Shimmer has the capability to spot and scrutinize market rigging actions and dubious trading on Bitfinex.
The exchange anticipates that the embedding of Shimmer in trade matching engine will enhance market transparency and integrity.
Currently, Bitfinex’ core group will receive alerts through email in case Shimmer identifies dubious trading activity on any of the tradable assets listed on its platform, including leveraged trades and futures.
Bitfinex trusts that Shimmer will aid in stopping price rigging methods such as layering and wash trading.
Paolo Ardoino, CTO of Bitfinex, explained about the new surveillance system:
“Comprehensive market and trade surveillance capabilities are integral to operating a leading cryptocurrency exchange. […] Bitfinex has chosen to develop its own state-of-the-art surveillance system. This will help to assure that potentially manipulative practices are rooted out and suspicious behaviour detected.”
Ardoino additionally explained that “Shimmer processes the entire order and trade data and tries to find patterns for layering, spoofing and other manipulative practices.”
He also pointed out that with the purpose of preventing false triggers due to algorithms involved in high-frequency trading, the network “can be taught to have different thresholds depending on the activity of the user.”
Ardoino disclosed that Bitfinex intends to transform Shimmer into open source in the months ahead, but there is no time line for this so far.
A spokesperson of the exchange stated that as soon as unusual trading is spotted, the firm will initiate several steps after assessing the gravity of the activity. As the crypto market is hardly regulated, cynics often complain about price rigging.
For example, studies conducted last November indicate that Bitcoin’s sharp rally in 2017 was primarily due to trades initiated by one whale. However, many analysts brushed away that hypothesis.