Insight Data Issue 05 | OKX Web3 & 0xScope: A guide to on-chain data analysis: how can novices take the first step?
Abstract: IncryptocurrencyIn the market, data has always been an important tool for people to make trading decisions. How can we clear the fog of data and discover effective data to optimize trading decisions? This is a topic that the market continues to pay attention to. This time, OKX specially planned the "Insight Data" column and cooperated with CoinGlass,AIIndustry data platforms such as Coin, Coingecko and 0xScope all start from common user needs and hope to explore more systematic data methodologies for market reference and learning.
The following is the fifth issue, which was jointly discussed by the OKX Web3 team and the 0xScope team around topics such as "How to establish an on-chain data analysis methodology". I hope it will be helpful to you.
About 0xScope:0xScope is the leading data analysis andAIData provider. It is creating a universal Web3 LLM, dedicated to using AI to reduce the difficulty for users to understand and interact with Web3. This is due to the rich Web3-related data that the 0xScope team has accumulated since 2022, which has been adopted by nearly 200 Web3 professional institutions. At present, Scopescan and Scopechat under 0xScope have accumulated more than 1 million users.
About OKX Web3:The team brings together top talents with profound technical background and rich industry experience. Over the years, they have continuously innovated and practiced in the field of Crypto, and continue to focus on user experience andSafetyCurrently OKX Web3 walletIt is already the most comprehensive decentralized multi-chain on the marketwallet, supports 90+ public chains, built-inwallet, trading, NFT market, DeFi, Dapp discovery. Users can view multi-chain through App, plug-in, and web pageToken, NFT, and DeFi assets.
1. On-chain data analysis is very important. How should novices take the first step?
0xScope:First, you need to understand the basic concepts and logic, such as address, amount, sender (from), receiver (to), and fuel cost (gas). And try to use and understand the most basicBlockchainbrowser, and then use other tools for more detailed analysis.
In general, commonly used analysis platforms or tools include on-chain data platforms,BlockchainBrowser and API interface. On-chain data platforms (such as ScopeScan, ScopeChat, Nansen, Glassnode and Dune Analytics) provide convenient data access and analysis functions.BlockchainBrowsers (such as Etherscan and Blockchain.com Explorer) can manually query blocks, transactions, and account information. In addition, many blockchain networks and data providers (such as Etherscan API and Coingecko API) provide API interfaces that can programmatically obtain on-chain data.
In addition, on-chain data analysis is mainly divided into two categories: transaction and investigation. Transaction data analysis can discover early alpha or trends through on-chain data, or formulate trading strategies by analyzing the fundamental data of the transaction target. Investigation data analysis can discover the flow of funds and potential address map relationships through on-chain data, or find the real reasons behind abnormal events through data association.
OKX Web3:On-chain data analysis is the process of gaining insights into network activity, user behavior, and market trends by examining and interpreting data recorded directly on the blockchain. For new users looking to take their first steps into on-chain analysis, here are some key points:
First, familiarize yourself with blockchain explorers such as Etherscan to understand basic transaction data and wallet activity. Second, pay attention to key on-chain metrics such as active addresses, transaction volume, and supply distribution. Next, explore user-friendly on-chain analysis tools like Nansen, Debank, and Glassnode to visualize on-chain data.
Start with basic metrics, tracking simple data points like daily active addresses or number of transactions. At the same time, understand how on-chain data relates to market trends and trader behavior, and identify patterns and correlations in price movements by analyzing historical data. Finally, combine on-chain analysis with fundamental and technical analysis to gain a more comprehensive perspective.
2. Which key indicators need to be focused on?
0xScope:It mainly depends on the needs and scenarios:
If your strategy is fundamental analysis or long-term trading, we recommend paying attention to the following 10 indicators:
• Number of transactions,The total number of transactions that occur on a blockchain network over a period of time, which usually reflects the activity and usage of the network.;
• Number of active addresses,The number of unique addresses with transaction records in a period of time. The more active addresses there are, the higher the participation of network users;
• Number of new addresses, refers to the number of new addresses created in a period of time. The increase in the number of new addresses usually indicates that the network has attracted new users, indicating the user growth of the network;
• transaction fee,The total fees users pay for transactions. High transaction fees may indicate high demand on the network, reflecting the level of network congestion and the costs users are willing to pay.
• Average transaction value,The average amount of each transaction. A higher average transaction value may indicate more large transactions, which helps to understand the flow of funds and user trading habits;
• fluidity,That is decentralizationexchangeThe amount of assets that can be traded in (DEX). Markets with high liquidity are usually more stable and healthy, affecting transaction slippage and market depth;
• TokenHolding concentration,Token持有者的分布情况，如前10/50/100持有者持有的总量比例，持有集中度高可能导致市场波动风险增加，了解代币持有的集中度和市场风险；
• Locked AmountTotal Value Locked (TVL), the total value locked in the DeFi protocol. A high TVL usually indicates that the protocol is popular and widely used, measuring the scale and popularity of the DeFi protocol;
• intelligentcontractNumber of calls, for a period of timecontract的调用次数，高调用次数表明contract被广泛使用，反映智能合约的使用情况和受欢迎程度；
• Developer Activities,The update frequency and number of contributors of the project code base. High developer activity indicates that the project is continuously improving and developing, reflecting the development progress and activity of the project.
If your strategy is short-term trading or you want to profit by catching the trend, we recommend focusing on decentralizationexchange的超买超卖情况，这反映了当前市场需求的异常波动，以及交易所的大额充值或提现行为，这可以揭示主力潜在的买卖意图。
If your strategy is copy trading, you can pay more attention to the movements of smart money.For example, the historical returns of smart money can help identify traders with strong long-term profitability; the frequency and volume of transactions can tell you how active and involved smart money is in the market. The transaction success rate assesses the trading accuracy of smart money, while the holding time reveals whether its strategy is short-term or long-term. The asset distribution shows the degree of diversification of its portfolio, and the transaction fee reflects its transaction costs. The risk-adjusted return measures the ability of smart money to earn returns while controlling risks, and the on-chain reputation of smart money shows itsCommunityIn addition, liquidity supply helps to understand whether smart money is also providing liquidity, which may affect its trading behavior. Through these indicators, the dynamics of smart money can be better understood and tracked.
If you are testing risks, it is recommended to focus on at least the following 10 key indicators:
• Abnormal transaction volume,That is, the number of transactions that is significantly higher than normal within a specific time period, which helps to identify potential attacks or unusual activities, such as hacking or fund transfers;
• Large transfers,Refers to transactions exceeding a certain amount threshold, which may indicate that assets aresteal, money laundering or evasion of detection;
• Trading frequency,That is, the number of transactions per unit time. Abnormally high transaction frequency may indicate an ongoing attack or fraud;
• A large number of transactions to new addresses,Newly created addresses that make a large number of transactions in a short period of time may be a means for attackers to hide their identities. By observing these addresses, the source of the attack can be identified;
• Smart contract call, involving transaction calls of smart contracts. Smart contracts may be targets or tools of attacks. By analyzing these calls, we can understand the attacker's operating methods;
• Token Transfer, the transfer of specific tokens in the network. Abnormal transfers can point to specific attacks, such as tokens beingstealor illegal transfer;
• Abnormal Gas Fees, transaction fees that are significantly higher or lower than the average level. Attackers may use high gas fees to speed up transactions, or low gas fees to hide a large number of small transactions;
• Trading time interval,That is, the time interval between consecutive transactions. Consecutive transactions in a short period of time may indicate an automated attack or the use of trading scripts;
• Unusual activity of on-chain protocols and contracts,A surge in activity on a specific protocol or smart contract could be an attack by an attacker exploiting a vulnerability or a problem within the protocol.
• Changes in account balances,That is, a significant change in the account balance, which can help users identify situations where funds have been stolen or transferred.
In fact, in general, these indicators are essentially traces left by the main traders. Beginners can feel the market changes by analyzing these traces.
OKX Web3:For beginners, we recommend following these 4 key indicators to gain insight into blockchain networks and market dynamics:
• Number of active addresses：This metric provides a basic understanding of network usage and economic activity. By observing the changes in active addresses, beginners can understand the actual application level and user participation of the network.
• Trading volume：Trading volume is an important indicator for assessing market activity, which helps understand the buying or selling pressure in the market. High trading volume usually means that market participants are more active, while low trading volume may indicate that the market is in a wait-and-see state.
• MVRV (Market Value to Realized Value) and NUPL (Unrealized Profit and Loss): These metrics provide deep insights into market valuations and overall sentiment. MVRV can help assess whether a token is fairly priced in the market, while NUPL can show whether investors are currently making a profit or a loss.
• Supply Distribution: This metric shows the concentration of token ownership. By analyzing the supply distribution, beginners can understand whether the token is too concentrated in a few addresses, which may have an impact on the liquidity and stability of the market.
As beginners become more familiar with these basic metrics, they can gradually incorporate other more complex metrics into their analysis, such as on-chain transaction fees, mining difficulty, network hash rate, etc., thereby comprehensively improving their understanding of blockchain networks and markets.
3. How to identify emerging Web3 projects through on-chain data?
0xScope:A very simple way is to pay attention to the GAS consumption rankings every day. Most of the abnormally increased contracts reflect some projects that are relatively popular that day or recently.
A more efficient way is to use EtherXiaobai NavigationScan's Chrome GAS plug-in allows you to see the current GAS level in the upper right corner of the browser at any time. When you find that GAS is soaring, you can use the Top Gas Consumer rankings we just mentioned or Etherscan's Gas Tracker to see where everyone's GAS is spent. Usually in this case you can discover some new projects.
The most commonly used one is the Top Gas Consumer ranking of Scopescan. If you often look at this ranking, you will find that in most cases, the top few rankings of the ETH chain are Uniswap router, USDT contract, and several TG bots such as Banana Gun. If you find a contract that you are not familiar with in this ranking, you can check whether the contract has a label on Scopescan or Etherscan; for students with better hands-on ability, you can also check who deployed the contract and where his handling fee comes from. Another way is to look at the Project Explorer ranking on our Scopescan. If you suddenly find a project you have never seen before appears on this ranking (TVL Rank and User Rank), it also means that this project is worth your attention.
OKX Web3:In fact, there are many ways to identify emerging on-chain projects. First, monitoring on-chain activity is a crucial step. This includes tracking new smart contract deployments, looking for increased transaction volume, and unique addresses interacting with contracts. By analyzing the gas usage of new projects, we can gain insight into their activity and development progress in the blockchain ecosystem.
Secondly, key metrics for emerging projects can be tracked and analyzed more effectively using customized dashboards provided by data aggregation platforms such as Dune Analytics, nansen, and Glassnode. These platforms can not only monitor the growth of total value locked in decentralized financial projects, but also track the daily active users of dApps and games, and evaluate the transfer volume and holder growth of new tokens.
In addition to on-chain data, you also need to pay attention to cross-references with off-chain data. Monitor social media activity andCommunityGrowth, observing developer activity on GitHub repositories, and analyzing the price trends of project tokens and trading volumes on exchanges are all important supplements for assessing the potential of emerging projects. The combined use of these methods and data sources helps to comprehensively evaluate and identify emerging Web3 projects with value and development potential.
But if you find it cumbersome, you can also directly view the locked-in TVL, DEX transaction volume, lending status and other information of on-chain protocols such as DeFi and DEX in the rankings in the OKX Web3 wallet discovery section, which is very convenient.
4. What are the common misunderstandings and precautions when conducting on-chain data analysis?
0xScope:We believe that there are several common misunderstandings and important matters to pay attention to when analyzing on-chain data:
First, a common misunderstanding is about the understanding of address tags and activities. For example, transfers do not always represent buying and selling behavior, and deposit and withdrawal activities on exchanges do not necessarily reflect actual buying and selling behavior. Market makers frequently perform deposit and withdrawal operations in order to provide liquidity, so these operations should only be considered as potential market signals when the volume is significantly higher than usual.
Secondly, most users usually use more than one address, so the activity of the whole rather than a single address should be considered when conducting analysis. However, smart money may transfer funds through deposit and withdrawal operations of centralized exchanges, which means that analysis that relies solely on on-chain data does not always successfully capture all situations. In addition, over-reliance on a single data source is risky, and it is recommended to combine off-chain data for comprehensive analysis. For example, when there is a sudden fluctuation in the market, understanding possible background news, such as important economic data released by the government, can help provide a more comprehensive market context.
In addition, the information or opinions released by KOLs usually only focus on specific transaction events, and do not deeply analyze the real situation of the addresses and entities behind them. Therefore, analysts should dig deeper and understand the stories behind the data on their own. Finally, it is recommended to choose data analysis products that have been in operation for a long time and have a good reputation, which can improve the reliability of data and the accuracy of analysis.
OKX Web3:I agree with 0xscope's point of view. New users must pay attention to several common misunderstandings and important matters when analyzing on-chain data.
First, the accuracy and reliability of the data are of paramount importance. On-chain data may be affected by various factors, resulting in incomplete or inaccurate data. In addition, we need to be wary of possible data manipulation by project teams or large holders, which may mislead the analysis results.
Secondly, a common misunderstanding is the misinterpretation of data. When analyzing on-chain indicators, it is critical to understand the context and avoid drawing conclusions based on isolated data points while ignoring the impact of the overall market situation.
In addition, over-reliance on a single indicator is also a risk. You should avoid relying on only one or two on-chain indicators to make decisions. Instead, you should use a combination of indicators and cross-reference them with off-chain data to obtain more comprehensive and reliable analysis results.
Finally, be aware that there is a gap between on-chain data and reality. For example, some on-chain activities may not be fully captured, such as off-chain transactions or the impact of second-layer solutions. Therefore, understanding the limitations of the data used is a key step in conducting effective analysis.
Conclusion
The above is the fifth issue of the "Insight Data" column launched by OKX, focusing on practical topics such as how novice players can establish on-chain data analysis methodology, hoping to provide a reference for new players. In future series of articles, we will continue to explore more practical data usage/analysis methods to provide references for traders and novice players to learn trading and understand the industry.
Risk Warning and Disclaimer
This article is for reference only. This article only represents the author's views and does not represent the position of OKX. This article is not intended to provide (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; (iii) financial, accounting, legal or tax advice. We do not guarantee the accuracy, completeness or usefulness of such information. Holding digital assets (including stablecoins and NFTs) involves high risks and may fluctuate significantly. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals for your specific situation. Please be responsible for understanding and complying with local applicable laws and regulations.
The article comes from the Internet:Insight Data Issue 05 | OKX Web3 & 0xScope: A guide to on-chain data analysis: how can novices take the first step?
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