On-chain data analytics providers are not new. Firms like Chainalysis have been around for over five years. More recently, however, there has been an influx of new blockchain data analytics firms that aim to provide deep insight into blockchain network activity.
In this article, we will examine leading companies in the chain data provider sector and compare their various product offerings.
Define On-Chain Analytics
On-chain analysis refers to techniques that involve examining data stored on a blockchain network. This data typically includes block details, transactional data and smart contract information.
Block details include variables such as timestamps, fees, miner rewards, block weight and addresses. Transaction details are those relating to each transfer of value. Examples are sending and receiving address, the amount sent in each transfer, as well as the amounts remaining in the address. Finally, for blockchains that use smart contracts, on-chain analysis also examines the underlying code that governs the issuance and transfer of tokens.
While price analysis only seeks to track the price movements of digital assets, on-chain analysis seeks to provide a more in-depth and robust look at a cryptographic asset. On-chain analysis digs into who is using the asset, how much of it they are using, and, if possible, how people are using the asset.
On-chain analysis has been an essential tool in the push to understand how digital assets are used by their users. This is especially true of Bitcoin (BTC).
However, critics of on-chain analytics firms believe that such firms undermine the spirit of the crypto sector. Opponents believe the scrutiny of blockchain data threatens the financial sovereignty of those who use these digital assets.
Conversely, blockchain analytics firms believe that the work they do is essential to bridging the gap between the crypto-verse and the traditional financial sector as well as the authorities. Analyst firms believe that providing more transparency will promote a greater understanding of the technology underlying digital assets, leading to favorable regulations that will in turn lead us into a more robust digital economy.
Leading Players
One of the earliest entrants to the data analytics market is Chainalysis. Chainalysis was founded in 2014 and is headquartered in New York, with an additional office in Copenhagen. The firm is known for its annual reports focused primarily on the links between cryptocurrencies and criminal activity.
The firm has four products: Chainalysis KYT, Chainalysis Reactor and Chainalysis Kryptos. The final product in its offering is the data that the firm has met through its efforts.
KYT stands for Know Your Transaction, which helps businesses comply with regulations while interacting with the bitcoin blockchain. Reactor helps people and businesses identify potentially illegal and or criminal transactions as they relate to bitcoin and money laundering. Kryptos helps individuals or businesses assess the profiles of cryptocurrency companies based on their KYC compliance and other related data.
Chainalysis is best suited for businesses concerned with legal compliance as they use digital assets.
Founded in 2017, another leading player is Coinmetrics. This firm is very different from Chainalysis. Coinmetrics has three internal products: network data, market data and indices.
Network Data provides users with daily macro feeds with 250+ statistics examining over 60 assets. Other features include on-chain exchange flows, wealth ties, realized limit, coin age statistics, and transaction breakdowns. Market Data examines data from leading exchanges worldwide to deliver to its users. It covers the top twenty-five exchanges worldwide and all the pairs contained within them. This data is easily accessed through the products API (application programming interface). Indices provide the user with single or multi-indices designed for benchmarking or for the creation of financial products.
Coinmetrics Calc agents service is used by leading investment product providers. Coinmetrics’ tools are best suited for individuals or businesses involved in investing in the crypto markets, as they provide a very in-depth look at all relevant market data, with the aim of informing sound investment decisions.
Founded in 2017, Switzerland-based Glassnode is another notable provider of analytics data in the chain. The firm takes a different approach to blockchain analytics, delving away from products per se, focusing instead on three broad groupings of data. These are called Studio, Metrics and Insights.
Studio usually provides users with graphs that map factors such as activity in the chain, entities, top/bottom indicators or addresses. Metrics cover numerous on-chain statistics across a range of assets. API documentation is also provided for easy utilization of this data. Insights provides users with reports that track market movements, exchange activity, etc.
Glassnode is aimed at individuals and businesses who want to gain more insight into the digital asset markets to make better trading and/or investment decisions. Its presentation is simpler than Coinmetrics’s, so it’s probably better suited for an inexperienced player.
Other notable analytics providers are IntoTheBlock and ByteTree. However, the two companies are much newer than their market-leading peers.
As the crypto markets continue to grow and mature, more on-chain data analytics providers are likely to enter the industry. And in a world where data is the new currency, crypto data is poised to finally become a hot commodity.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
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