If you frequent overseas cryptocurrency communities or Twitter, you should see some on-chain data analysis and discussions from time to time.
There should be many cryptocurrency users who have not heard of Nansen, because on the one hand, their product is too instrumental and the learning curve is too high, and on the other hand, their service is very expensive – so expensive that ordinary cryptocurrency users will walk away.
Of course this is for ordinary users, and for investment institutions and independent serious investors who focus on the blockchain ecosystem, a monthly subscription fee of $150 should still be acceptable, but with a monthly subscription fee of $2,500 for the highest level, the number of target customers is estimated to be not so many.
To reach all types of subscribers, Nansen has introduced three levels of service, $150 per month (Standard level), $1,500 (VIP level) and $2,500 (Alpha level). For a team as early as Nansen, the tiered pricing is likely to test the waters of market acceptance.
Alex Svanevik, CEO of Nansen, told Chain News, “We tag 85 million ethereum wallets to help users follow the real activity on the chain in real time and understand We have tagged 85 million ethereum wallets to help users follow the real activity on the chain in real time and understand the activity of Smart Money in terms of investment, mining, governance, and DApps. At the same time, the status of Gas usage and capital flows of different entities can be monitored.
Nansen is named after the Norwegian explorer Fridtjof Nansen, who was also a scientist, humanitarian and diplomat, and was awarded the Nobel Peace Prize in 1922.
The name was chosen in relation to the background of Nansen’s team members, such as founder and CEO Alex Svanevik, who graduated from the University of Bergen in Norway with a degree in cognitive science and later studied AI technology at the University of Edinburgh.
Alex Svanevik, founder of Nansen, with DeFi whales Su Zhu (Three Arrows Capital), Kyle Davies (Three Arrows Capital), Arthur Cheong (DeFiance Capital) together
Prior to founding Nansen, Alex Svanevik also founded a decentralized autonomous organization (DAO) called D5, of which some of Nansen’s early employees were also members, dedicated to serving data scientists and engineers whose business includes supporting startups and enterprises in data science, with clients such as Their clients include industry leaders such as Aragon, 0x, Totle, and others.
Nansen previously raised a public $1.2 million seed round last October, when they said they had more than 1,000 trial users and 200 subscribers. Since Nansen also only officially launched last April with a team of 3, the subscription payment numbers were pretty good from that perspective.
What exactly did they offer to attract these users? The other, more fundamental question is, is the block data worth analyzing? Chain News chatted with Nansen, a startup with an extremely lean team that has managed to capture the golden spire of users in the cryptocurrency world, to hear their thoughts.
Background: Why is blockchain data worth analyzing?
Ether is emerging as a massive financial settlement network as demand increases for more and more DeFi operations, liquidity initialization for early-stage projects, and various variants of token financing (liquidity mining, IDO, etc.). To put it another way, when every transaction costs an average of a dozen dollars to settle, the business itself must have a corresponding investment or use value.
Coupled with another feature of blockchain network, “open book data”, there is a huge value of data mining in it.
Imagine if all the user business data of banks and central banks were public, any commercial organization would be able to analyze the consumption habits, income, preferences, and various other characteristics of each user through these massive data. But because this would violate the privacy of users, it is also unlikely that financial institutions would disclose this data.
But in the blockchain network, users’ accounts can be anonymous by default, so even if your transaction data are public, there is no way to know which real-life person an account corresponds to, unless the user chooses to disclose it voluntarily, or when the account has interacted with a business (such as an exchange) that has authenticated its real name, it may also leak privacy information.
On-chain real-name users: e.g. SBF or Vitalik Buterin
For on-chain real-name users, they may be public figures in the industry themselves, so every transaction they make may have an impact on the market itself, such as when Vitalik Butrin chooses to sell or destroy various dog tokens, which can have a dramatic impact on the market.
Vitalik Buterin destroys 410 trillion SHIB tokens
And when Sam Bankman-Fried (SBF), co-founder of market maker Alameda Research and crypto derivatives exchange FTX, chooses which project to participate in liquidity mining, this can mean many layers, for example, it can be interpreted as: the quality of the project is approved by SBF, the security of the smart contract is higher, the the whales have entered without the chance of retail investors, etc. But in any case, the matter may be known by many people, which in turn may influence the decisions of other users or trigger discussions in the community.
Some whale users or institutions may be hoping to achieve exposure in this way and subsequently influence market hotspots on a large scale, so it’s a good marketing tool for them.
Anonymous users on the chain: for example, addresses with good historical returns
On the other hand, for those addresses that are not willing to disclose their identity information, there are actually many places to explore.
For example, many addresses will make frequent token transactions or participate in new projects that are unheard of. If these historical data are counted, it is possible to roughly determine the historical returns of a certain address, or to learn what new projects may be on the market that everyone has overlooked.
Some users on Twitter also follow Nansen’s statistics on Smart Money funding movements
This information and data is crucial in this fast-moving market because there are so many new projects, so if you can start with these high-quality addresses and get information from them, it’s much more effective than finding a needle in a haystack.
Disadvantage: you can’t see the whole picture
These addresses may help users get a better understanding of the core information in the market, but there are some risks involved: a single address may not be the full picture of a particular investment strategy, and the address holder may have all the strategies spread out over many addresses. This is especially true now that the DeFi stack is becoming more sophisticated, and the risks and problems in this area are becoming more pronounced.
For example, for a frequently traded address (through a DEX like Uniswap), it may appear that the address has a very good historical track record, but in fact the address holder has another address that does a lot of hedging, such as buying and selling options, futures, and other derivatives, and if a certain transaction generates a loss in the spot, the risk hedge in the other address can play a protective role.
As DeFi protocols become richer and better, there should be more risk hedging mechanisms in the future, whether options, futures, insurance, or even more complex or structured derivatives, and the number of ways for users to hedge risk will gradually increase.
So for the observer, copying all trading strategies from a single address may expose a great deal of risk unless one can see the full picture of a trader’s position.
Several components of the Nansen product
There are a number of companies that analyze data on the chain, but its most basic step is the need to ‘tag’ addresses, although of course different business types may have their own specific way of classifying them. As well as also providing more detailed analysis of transaction data, charting tools, and other data services.
Address classification, labeling
For example, for Etherscan, the most commonly used block browser in Ether, the tags they give to addresses generally cover exchanges, some special users (e.g. Vitalik Buterin), smart contract addresses for specific DeFi businesses, etc. Because they are providing a generic block data service, the amount of tag data is not very large.
Another common use case is block analytics companies that provide compliance services, such as Chainalysis or CipherTrace, which can provide AML-related services to exchanges or financial institutions, so they focus more on this aspect of address classification, e.g., whether an address has been tagged with a previously tagged “problematic” (black industry, etc.) address based on on-chain data. For example, they can analyze whether an address has been associated with previously flagged “problematic” (black industry, etc.) addresses based on the data on the chain, or whether any “de-anonymization” operations have been performed on the assets (e.g., using Tornado.
Nansen’s classification method is a mixture of several methods, in addition to marking the addresses of investment institutions and KOLs, it also puts some special “classification labels” on the addresses according to the way the algorithm automatically identifies them, such as “Smart Money” or “Giant Whale” according to the user’s capital volume and historical achievements. Although it is not possible to know who the specific user behind the label is, it is possible to mark the user’s portrait with such labels.
There are even tags like “epic NFT collector” and “heavy trader
Nansen told Chain News that they have a full-time team responsible for tagging addresses, which mainly relies on three methods: algorithm, manual investigation, and community submission. For example, the addresses of “Giant Whale” and “Smart Money” can be based on some human-set rules, and then be determined. The number of addresses marked per day is 150,000 to 200,000, and the total number of addresses that have been marked so far is 85 million, so algorithms are the main method among them.
For those specific addresses, Nansen’s team can then target specific addresses based on the user’s or institution’s own disclosure, ENS (some users disclose their wallet address information through the Ethernet domain name system), or in combination with the investment institution’s position data.
Chart of ETH positions, mostly tagged
This one involves a more tedious and non-standardized part, but it can save users a lot of time if they have someone dedicated to the collection of this information and study it. After all, the number of institutions, KOLs, and communities in this market is so huge that even if this were public information, the average user would not have the energy and time to be able to count it all.
Data analysis, aggregation dashboard and other tools
For these tagged addresses, Nansen can take advantage of the completely public nature of the data on the chain to further track and organize the data, and since the number of tokens and DeFi businesses on the chain is huge, any combination can provide a variety of dashboard tools.
The simplest is to keep an eye on the position data of certain projects and tokens, which well-known institutions are the core participants, and their recent trend of increasing and decreasing positions. This data is also available in Etherscan, but in terms of address labels, Nansen is more comprehensive.
The transaction data can then be aggregated several times to provide more high-latitude trend data, such as the volume of tokens traded on different decentralized exchanges, the average position time, the number of token holders, or the overlap between two token holders. Due to the full transparency of on-chain data, there are actually a particularly large number of points that can be mined.
Alex Svanevik says the address looks like Nexo’s
The Nansen team has built in a dozen common dashboards for users, such as what they call “Token God Mode” (the “God Mode” for tokens), “Wallet Profiler” (analytics for a particular address), “Stablecoin Master” (expert mode for stablecoin data), Smart Money” (what are the new trading trends for smart addresses), etc. Users can get the corresponding data from each dimension.
Some of the dashboard features also clearly state that the feature is in Alpha or Beta development, so some of the features may be added or removed. Of course, this also means that Nansen’s development is progressing quickly.
In addition to these built-in dashboard features, Nansen also opens up a number of other customization and customization features for users that can further extend the platform’s tool properties.
For example, for some addresses that Nansen fails to cover to tag, users can also analyze them on their own. For example, users can tag certain addresses with specific people based on their sources as a way to track data for certain specific addresses, a feature that will remain private independent of Nansen’s public tagging library.
A push bot set up by a user at Nansen
In addition, Nansen offers custom alert or push tools, and may provide API access for more complex functionality in the future.
Other non-tool value-added services
For the Nansen team, which has a huge amount of data at its disposal, not only can they provide tools for institutional and professional investment users, but they have also set up their own research team to provide more in-depth interpretation services for more advanced subscribers.
Nansen says that some of their internal analysts are dedicated to “Alpha” clients (the most advanced level of users on their platform), providing daily trends and relevant intelligence on “Smart Money” under the name Alpha Radar. This is a way to export their data analysis and research capabilities to the outside world.
For Alpha customers, they also offer weekly conference calls and a private Telegram group, which provides a forum for discussion and analysis for advanced users. I’ve heard of people subscribing to the Alpha service in order to join these groups and exclusive weekly meetings.
In our conversation with Nansen, we also talked about multi-chaining, as other public chain networks besides Ether have a growing number of DeFi operations, and this data may also be in demand by their users.
Nansen said that multi-chain support is already in their planning, and the main consideration is user demand. So they have recently supported the Ethernet sidechain Polygon (formerly Matic) and will be adding more features and data in the next few weeks.
Previously Nansen also partnered with Polygon to airdrop tokens for subscribers
The other two that will be supported relatively soon are BSC (Coin Security Smartchain) and Optimism, an ethereum Layer2 solution, and they are currently nearing completion of integrating the backends of both solutions, with the goal of having support in place by June.
Nansen is also discussing implementation options with the Arbitrum and StarkWare teams, and another popular high-performance public chain, Solana, may also be supported soon.
With the gradual start of the multi-chain ecosystem, Nansen has more to explore in terms of data analysis, such as sharing a set of account system of Ether, BSC, HECO, etc. The same user will conduct all kinds of transactions on different chains, which may eventually need to be attributed to the same account system, which adds more challenges for Nanasen.
Off-topic: the impact of privacy technology on data analysis
Although most of the public chain networks are still open and transparent ledger systems, in the long run, there are more and more privacy-related technologies (hybrid coin pools, privacy computing, zero-knowledge proofs, etc.) being explored and implemented, which may bring some privacy and anonymity features to the blockchain world.
This may then make data analysis more difficult for Nanasen, but they are not worried about this, believing that most addresses and transactions in the ecosystem will remain public and that it will be difficult for corporate entities to use privacy features from a regulatory perspective. Also for decentralized projects, there may be a preference for open transactions to maintain community trust.
However, as privacy technologies become more widespread, there should still be a number of users who choose to conduct “anti-tracking” transactions for some assets, especially the “black industry” may use these technologies more often. And for most users, they do not want their asset transaction records to be made public. So these factors may make it more difficult for Nansen to analyze the data and reduce the accuracy of the data.
But there are still many users who are willing to make their transactions public, such as influential public figures or community leaders, many of whom are happy to trade with their public names, after all, their decisions also affect the direction of the market, which is also considered a reflection of the fan economy and the economy of influence.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/what-is-the-real-power-of-nansen-the-10000-a-month-on-chain-data-analysis-tool/
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