It should be no surprise at this point that crypto is laden with scams, false marketing, propaganda, biases, etc. Any possible misconception or misdirection that you can imagine is taking place in crypto. This happens in any emerging industry as some bad actors will always exist and will always stand at the gates and try to take advtangage of the newcomers.
As someone who’s been in the space for a while, it’s pretty easy for me to spot crypto scams. Whether it’s a gut feeling or a tangible piece of evidence that makes me weary of using some type of product, there is always a way to identify bad projects and stick the cautious side of the spectrum.
For newcomers, however, it’s hard to tell good projects apart from bad projects. Some cases are obvious even for a newbie, but other cases require a great deal of research and a certain level of expertise.. which these users often do not have.
Ranking algorithms changed the face of the internet over the past decade. Google emerged as the far and away leader in this category and provides us all with an easy to use, fast and effective engine to search the trillions of pieces of data that are on the internet.
Without ranking algorithms and search engines, the internet would be one cobbled together aggregate of data and it would be near impossible to find what you’re looking for. With all the bad that comes with Google as a massive corporation, there is still plenty of good there as well.
Enter Nomics x Nexo.
Nomics is a ranking company in the crypto space. They’ve recently partnered up with Nexo — a crypto lending platform (which also happens to frequently advertise on our https://leofinance.io interface) — to create a new kind of product review algorithm for the crypto space.
"Nomics ranks crypto products within categories. Currently, it provides rankings for five crypto categories: wallets, credit lines, tax services, custody solutions, and OTC trading desks. The startup uses an algorithm to approximate reputation by sorting through referral links, tweets, Reddit mentions, blogs, and other online sources.” Decrypt
"Important to note: The rankings do not necessarily tell you which product is best. “We crawl the web, which is kind of an undertaking,” Collins said. “It’s basically driven by many of the same papers that Google has published about how to gauge reputation. So the purpose of the algorithm is not to say who's the best. What we're looking at, primarily, is how does the market see these?”” Decrypt
What they’re doing is essentially creating a Google-like way to rank products & projects in crypto. The outcomes of this can be varied as it is a centralized product with a hidden algorithm.
Just as Google manipulates the data, so too can Nomics. One example of the possible biases & centralization is already available in their rankings as their partner (Nexo) is ranked #1 for crypto credit-line products:
"One example of “possible impartialness” we noticed is that Nexo is the top-ranked crypto credit line product with a reputation score of 969. Collins assured us Nomics approached Nexo after the firm was ranking number one.” Decrypt
They did go on to say that Nexo is a clear winner in the category and their algorithm ranked Nexo the same as it would any other company. Who knows.. it’s always hard to tell with these kinds of centralized ecosystems. I’ll give them the benefit of the doubt since Nexo is a relatively large crypto-lending platform (but is it bigger than things like Compound and MakerDAO? — I haven’t done the research yet).
"“We're drawing inferences from Twitter mentions, from Reddit mentions, from mentions on even random web pages. We look at each link to the product page or homepage, whatever we have, and try to gauge the reputation of those inbound links. Then we try and figure out which of these products the market deems to be most important. That's fundamentally what drives the algorithm,” said Collins." Decrypt
Biases and centralization aside, I think this is a great product for the crypto space. If they stay true to the mission of weeding out bad actors and malicious projects, I believe that they will contribute to crypto in a positive way. Whenever I introduce people to crypto, I always have to give them all sorts of warnings about what projects to steer clear of.
I essentially tell everyone I know that when you get into crypto, don’t ever send your money to any exchange, project, protocol, etc. without having done countless hours of research on exactly how that project works.
With all the DeFi farming and what-not that’s happening out there, projects are offering people ridiculous returns. If it sounds too good to be true, then it probably is.
I wouldn’t mind having a few “Google algorithms” in crypto that help us weed out these shitcoins and shitprojects, but to wear my skeptic hat for a minute — be weary of the algorithms just as you would be weary of crypto projects offering high yields and “risk-free returns”.
Stay vigilant and DYOR!
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