Acquired by Binance, is CoinMarketCap still believable?

Author: Joyce

Source: Blockchain Outpost

 

A certain degree of trust is required between the exchange and the data provider, and the relationship between CMC and Binance will not be able to sort out the boundary between the two. Yesterday, Binance officially announced the completion of the acquisition of cryptocurrency information website CoinMarketCap. Zhao Changpeng said that the acquisition reached an oral agreement a few months ago and officially ended on March 31. Protected by confidentiality agreements, Binance cannot disclose the transaction amount. However, TheBlock reported previously that people familiar with the matter said that the acquisition was close to US $ 300 million, mainly in the form of equity and BNB.

A traffic-oriented acquisition?

People familiar with the matter said that Binance's acquisition focused on the strong traffic of CoinMarketCap (hereinafter referred to as CMC). Zhao Changpeng emphasized in today's AMA that the acquisition is not to import all its traffic into Binance, but to enlarge its own ecology.

CoinMarketCap was founded in 2013 by Brandon Chez of Delaware, USA. After 7 years of development, the website has become one of the most visited websites in the field of cryptocurrency and the main source of market data. Alexa website data shows that CMC is currently ranked 555 on global Internet sites, with an average daily visit duration of 3 minutes and 40 seconds. The name of the currency arrangement is 1682, and the average daily access time is 9 minutes and 27 seconds.

According to SimilarWeb data, CMC has attracted 370 million visitors in the past six months, and Binance has 230 million visitors. CMC is nearly 60% higher than Binance. But from the website perspective, we can see that although the user stickiness of the Binance website is better than CMC (the nature of the exchange), CMC is better than Binance in terms of user volume.

Comparison of CMC and Binance visitors in the past 6 months, yellow: CMC; blue: Binance Source: similarweb

Previously, Zhao Changpeng said in an interview with the media that in 2019, Binance made a total of 9 wholly-owned acquisitions (there are currently only three announced: JEX, DappReview, WazirX), invested 21 companies (including FTX, etc.), while funding 59 developers. The purpose of this move is to develop Binance products and businesses, and acquisitions are relatively low cost.

CMC is not as "stable" as imagined?

So why is CMC with strong traffic willing to accept this acquisition?

In 2019, a report submitted by digital asset management company Bitwise to the US Securities and Exchange Commission (SEC) found that 95% of crypto exchanges that provide data to CMC have false trading volumes. Startups such as Nomics, Messari, and CoinGecko seize the opportunity to put pressure on CMC, especially among institutional investors, because institutional investors need reliable data and cannot allow their clients to be manipulated.

At the same time, Carlyyne Chan, the current CMC interim chief strategy officer, said in an interview, "We will learn a lot from Binance to understand how they manage a better team in terms of best practices. At the same time, we can learn from Binance To some basic security and financial aspects, because their team size is much larger than ours, and the efficiency of expansion is much higher.

From this we can also snoop out that there are also some problems within the CMC in terms of team management and financial security. The CMC founder's resume also shows that Brandon Chez may not be very good at management.

Brandon Chez graduated from Rochester Institute of Technology (RIT) in computer science in 2009. He has worked for weapon maker Lockheed Martin, media talent website Mediabistro, and a company that saves business travel costs for users. On April 28, 2013, Brandon Chez registered the domain name coinmarketcap.com, developed the website in Python and went live in early May.

After the announcement of the acquisition, Brandon Chez, the founder and former CEO of CMC, announced his departure, with the current chief strategy officer Carylyne Chan as interim CEO. "Although I can make more contributions, I think it is not absolutely necessary to be a leader." Brandon Chez said in the open letter. After running the company for 7 years, he will plan to return to his family, but still serve as a CMC consultant.

Binance says CMC will operate independently, but difficult to question

Despite the close cooperation between the two companies, CMC will continue to operate as an independent business entity. The Binance side said that although Binance and its platform BNB are listed on CMC, CMC and Binance are independent entities, and maintain strict independence policies between each other: Binance is not related to CMC ranking, while CMC is Binance's operations have no impact.

Zhao Changpeng expressed the hope that in the future, CoinMarketCap will have 10 times or even 100 times room for growth, and make it easier for more people to obtain valuable data. "We cannot sacrifice one company to achieve another. This is wrong. Binance has proven its competitiveness and does not need to capture the value of CoinMarketCap."

However, some Binance employees revealed that Binance is considering major changes to CMC's business model, from an advertising-based model to a subscription model, which will charge transactions on the website. At present, the main revenue model of CMC comes from advertising revenue, and most of it comes from Google advertising display.

In addition, some industry insiders pointed out that after the acquisition of CMC by Binance, the outside world may have some doubts about the neutrality and objectivity of CMC data.

CMC, which has been questioned for the authenticity of the data, has established an intimate connection with its clients. It is undoubtedly more "indifferent to jump into the Yellow River". "When you run an exchange and may be the largest owner of BNB, how can you convince people that rankings and trading volume are real?" Said Andy Cheung, former chief operating officer of OKEx and founder of the crypto derivative platform ACDX .

In addition, whether Binance will indirectly obtain friend business data through CMC is also a matter of concern. Clay Collins, founder and CEO of Nomics, said that a certain level of trust is needed between the exchange and the data provider, and the relationship between CMC and Binance will not be able to sort out the boundaries between the two. "If other exchanges feel that Binance is collecting data through CMC, then these exchanges will be less willing to provide low latency and high granularity data."

In short, this acquisition currently seems to be less friendly to the development of CMC, but for Binance it is an important part of its ecological construction.