the “trusted” group of trading platforms created by CoinMetrics. Assets are sorted by tightness of correlation with Bitcoin.
According to analysts, any exchange with a correlation above 80% passes this test. The table below shows that the top three are the American trading platforms Coinbase and Kraken, as well as the oldest European exchange Bitstamp. The most visited Binance is in 4th place.
The second stage of verification  involves assessing the relationship between the exchange's reported trading volume and its daily web traffic.
“In theory, the trading volume on the exchange should correlate to some extent with the number of traders visiting the site. An increase in the number of users should cause an increase in volume, and vice versa, ”CoinMetrics stressed.
Researchers are convinced that exchanges that broadcast "bloated" data should have a relatively high ratio of trading volume to traders compared to other trading floors.
Analysts compared trading volumes on various exchanges with the number of page views of their sites in 24 hours. The result is illustrated in the diagram below.
The next graph shows a similar comparison, but not page views are taken into account, but visits (according to SimilarWeb).
Bibox has the highest indicator - $ 2502.67 per trader. Therefore, the likelihood of fake data on this trading floor is extremely high.
"Any exchange over $ 50 is less credible than regulated exchanges, where the average is $ 21.96," the researchers noted.
The dot plot below shows that exchanges with a relatively small ratio of visits to visits to trading volume are located close to Coinbase, Gemini, Bittrex and other trusted exchanges.
OKEx, HitBTC, Huobi, Bibox, LBank, Liquid and OKCoin stand apart from the "trusted" trading platforms.
During the  final phase of the  study, CoinMetrics assessed exchanges on a number of qualitative parameters, including:
- support for  REST  API and WebSocket protocol;
- availability of historical trading data and other information in real time;
- availability of trade policy and market surveillance;
- the requirement to undergo KYC procedures for basic trading operations;
- proposals for deposit insurance;
- the ability to deposit and withdraw fiat money;
- the amount of trading commissions;
- listing standards, etc.
Coinbase, Binance.US and Gemini are among the top three in terms of quality.
Any exchange that did not score at least 50 points in this test failed. Based on the data in the table, Bibox and OKEx are on the verge of a foul, where there is a high ratio of trading volume per visitor. Also Kucoin and ZB.com have low points.
Below is a summary table with the results of three tests:
As you can see, only one exchange, OKEx, failed all three tests. Four trading platforms - Bibox, ZB.com, LBank and HitBTC - have successfully passed only one stage.
Fourteen exchanges managed to pass all three tests:
  • Binance.
  • Binance.US.
  • Bitbank.
  • Bitfinex.
  • bitFlyer.
  • Bitstamp.
  • Bittrex.
  • CEX.IO.
  • Coinbase.
  • Gate.io.
  • Gemini.
  • itBit.
  • Kraken.
  • Poloniex.
The list is current as of July 1. CoinMetrics will update it periodically.
***
The problem of fake trading volumes on exchanges is still an issue for the industry. Many firms seek to improve the methodology for assessing activity on trading floors, offering original approaches. As a result, the ratings of trusted exchanges for different analytical resources may differ from each other.
Below are the services trying to weed out fake volumes of trading platforms:
CoinMetrics researchers have found that exchanges with relatively high volume-per-trader ratios are likely to broadcast data that is far from reality. Such platforms usually do not get enough scores on quality scores.
An integrated approach to assessment, which involves the use of quantitative and qualitative indicators, allows you to weed out many trading platforms with overestimated indicators of activity, and in the future - to build more objective ratings.
It is possible that as competition between exchanges further intensifies, legal uncertainty is removed, and the industry as a whole matures, the problem of fake trading volumes will continue to lose its acuteness.

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Crypto Currency Magazine: Cryptocurrency exchanges you can trust. Big overview of crypto platforms
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