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As managers investing on behalf of clients, we are constantly monitoring on-chain analytics to ensure we are making informed decisions. You can gather a lot of useful, actionable information with on-chain analytics. For example, you can look at unique wallet addresses. If this is growing rapidly it could mean that adoption of the project is picking up. You could also look at wallet activity if there are a lot of transactions, addresses sending crypto back and forth, it could indicate that the project has a meaningful user base and it is not solely being traded on centralized exchanges. You can also see what percentage of the supply of a token is held by the largest wallet addresses. This is important because the main ethos of crypto is decentralization and giving autonomy to its users. However if a project’s tokens are more or less held by a few large wallets then this leads to a centralization that allows a few whales to manipulate, price, rewards, governance, etc. These are just a few examples. Analysis of this data is constantly evolving and new, meaningful relationships, ratios, and statistics are being discovered and tracked. And since this is done on public ledgers, anyone with an internet connection can do their own analysis.
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