Guide to On-Chain Tools

In recent days, there has been some pullback in the cryptocurrency market, and some friends asked: Should we sell some altcoins for Bitcoin now that it’s fully loaded?

My response is: In a bull market, frequent trading is not advisable, and it mainly depends on individual expectations. If you expect Bitcoin to double and the altcoins you currently hold are also expected to double, then there is no need to change positions at this stage.

Some may be surprised by this response. Haven’t I always advised everyone to hold Bitcoin? Why am I suddenly wavering?

It’s not that I’m wavering, but others are. I started accumulating Bitcoin in 2022, and articles have been advising people to do the same. However, we are now in the middle of a bull market, and if you still don’t have Bitcoin in your portfolio, then Bitcoin may not be as important to you (in your mind) as any other altcoin. So, at this stage, whether or not you hold Bitcoin is less important, and what matters most is the altcoins you currently hold (the ones you believe in) and your expectations for them.

Yesterday, another friend left me a message saying that half of their portfolio is in XMR, and they’ve been holding this coin for over a year. They’ve been at a loss for the whole bull market because of this coin. They asked if they should sell all of it and switch to Ethereum.

This is indeed a somewhat tangled issue. This friend heavily invested in XMR because they believed in the privacy sector, hoping to make a decent profit in this bull market. But who would have thought that this coin would be delisted by major exchanges directly?

So, I took a look at XMR’s trend. The price has now dropped to around $120, but it still ranks among the top 100 coins, with a market capitalization of $2.35 billion, ranking 50th. If we don’t consider other factors, from a candlestick perspective, it’s basically at the bottom period, and theoretically, it should be difficult to continue to fall. So, there may be two choices at this point:

The first is to continue holding XMR. If there is no major negative news in the future, with the help of the bull market (and some undisclosed use cases of this coin), there is a certain probability that this coin will rise again. For example, there is a 70% chance it will rise to over $300 (just a random guess, please do not follow).

The second is to sell some XMR and switch to ETH because ETH is expected to rise to $8000 - $10000 in this bull market (of course, this is subjective, as ETH is a coin I have always been bullish on). Even if you buy at the current price of $3300, I believe there is a 99.9% chance that it will double (to around $6000) in this bull market. In this case, switching positions can make up for the existing losses in XMR.

One is a coin you were very optimistic about, but there is only a 70% chance that it will make you money now. The other is a coin you weren’t very confident about at first, but there is still a 99.9% chance (and most people also believe so) that it won’t make you lose money. If you were the one reading this article, what would you choose?

At this stage, many old investors should already be fully invested, and many new investors are probably still following the hot spots and buying in. Only a small number of people continue to watch from the sidelines. Of course, there are many ways to make money in this field, besides spot trading. Some people may also be using their own expertise and methods to make money (such as on-chain arbitrage, airdrops, staking, etc.).

But no matter how you make money, if you want to delve deeper into this field, it is essential to understand and utilize some on-chain tools. Finding and using on-chain tools can greatly amplify your research and investment efforts. Next, following this train of thought, we will do a new round of sharing on the topic of on-chain tools.

1. Tools for discovering narratives

In previous articles, we have mentioned multiple times that in this field, research should focus on understanding narratives rather than specific projects. Especially during a bull market, constantly changing narratives/trends can greatly influence market sentiment and the success of related projects.

In this field, one of the ways to make quick (big) money is to buy into projects at relatively low prices before the corresponding narratives become popular and the projects potentially skyrocket. This approach may be one of the fastest ways for ordinary people to make money besides using leverage.

I remember a few days ago, a friend asked me a rather mystical question: What is the next sector to rotate, and please tell me a few corresponding projects so I can lay low now.

To be honest, no one (except perhaps institutional investors) can predict in advance what the next booming sector will be. More often, it’s just offering a few possible options based on some data or personal experience. Unlike traditional analysis methods such as technical analysis (like candlestick charts) or fundamental analysis (focusing on price models and market trends), narrative analysis mainly attempts to uncover collective attitudes and emotions of people (investors). Therefore, narrative analysis is quite challenging. It not only requires timing but also the ability to grasp collective attitudes and emotions, which is almost impossible for anyone to do perfectly (even current AI can’t do it).

So, please don’t ask me such questions in the future. If I could accurately predict the next booming sector and project in advance, wouldn’t I be getting rich every day with my eyes closed?

So, is there a way to make these predictions (guesses) more reliable? Or, how can we effectively lay low before some potential (possible) narratives emerge?

There are mainly two ways:

Firstly, it’s essential to get involved in projects that align with the narrative as early as possible and persist in researching them. For example, since the beginning of last year (2023), we have been extensively discussing RWA, but many people were not familiar with this narrative concept at the time, so they didn’t see its potential. If you had persisted in focusing on and studying the development progress of related projects under this narrative, it would have been easier to capture its growth changes before the narrative exploded.

For instance, during the 2017 wave, many people jumped on the narrative hype of ICOs and made money, and in 2021, some caught the rise of NFTs and also profited. In this current cycle, we have already identified AI, GameFi, and RWA as three major focus narratives early on and have consistently recommended them in our articles. Of course, the biggest surprise of this cycle should be the emergence of BRC-20, which later ignited the development of the entire Bitcoin ecosystem. If you could have entered this narrative early and deeply understood and researched it, you would likely have had a good harvest.

However, this approach may not be suitable for many people because you cannot rely solely on information obtained through self-media or media to decide your investment direction. What others say is only their opinion, and any action process must be DYOR (do your own research).

Secondly, use some on-chain tools to discover potential trend changes. For example, some people like to use changes in whale wallet addresses as an auxiliary basis for judgment, while others prefer to use the topic index on social platforms or Google Trends index as an auxiliary basis for judgment, and so on.

Here we recommend combining the above two methods. Why?

Because only by cross-verifying the information you obtain (including news) and using some on-chain tools for real data, you may truly judge those possible trends.

Here, we briefly introduce two practical tools: Dune and AlphaScan.

Dune is a very practical dashboard tool where many experts share dashboards based on various dimensions of data, making it one of my most commonly used tools for discovering data. If you are interested in certain concepts or projects, you can directly search through Dune and then look at the dashboards with relatively high ratings.

We recommend a dashboard called Crypto Narratives, created by the well-known KOL cryptokoryo, which lists the data trend changes of many sectors, giving you an intuitive understanding of the narrative in the crypto field. This dashboard is also one of the key dashboards I collect. See the image below.

AlphaScan: We have introduced this tool several times before. It is a very practical Twitter topic analysis tool. It not only lists many representative crypto KOLs (you can directly click and follow them), but also lists these KOLs. Excavate the project topics that have been discussed recently and display them in a summary. It can be said that through this tool, you can basically understand what the various KOLs on Twitter are paying attention to. We all know that crypto KOLs are generally at the forefront of this field, and what they are currently focusing on or discussing may be narratives that are currently or about to explode. As shown below.

2. Wallet tracking tools

We mentioned above that some people prefer to judge the direction of the market or certain projects by monitoring the activities of some whales. There are currently many tools for monitoring whale wallet addresses, such as Debank (we introduced in his previous article) offers a whales column, as shown in the figure below.

DexCheck: There is also a Whales Big Trades Tracker section in the tool, which can detect the latest trading activities of whales on different chains in real time. As shown below.

In addition, there are monitoring functions for whales in tools such as Arkham, Nansen, and even Dune mentioned above, all of which can be used to monitor Smart Money.

However, the other problem is that these whales now know that they are being watched by many people, so they will also try various corresponding methods (unless they intentionally want you to know). As a result, the effectiveness of monitoring whale wallets seems to be increasingly delayed.

Therefore, we may consider a new approach, such as monitoring Alpha Hunters. These wallet addresses often do not initially have large assets (less than $100,000), but some of them always manage to achieve exponential asset growth in a short period. If we can find and monitor such wallets for analysis, would the effect be better?

For this, we can use specialized monitoring tools for Alpha Hunters wallets, such as Alpha Quest. This tool has currently collected and listed more than 4,000 related wallets (small accounts) and their performance. By studying these wallets and their correlations, we may be able to discover some Alpha opportunities. See the image below.

However, although Alpha Quest seems to be a relatively easy-to-use tool, it is chargeable, which may be a barrier to use for many people. So we can also consider using other such free tools, such asgmgn, which (currently supporting the simplified Chinese interface) has a “Discover who will is buying” section, which lists different categories such as smart money, new wallets, KOL, sniper wallets, etc. You can proceed as needed in real time. As shown below.

3. Tools for tracking VC

Many people also like to pay attention to the dynamics of various VCs to assist their investment decisions. This is actually a relatively reliable way. Because compared to simply following hot spots, or mindlessly following other people’s pursuit of local dogs, paying attention to the investment field of VC is equivalent to paying attention to the flow of big funds. While this insight may not be of practical help to you in the short term, it can help you predict which narratives/areas will gain momentum in the near future.

There are actually many tools in this area. Here we will briefly mention the two that I usually use most.

The first is CryptoRank, the tool itself is also a comprehensive data platform that can help you track various crypto projects, financing status, and even provide various news information. As shown below.

The second one is Crypto Fundraising. With this tool, you can browse projects that have recently received financing. It offers a clear classification selection. And I also prefer the interface of this platform, so I took many of the screenshots of data quotes related to project financing in our articles on this website, and you must have seen them many times. As shown below.

Of course, in addition to the two tools above, you can also use the tools crunchbase, Cypher Hunter and rootdata introduced in our previous articles to query VC financing data for various projects.

In addition, if you are more concerned about projects that have received VC investment but have not yet been listed on a major firm, you can also use special tools to query them. For example, through the following tool, we can directly list projects that have received investment from Binance but have not yet been listed on Binance and focus on them. As shown below.

1. Initial Offering Projects (1DO/IEO/LBP, etc.)

If you experienced the market in 2017, then you should still remember the 1CO craze at that time. Many people also made returns of 50-100 times their investment during that period (of course, some participated in scams and lost their entire savings).

However, now due to fierce competition among projects (such as the previous launch of Merlin Chain on the People’s Launchpad platform, which attracted over 1.05 million participants in just 5 days), some projects use lottery mechanisms (making it difficult to win), some projects require whitelisting to participate, and other reasons, many newcomers seem less interested in this approach.

But in the long run, I still recommend that enthusiastic individuals pay attention to these types of projects (paying attention does not mean rushing to grab the initial offering qualification), because projects launched in this way, in a sense, also indicate that they are relatively transparent projects. Therefore, paying more attention to projects with good Liquidity Bootstrapping Pools (LBPs) seems to be a good direction.

As for tools in this area, just take a look at platforms like this, and in previous articles (January 16th), we also separately clarified concepts such as Launchpad, IEO, IDO, 1CO, and listed some newer platforms. Interested individuals can search for historical articles to understand more.

Here we simply list one LBP tool platform: Fjord Foundry.

In simple terms, LBP is a fair and decentralized way of distributing new tokens, and its pricing mechanism is similar to a Dutch auction, starting high and gradually decreasing. The biggest advantage of this method is that it can mitigate the impact of sniper bots and whale manipulation.

Fjord Foundry provides fair and transparent LBPs, and they announced last month (March 28th) that they would be launching on the Solana chain and providing a range of new features and launch types.

In addition, if you pay attention to the Solana ecosystem, you can also pay attention to 1intro. It claims to be the first LBP platform on Solana. As shown below.

Of course, in addition to the fairer initial launch method like LBP, there is another way to discover new projects that may not be so fair, but is also full of Alpha opportunities, and that is to choose from numerous new pools on the chain (If some of these projects have the opportunity to go online to large institutions later, it will be sort of overcoming a big challenge, such as PEPE). Here we will list a few more related tools.

The first tool is Dex Screener, a relatively powerful multi-chain DEX aggregator that can help you track and analyze real-time data from multiple DEXs and on-chains. This tool has almost become one of the must-have tools for finding new coins nowadays. As shown below.

The second is DEXTools. The function of this tool is similar to the Dex Screener above. It currently also supports simplified Chinese displays. If you don’t like to see the English interface, you can also try this one. Moreover, it has a DEXT score which I think is more practical. Many people used to play with it. I also suggest that my friends take a look at the score first. If a native Token’s score is lower than 80, just stay away from it. This tool seems to be one of the must-have tools for playing native altcoins nowadays. As shown below.

The third tool is AVE. It is similar to the Dex Screener and DEXTools above. It is also a multi-chain DEX aggregator. I found that many friends who want to play with it are also using it. As shown below.

The fourth is birdeye, which is also a multi-chain DEX aggregator that can help you find and discover the latest gem projects with upside potential. As shown below.

I jokingly classified these four tools as the four must-have tools for playing native altcoins. Of course, in addition to specialized DEX aggregators, some of the better Web3 wallets currently provide some related tools. For example, if you like to study MemeCoins in the Solana ecosystem, you can also use OKX directly. The one in the walletMeme Coin HunterTools, which I think is quite interesting. As shown below.

Finally, let’s conclude:

In the realm of cryptocurrency investment or study, we shouldn’t solely rely on various media or self-media (including various communities) to gather information. It’s essential to also utilize necessary on-chain tools to assist in research or validation of decisions.

Investing doesn’t necessarily require complex strategies, and you don’t even need to master all technical indicators (even if you wanted to, it’s quite challenging because there are so many). As long as you can identify and effectively use some basic indicators or on-chain tools, you may achieve better returns than others or discover alpha opportunities earlier.

Take the simplest example:

If you have enough patience to focus on just one indicator like AHR999 to navigate bull and bear cycles, you’ll likely outperform 90% of investors in this field, achieving returns of 3-5 times in a major cycle. There are many indicators like AHR999, as shown below, but for ordinary people, focusing on several of them is enough.

If you have both time and energy, and enjoy learning and research, you can further leverage on-chain tools to identify potential narrative/projects that may surge, thereby increasing your chances of higher returns, such as 10x, 50x, or even 100x.

Of course, returns and risks go hand in hand. It’s not guaranteed that you’ll achieve XX times returns just by using tools. However, at least utilizing these tools can accumulate experience and, to some extent, increase your chances of higher returns (i.e., improve probability).

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