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On-chain data analysis providers are not new. Firms like Chainalysis have been around for over five years. However, more recently, 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 explore leading companies in the on-chain data providers sector and compare their different product offerings.
Defining On-Chain Analytics
On-chain analytics refers to techniques that involve scrutinizing data stored on a blockchain network. This data typically includes block details, transactional data, and smart contract information.
- Block details include variables like timestamps, fees, miner rewards, block weight, and addresses.
- Transaction details are those which pertain 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.
- Lastly, for blockchains that leverage smart contracts, on-chain analytics also investigates the underlying code controlling the issuance and transfer of tokens.
While price analysis only attempts to track the price movements of digital assets, on-chain analytics attempts to provide a more in-depth and robust look into a cryptographic asset. On-chain analytics delves into who is using the asset, how much of it they are using, and, if possible, how people are using the asset.
On-chain analytics has been an essential tool in the push to understand how digital assets are utilized by their users. This is especially true of Bitcoin (BTC).
However, critics of on-chain analytics firms believe such firms undermine the spirit of the crypto sector. Detractors believe scrutinizing blockchain data threatens the financial sovereignty of those who leverage these digital assets.
Inversely, blockchain analytics firms believe that the work they do is imperative to bridge the gap between the crypto-verse and the traditional finance sector as well as the authorities. Analytics firms believe providing more transparency will foster a greater understanding of the technology underpinning digital assets, leading to favorable regulations which will, in turn, lead us into a more robust digital economy.
Leading Players
One of the earliest entrants into 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 which are primarily focused on the connections between cryptocurrencies and criminal activity.
The firm has four products: Chainalysis KYT, Chainalysis Reactor, and Chainalysis Kryptos. The last product in its offering is the data the firm has complied through its endeavors.
- KYT stands for Know Your Transaction, which helps businesses stay compliant with regulations as they interact with the bitcoin blockchain.
- Reactor helps people and businesses identify potentially illegal and or criminal transactions as it relates to bitcoin and money laundering.
- Kryptos help individuals or businesses to 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 utilize digital assets.
Founded in 2017, another leading player is Coinmetrics. This firm is very different from Chainalysis. Coinmetrics has three in-house products: Network Data, Market Data, and Indexes.
- Network Data provides users with daily macro feeds with 250+ metrics scrutinizing over 60 assets. Other features include on-chain exchange flows, wealth bands, realized cap, coin age metrics, and transaction breakdowns.
- Market Data scrutinizes data from leading exchanges globally to delivers to its users. It covers the top twenty-five exchanges globally and all the pairs contained therein. This data is easily accessed through the products API (application programming interface).
- Indexes provides the user with single or multi indexes designed for benchmarking or for the creation of financial products.
Coinmetrics Calc agents’ service is utilized by leading investment product providers. Coinmetrics’ tools are best suited for individuals or businesses concerned with 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 on-chain analytics data provider. The firm takes a different approach to blockchain analytics, delving away from products per se, and instead focusing on three broad groupings of data. These are called Studio, Metrics, and Insights.
- Studio typically provides users with graphs charting factors like on-chain activity, entities, top/bottom indicators, or addresses.
- Metrics covers myriad on-chain metrics across a range of assets. There is also API documentation provided for the easy leveraging of this data.
- Insights provides users with reports detailing market movements, exchange activity, etc.
Glassnode is targeted at individuals and businesses looking to gain more insight into the digital asset markets to make better trading and/or investment decisions. Its offering is simpler than Coinmetrics', so it is likely 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 counterparts.
As the crypto markets continue to grow and mature, more on-chain data analytics providers will likely enter the industry. And in a world where data is the new currency, crypto data is poised to eventually become a hot commodity.