The end result of Binance Community Coin of the Month – Round 8 was that the top 3 coins Mithril, NKN and Libra Credit were disqualified, leaving 4th place Polymath to win the vote. The CEO of Binance admits that all teams in this round acted with high integrity, and that the cheating came from various community members and investors that manipulated the vote count.
Disqualifying coins because of fraudulent votes is not the best action. There are 3 main reasons for this.
1. It punishes people who took no part in the cheating. Many voters were completely honest. All those who voted for the disqualified coins lost 0.1 BNB while doing nothing wrong but more importantly the coin they supported is disqualified. In democratic votes for politicians, it has, to my knowledge, never been the case that a candidate was disqualified as a result of fraudulent votes being cast for them.
2. While it discourages fraudsters from voting for the coin they want to win, it encourages them to vote for coins they want to lose as this will disqualify them. It’s still possible to game the system.
3. It lowers Binance’s credibility. How many fraudulent votes is sufficient to disqualify the project – where does Binance draw the line? I would argue that it’s very unlikely that any coin has ever had 100% legitimate votes, so Binance has to draw the line somewhere. Drawing the line after the results are in isn’t right, as it gives Binance an opportunity to exert a biased ruling for or against a coin. Even if Binance isn’t biased, it is the possibility of bias that does the damage, not only a biased ruling itself.
Suggestions for future coin votes
1. KYC required. This is the simplest way to strongly combat fraudsters. Setting up KYC makes it much more difficult for rich players to exploit the system.
2. Do not show vote count until it is over. This is because cheaters could discourage voters. For example, a group of cheaters could vote en mass for one coin, making other coins lose hope and so choose not to waste their time buying BNB and paying 0.1 BNB in fees. Ideally the vote count would also be hidden to the internal Binance team to ensure no information is leaked.
3. If fraudulent votes are found, instead of disqualifying the coin they voted for, remove those votes and suspend the fraudsters’ binance accounts and the winner is whoever has the most votes after this step is complete. This is the most sensible and direct way to deal with cheaters.
4. Simplify the voting process. Allow people to vote for only 1 specific coin. There’s no need to allow for multiple coins. This would definitely make it easier for people to understand and would likely increase the number of people participating in the vote. I do not have statistics available on how many people vote for multiple coins but I suspect it is very low.
I came away from this feeling that the real winners here were those whales making fraudulent votes. They invested before they pumped up the vote count with fraudulent votes, then dumped on everyone who was excited to see their coin have a chance of being listed. NKN had a huge lead at first, then Libra, then Mithril. A top player could have orchestrated all of this and made massive profits off the backs of the smaller trader who don’t have the power to influence the vote count. I hope that Binance makes changes for next time.
Anthony Rose 