On-Chain Fund Flows: How to Use Data Tools to Identify Genuine Transaction Trends?

2023.11.02

On-Chain Fund Flows: How to Use Data Tools to Identify Genuine Transaction Trends?

Without solving the problem of "who owns the unknown address," you will always be misled by surface-level information.

2023.11.02 - 06:04:48

Navigating Web3 tides with focused insights

Without solving the problem of "who owns the unknown address," you will always be misled by surface-level information.

"2905 BTC moved from an unknown address to Binance"

"15,000 ETH transferred from Coinbase to an unknown address"

We often receive alerts like these— but behind them, are they just wallet consolidation, or actual buying/selling activity?

Without solving the question of "who owns the unknown address," you'll always be misled by surface-level information. Reading this article might save you $10,000 in tuition fees.

1/ Data Tools

I’ll cover several tools below, each excelling at labeling different types of addresses. Choose based on your needs: Arkham, Nansen, Mest, Etherscan.

2/ Address Classification

We broadly classify addresses into two categories: institutions and individual investors—and break them down one by one.

Institutional addresses include exchanges, market makers, VCs, project teams, etc., typically managing large capital. Their deposit/withdrawal activities often impact token prices—such as Binance, DWF Labs, a16z, or the Uniswap Foundation.

3/ Identifying Institutional Addresses

When you spot a high-value transaction, use Arkham and Nansen to check whether the address belongs to any known institution.

In practice, these two platforms offer more comprehensive labels. The process is simple: copy the address and hit enter. If it's labeled, the identity will appear; if not, only the raw address is shown.

4/ Real-World Example

Take this transfer, which shows 15,000 ETH deposited into Gate.

Paste the sender address 0x85F...0C35c into Arkham, and you’ll find it’s an internal Gate address. This was merely an exchange’s internal wallet consolidation—not a sign of ETH dumping—thus avoiding unnecessary panic selling.

5/ Labeling Individual Investor Addresses

Compared to institutional addresses, identifying individual investors is harder. We further divide them into:

1. Well-known figures in crypto, such as Vitalik, Justin Sun, Maji, etc.;

2. Smart money addresses;

Well-known individuals are relatively easier to identify due to associated addresses or off-chain information. You can still use Arkham and Nansen—for example, Justin Sun already has 19 addresses tagged.

6/ Identifying Smart Money Addresses

Determining whether an individual qualifies as "smart money" varies by person. It usually requires additional context—such as past performance or prior recognition as smart money.

You can use Mest to gather such insights. Many community users create wallet lists there—like airdrop hunters, early UNIBOT holders, etc. The more lists an address appears in, the higher its visibility and credibility.

7/ Real-World Example

During $UNIBOT’s early days, you notice address 0x461...b972c bought a large amount at a low price—is it worth tracking? Arkham provides no useful info here.

Try querying with Mest: you discover this address is also listed in three other community lists. It previously made huge profits trading MEME coins and was an early PEPE holder. So you decide to add it to your watchlist.

8/ Tagging Smart Money Addresses

News outlets or WeChat groups often share Etherscan transaction links. How can you quickly identify the address and understand the transaction context?

Use the “manual tagging” feature to label addresses as you collect intel:

1. Open the address detail page;

2. Click “More Info” then “PRIVATE NAME TAGS”;

3. Add a note, e.g., “high-win-rate trader”;

9/ Manual Tagging Feature

Note: You must log in to Etherscan first. All your tagged addresses can later be found under “Account dropdown > PRIVATE NAME TAGS” in the top-right corner.

10/ Real-World Example

For example, I recently got an alert: the BIGTIME team transferred out 2.5 million tokens, but the recipient address was unclear.

So I opened Etherscan and saw my prior manual tag: “FBG Capital.” That confirmed it was likely the project team distributing via an asset management platform. I immediately shared the update on Twitter.