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Nansen: Tracking on-chain geniuses, understanding smart money labels and applications

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Nansen: Tracking on-chain geniuses, understanding smart money labels and applications

Observing the trends of smart money in the crypto world helps us make wiser investment decisions.

By: Nansen

Introducing Smart Money

In the unregulated world of cryptocurrency, some individuals can leverage its advantages in various ways, such as:

  1. By working in the field and networking with the right people
  2. In the correct TG Telegram alpha group
  3. Or exploring on-chain and looking for front-running transaction lists

However, one thing is clear — the blockchain never lies. To discover signals in Nansen, we have been dedicated to analyzing Smart Money – wallet addresses that have been proven to be smart money. Thus, this will serve as a live case study to research and showcase Smart Money.

In the following sections, we will introduce some of our existing Smart Money labels, definitions, and suggestions on how to use them.

First Mover LP & Staking

  • First Mover LP – Taking the top 200 addresses, they are the earliest to provide LP liquidity in a certain scale of LP liquidity pools and quantities (the first 100 entering addresses)
  • First Mover Staking – Taking the top 200 addresses, they are the earliest to stake in a certain scale of Staking pools and quantities (the first 100 entering addresses)

These labels generally identify two types of investors:

  • Front-runners, always lurking on Twitter and Discord, ready to be the first to enter various trading pools.
  • Early supporters of projects (e.g., VC investors, whale friends) looking to boost early liquidity of project tokens and help the project.

"There are 3 ways to survive in the blockchain world: be quick, be smart, be tricky — here, we strive to be the earliest investors."

A way to delve deeper is to view our Smart Money data panel and filter for First Mover LP and Staking to get a list of active addresses in the past 24 hours. Next, use the Wallet Profiler to study the addresses and set up on-chain smart alerts for active addresses in your time zone.

Funds & Private Seed Investors

  • Funds – Entities that invest in and manage cryptocurrencies publicly.
  • Private Investors – Addresses that receive at least $100,000 from distributors of various tokens.

The difference between the two lies in identification. For Funds, we have identified the entities behind the wallets. On the other hand, Private Seed Investors (PSI) are addresses that provide on-chain evidence of investor activity. This scope is broader, including advisors, angels, and potential entities working on token distribution bases (e.g., media companies, consulting firms).

Aside from simply copying these addresses, understanding their current investment portfolios, their allocation specifics, and the protocols they are using can be useful.

A more intricate mining method involves tracking inflows and outflows. A brief case study:

If someone observes token inflows into the Defiance Capital address, they may discover strategic funding transactions between Muse DAO and Defiance Capital on-chain before the announcement.

Smart & Smarter LPs

  • Smart LP – Earns over $100,000 by providing liquidity on Uniswap or Sushiswap. Profit calculations exclude impermanent loss.
  • Smarter LP – Ranks in the top 1% of liquidity providers and miners on any Uniswap V2 type DEX in terms of profit and ROI, including impermanent loss in profit calculations.

Similar to First Mover LP, these labels consider liquidity provision. However, the key distinction is that in this label, we use earned profit as the benchmark rather than their front-running speed.

Airdrop Pro

Addresses that have received a significant amount of tokens in multiple airdrops (airdrop value based on the average 30-day value post-distribution).

Here, we look at addresses that have received substantial airdrops. Addresses with this label are generally divided into two categories – those scavenging airdrops or interacting with select on-chain protocols, with the latter being the addresses you should pay attention to.

You must dig deeper and examine the transaction history of addresses before closely monitoring a few qualifying ones. Here are some examples of prominent projects with significant interactions:

We do not endorse the potential of the above airdrops or comment on the quality of the protocols themselves, we simply suggest that you investigate the list above as a straightforward starting point for your exploration journey.

Smart NFT Traders

The top 100 addresses that have profited from NFT sales and the top 100 addresses based on our internal trader rating indicator.

As the labels imply, these are addresses skilled in trading NFTs. Whether flipping an NFT from 0.1 ETH to 1 ETH or from 30 ETH to 60 ETH, we rank each NFT trader based on their realized profits both absolutely and relatively for each NFT trade they have made. Additionally, we only consider traders with a certain number of collections to avoid traders who strike it rich by luck (e.g., those who gained it through just 1 collection).

Naturally, this will be a type of address for replicating trades. You can check our NFT Paradise profit leaderboard panel to find examples of such addresses to closely monitor.

Smart NFT Hodlers

The top 100 addresses based on the estimated profits of their current NFT portfolios and the top 100 addresses based on our internal hodler score indicator.

Here, we shift to view unrealized profits. How many addresses hold substantial paper profits but refuse to sell the NFTs they own? This label emphasizes addresses that have not sold their NFTs yet.

A good starting method is to view the Smart Money tab on NFT Paradise, examine recent transactions from Smart Money addresses, and see what they are up to. You can even specifically filter for Smart NFT Hodler labels and the activity type you are looking at (buying, selling, minting) for a better view. Reminder, if you see a portion of smart NFT diamond hands starting to sell a certain type of NFT, it could be a potential "exit" signal, and vice versa.

Smart Early NFT Collectors

The top 100 addresses that invested in selected blue-chip NFT projects before a specified date and still hold the NFTs of that project.

Within many NFT blue-chip projects, there is an "Alpha" chat channel or a channel set up that requires verification of holding NFTs to enter. Observing some wallet addresses may help tell us what they are up to. Nelson's this long push covers a good method to find out such "Alpha groups."

"What if their precious BYAC NFTs are stored in cold wallets? Is this label no longer useful?" - This may be true, but may require some effort. Typically, there are "links" between traders' hot wallets and cold wallets. People can observe counterpart transactions on Wallet Profiler to find some clues.

Smart NFT Minters

The top 100 addresses that have minted multiple NFT collections in the past 60 days, realizing at least ≥ 5 times the realized profit.

Minting is challenging, especially with the recent explosive growth of NFT projects. How do you determine what to mint? Tracking these addresses may be a way to showcase interesting Mints.

Quick Smart Alert Tips

Instead of just entering an address, add a "From:" before the address to filter transactions initiated by that address. This significantly reduces the number of fraudulent tokens that appear (e.g., scammers actively airdropping junk and phishing NFTs to celebrity addresses), reducing noise.

Conclusion

Understanding and knowing who the counterparties are behind the trades allows you to comprehend what transactions are taking place on-chain. By utilizing Nansen's labeling feature, you can make wiser investment decisions and be aware of opportunities as they arise on-chain. We will add more comments to additional labels in the future, so stay tuned to this page and keep exploring!

[Disclaimer] Markets are risky, and investments should be made cautiously. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this, is at your own risk.

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