The problem

The blockchain technology is hailed as a great provider of transparency. The technology is the basis for an open system of transmission where all transactions are recorded and available to anyone. The crypto space is awash with noise, and with so many transactions taking place, it is difficult for users, developers traders, and organizations to make decisions based upon the data.

Even when users drill into a transaction to examine it in detail, the level of transparency is usually limited to the blockchain and its date, time, value traded, as well as the addresses of both parties. These are equivalent to account numbers.

The projects have been able to extract useful information from these data. Etherscan is a block-explorer that allows users to browse and search the transaction history of an address. Chainalysis is a platform that focuses on anti-money-laundering. It allows users to use their investigation software in order to monitor transactions live.

Understanding transactions can be difficult when there are no addresses or names of the parties involved. If the parties to two identical transactions are different, such as if one is a bank or exchange and the other is a person, the perception of the trades will be very different. It could be even criminal.

Could the public find out more about an address without identifying the owner or doxxing them?


Projects to Watch: Reclaiming Purpose for Crypto

The idea: Nansen

Alex Svanevik, CEO of Nansen, says that the inspiration for Nansen was Crypto Twitter.

Svanevik, a data scientist, is an expert in the field. He noticed viral tweets by people who wondered, for example, who owned the addresses of $200 million USDT that moved from one to another. The blockchain was transparent, in that people could see how much capital moved but not why.

Svanevik stated that “we saw two needs, both in the investor camp and builder’s camp. People could better understand their ecosystem and build products.”

In April 2020, Svanevik, Lars Bakke Krogvig, and Evgeny Medivedev, two other data scientists, named Nansen after Norwegian polymath Fridtjof Nansen and Nobel Peace Prize winner. Krogvig, Medvedev and Svanevik were responsible for the engineering effort exclusively focused on building. Svanevik was in charge of business strategy and fundraising.

They set out to attribute, characterize or label addresses. This is a challenging task due to the sheer volume of data. The team had to find a way to combine data from different layers 2 and blockchains into one form that could be used for analytics.

What’s on a label

Nansen’s website states that the company has labeled over 250 million addresses across ten different blockchains.

Nansen uses algorithms to determine the type of wallet based on its behavior and activity. The wallets will then be tagged with descriptors such as fund, decentralized exchange trader, or private investor. Nansen also adds an emoji that lets users know if a wallet is an exchange or a smart contract.

Nansen’s toolbox has more than a hundred names, and each wallet is able to be tagged several times. A Nansen post states that it uses labels and that does not doxx or reveal private identity. This is in line with the crypto-ethos of privacy and anonymity.

Many wallets, however, are public knowledge, including those of well-known individuals such as Justin Sun and Vitalik Yeterin, as well as companies like Wintermute or Jump Trading.

Nansen gives users a better understanding of what’s happening on the blockchain. By naming wallets users can see when Justin Sun trades at a decentralized market, or when legendary collector of non-fungible (NFT) tokens purchased PFPs from Milady Maker.

Instruments and controls

Nansen dashboards provide sophisticated tools for data analysis, building on its labeling capabilities. Token God Mode is a dashboard that allows users to dive deep into a token, showing its distribution, activity and exchanges.

Exchange Flows shows the users which wallets interact with exchanges. It also shows what tokens flow to and from exchanges.

Nansen has even created a dashboard, called NFT Paradise, that displays recent sweeps (defined by the purchase of three or more NFTs at once), the most profitable collections for flipping (defined by the buys and sales within a specified time period) as well as the most popular NFTs contracts over the last seven days.

Token God Mode is just one of many dashboards available on Nansen. They cut through the clutter and allow users to focus their attention on specific parameters. Svanevik explained that instead of 40 tabs for analyzing a particular chain, all the information is in one place.

Future of Finance

Nansen has a headquarters in Singapore, and employs approximately 150 people across 38 different countries. Svanevik believes Nansen is an important player for the future of finance. Many investment firms agreed. According to Svanevik, Accel, GIC, (Singapore’s sovereign wealth fund), Andreessen (a16z), Tiger Global, and SCB 10X have all invested $88 million.

Svanevik said that he hopes the crypto community “will have built a new financial framework for the world by 2035 so that traditional finance will be replace with blockchains.” Svanevik will do his part to help make this happen. He said, “This future does not happen on its own.”

Svanevik stated that transparency is key to building.

First, we must ensure that pioneers who are entering the crypto-space – traders, investors and builders – will succeed. “If we help them to get the best information, so that they see success, then they will reinvest in the industry. If they invest in the industry then it will blossom. Svanevik continued, “You get new projects and companies that are being realized in order to build this futuristic future that we want.”

Daniel Kuhn, Jeanhee Kim and Daniel Kuhn edited the book.