How to Become a Chain Analyst: The Best Skills You Need

Analysis is common in all sectors, including traditional finance, but crypto analysts have unique data to work with.

While price prediction is an important part of chain analysis, people will also use chain data to evaluate economic risks, such as whether a whale holds a large portion of a token’s liquidity or technical risks such as exposure to a hack.

On-chain detectives also use on-chain analytics to catch scammers, fraudsters, and other bad actors—ZachXBT is a popular example.

Interested in joining the ranks of the industry’s soothsayers? Here’s what you need to know.

Blockchain knowledge and tools

The most obvious skill you need is to know blockchain technology like the back of your hand.

“There is quite specific knowledge you need to progress [in analysis],” Vincent Maliepaard, marketing director at blockchain analytics company IntoTheBlock, told Decrypt. “You need to know the details. Like, if you’re going to compare Ethereum transactions with Bitcoin transactions—it doesn’t quite work that way. These are different protocols with different purposes. You have to understand those nuances.”

You need to understand what it means when gas fees go up, or what an increase in transactions could mean. Technical blockchain knowledge is an important foundation for this role.

Just as a graphic designer needs to know Photoshop, on-chain analysts need to be well versed in their tools.

“I think most needs can be fulfilled with four basic tools,” said Maliepaard. “Anything that can take daily price and compare different coin prices, a block explorer, advanced intelligence tools like IntoTheBlock, [and] social tools like Telegram or Discord, as they are usually the first platforms to be updated when something happens in a project.”

Which intelligence tools you choose to rely on is up to you.

Tools like Artemis, TokenTerminal, and DefiLlama also provide a high-level overview of protocol metrics, so you can see broad trends within the blockchain ecosystem.

On the other hand, Dune and Flipside dive deeper into data, to help you understand why changes are happening. Elsewhere, tools like Arkham and Nansen specialize in monitoring wallet activity.

Despite all these advanced tools, block explorers remain the most important piece of equipment in the analyst’s toolbox. Understanding how to read a block explorer isn’t fun; it is a requirement to be an on-chain analyst.

To find a conclusion

Due to the wide variety of data you will be consuming, being highly technical with a strong understanding of financial mathematics and relationships is the next requirement.

Having this skill creates room for nuanced analysis through the use of formulas and mathematical theory. For example, an on-chain analyst can project how a cryptocurrency’s supply may develop over time using linear extrapolation techniques—a type of mathematical estimation.

While data analysis is obviously an important part of this job, being a good on-chain analyst goes beyond market value to realized value charts and out-of-the-money metrics.

“A lot of on-chain analysis is really about following the trail of different transactions,” independent on-chain analyst Patrick Scott told Decrypt. “[You need] to have the patience and attention to detail to see the research through to its natural conclusion.”

Anyone who has attempted to trace transactions in the chain will know that the soft skills of attention to detail, persistence and curiosity are the keys to success. Tracking a long series of transactions can be hard work, but it’s a crucial part of the job.

Once an on-chain analyst has gathered the information they need through their intense blockchain knowledge, high technical ability and soft skills, it’s time to come up with a thesis.

“I like to think about on-chain analysts in terms of the scientific method: you start with a hypothesis and test the heck out of it using data,” said Nirmal Krishnan, Head of Engineering at Artemis.xyz , told Decrypt. “You’ll find data that quickly disproves your hypothesis and go back to the drawing board with a new one. This process is iterative—you guess and then test until you get to data that supports your hypothesis.”

Get your on-chain gig

When you’re starting out, you’ll want to build a portfolio of work that proves you’re right for the job.

“Get comfortable with tracking wallets and on-chain movements,” a spokesperson for Nansen told Decrypt. “Actively share your findings and analysis on X [formerly Twitter] can help build your profile.”

You will start to make a name for yourself and you will have a portfolio of correct predictions, risk assessments or on-chain investigations to show.

Next, you have two options: Get a full-time job for a company or earn money as an independent on-chain analyst.

“We are working with a recruitment agency. Your best bet is to make sure you have the knowledge and make sure it makes sense for a recruitment agency to contact you for this position,” Maliepaard explained. “Write a few pieces about something related and post them on your LinkedIn, so when recruiters visit, they say, ‘Oh, this guy must know his stuff.’

That said, it’s always worth searching general crypto job boards like Cryptocurrencyjobs.co, CryptoJobsList.com, and Crypto.jobs for analyst roles.

At the time of writing, there are 75 jobs available on Cryptocurrencyjobs.co with the keyword “analyst.”

Unfortunately, finding work in the industry isn’t always easy—so you may have to stay independent. Or maybe you just want to live the freelance lifestyle—free from the shackles of a 9 to 5.

How to be a freelance analyst

OKHotshot is an independent on-chain analyst and has been named “one of the leading NFT analysts and security experts” by DappRadar. Before he was an on-chain analyst, he was a day trader – but once he introduced on-chain analysis into his day-to-day, he saw a “night and day difference” in his profits and losses.

“As an on-chain analyst, I use this data in custom models to predict possible market scenarios and position myself accordingly,” OKHotshot told Decrypt. “I lead with on-chain data and it has been very profitable.”

Meanwhile, independent chain analyst Patrick Scott started out by creating educational content about chain analysis, on the side of his full-time job in corporate finance. He started slowly building an audience before taking the leap to go full-time as a freelance on-chain analyst.

While trading is his main form of income, he also offers his services as an on-chain analyst to design strategies and assess on-chain risk. In exchange for these services, he will take a portion of a project’s tokens.

“I advise a project called Clip Finance that provides one-click, automated return vaults,” Scott explained. “These vaults include a basket of strategies and I help them find strategies that meet their risk profile, have suitable liquidity and are diversified.”

OKHotshot provides a similar service to NFT projects to approach it, including XCOPY, to help position themselves in the market.

“The work I do varies a lot per project,” explained OKHotshot. “Think: Creating Launch Strategies, Pricing and Incentive Models Based on Chain Data and Trends, Together with Smart Contract Auditing and Web3 Security.”

Getting your first clients is always the hardest part. F

or Scott, he connected directly with founders on X just to discuss the markets which later led to one or two bringing him on as an advisor. After the first few customers, things got easier as he built up a track record.

Does on-chain analytics sound up your street? Familiarize yourself with block explorers, intelligence tools and mathematical formulas. Start making predictions and find security holes.

Build your reputation in the scene and one day you too can be part of crypto’s army of fortune tellers.