How On-chain Analytics Bring Transparency to Blockchain and Cryptocurrency Transactions
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 through on-chain analytics. For example, you can view unique wallet addresses. If this trend develops quickly, it could mean that adoption of the project is accelerating. You can also look at wallet activity if there are a lot of transactions, addresses sending cryptocurrencies back and forth, this could indicate that the project has a significant user base and is not not only 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 philosophy of cryptography is decentralization and autonomy for its users. However, if a project’s tokens are more or less owned by a few large wallets, this leads to centralization that allows a few whales to manipulate, set prices, rewards, governance, etc. These are just a few examples. The analysis of this data is constantly evolving and new meaningful relationships, ratios and statistics are discovered and tracked. And since this is done on public records, anyone with an Internet connection can do their own analysis.
