As managers investing on behalf of clients, we constantly monitor on-chain analytics to ensure we are making informed decisions. You can gather a lot of useful and actionable information with chain analytics. For example, you can search for unique wallet addresses. If this is growing rapidly, it could mean that adoption of the project is increasing. You can also look at wallet activity, if there are a lot of transactions, addresses sending crypto back and forth, it could indicate that the project has a significant user base and is not solely traded on centralized exchanges. You can also see what percentage of a token’s supply is held by the largest wallet addresses. This is important because the main spirit of cryptocurrencies is decentralization and giving autonomy to its users. However, if a project’s tokens are more or less held by a few large wallets, this leads to centralization allowing a few whales to manipulate the price, rewards, governance, etc. These are just some examples. The analysis of this data is constantly evolving and new and significant relationships, ratios and statistics are discovered and tracked. And since this is done on public ledgers, anyone with an Internet connection can do their own analysis.
How on-chain analytics brings transparency to blockchain and cryptocurrency transactions
