Nansen

Author: Paul Harwood

I remember a scene from an old movie. I forgot the name of the movie, but that scene has been etched in my memory. It was about a top Wall Street trader revealing that he had been copying trades based on eavesdropped conversations in the backseat. In the end, he no longer needed that job. Because he was already a millionaire.

## 1. Information Wants to be Free

Traders can directly benefit from the advantage of first-hand information, but from a broader perspective, this can create a more efficient market. In short, information wants to be free. The more open the infrastructure for transmitting information, the faster and fairer the transfer of knowledge. Illegal eavesdropping on government press releases for trading, hosting financial exchange servers at the front end for retail, and analysts predicting quarterly earnings based on satellite images of cars parked at McDonald's are all examples of traders seeking a wisdom advantage—new knowledge.

## 2. Trust Needs to be Earned

The emergence of encryption and blockchain has accelerated the speed of information transmission. The personal privacy of "becoming your own bank" comes from the trade-off of all transactions being publicly broadcast. This reverses everything we know. Trades are not conducted by shady managers behind the wheel of luxury cars, and numbers are not hidden behind balance sheets protected by fraudulent rating agencies—everything is online. We call this "on-chain." In this new economy, trust is earned through verification, not hidden behind institutions and credentials.

## 3. Transparency is King

The privacy offered by crypto comes at a cost: transparency. Transparent transactions on the blockchain mean that everyone is a driver of listening to trades. We can listen to every transaction happening in the world and peek into every wallet and bank account. But can this be done by ordinary people? As a researcher, I am fascinated by the human behavior encoded on the chain in this new open economy. However, in practice, listening to the blockchain is challenging, making it a complex task to bring clear signals to the surface in big data analysis. This is where I first stumbled upon Nansen.

## 4. Uncharted Territory

The Nansen team has played a crucial role in building open-source tools that convert code into meaningful trades. You can check out the Ethereum ETL developed by one of Nansen's founders, Evgeny Medvedev. Nansen continues to refine these open-source tools with a proprietary business model to secure the funding needed to delve deeper into these uncharted territories.

## 5. Names Matter

Data only becomes real with labels. Nansen's labels are descriptive and behavioral names for various blockchain wallets. They do not doxx or reveal the private identities of these wallets. They do something more interesting: they doxx. Nansen has over 100 million labeled wallets, and these labels can be attributed to aspects of user behavior.

The core of Nansen's value creation comes from a team seemingly simply named "Attribution." Within this team, you will find some of the smartest people in the world constantly proposing and refining heuristics to track behavioral trends. Labels range from simple attributes (like "Token Millionaire") to more complex attributes (like "Smart Liquidity Provider").

The label for address "0xd387a6e4e84a6c86bd90c158c6028a58cc8ac459" is known as the influential NFT investor "Pranksy."

## 6. Smart Money Matters

At the top of Nansen's labels is smart money. These are wallets owned by the elite of the crypto world. These wallets have a long history of making savvy investment decisions and staying ahead. Nansen allows users to set highly customizable smart alerts to notify them in real-time when these wallets make new trades and investments.

Smart alerts allow users to track crypto activity in a highly customizable way.

## 7. Smart Money Sends Signals

Tracking smart money wallets individually is a powerful tool for understanding the trading strategies adopted by successful investors. Nansen's new watchlist has been continuously updated to allow users to easily create and track their own curated wallet lists. However, when we view smart money as a group of wallets, they provide a more fundamental overview of the market. Take Nansen's smart money flow as an example; it tracks the total inflow and outflow of smart money deposits and withdrawals across crypto tokens.

Custom watchlists allow for manually curated wallet lists and their latest activities.

Earlier this year, when smart money began investing in Shiba Inu, many people asked why Nansen showed smart money investing in a seemingly meaningless meme coin. Months later, Shiba Inu has ranked among the top cryptocurrencies. The flow of smart money provides signals for capital entering and exiting, allowing for the discovery of new investments and reassessment of existing ones.

Nansen's homepage utilizes smart money labels to track important capital flows.

## 8. DeFi and Smart Liquidity Providers

The rapid pace of crypto innovation has made many innovations inaccessible to the outside world. For those venturing into cryptocurrency, the financial innovation known as decentralized finance (DeFi) has fundamentally changed what we can do with money. Rewards for providing liquidity through smart contracts offer smart functionalities for what is commonly referred to as programmable money. Just as smartphones unlocked new types of applications, smart contracts have unlocked money.

Nansen's "smart liquidity provider label" attracts the most skilled DeFi users by combining precise pricing sources and advanced systems to assess ambiguous values (like impermanent loss). Read more about these updates here.

## 9. NFTs are Perfect for Smart Money

The recent boom in NFTs has made wallet labels more relevant than ever. NFTs are closely tied to social markets. When wallet '0xd387a6e4e84a6c86bd90c158c6028a58cc8ac459' (labeled 'Pranksy') makes a trade, the community quickly follows suit and trades. Nansen has long recognized that smart money is often only smart in areas where they excel. DeFi liquidity providers, on the other hand, are often clueless about which NFTs to purchase.

In particular, the social layer of the NFT market often makes it immune to external influences. Some NFTs frequently change hands for millions of dollars. A slight adjustment to the texture of a Bored Ape Yacht Club (BAYC) fur or rearranging a few pixels in a CryptoPunk can significantly increase or decrease the value of these NFTs.

To reflect the depth and maturity of the NFT market, Nansen further refines its smart money into sub-markets. In addition to existing labels like "Legendary NFT Collector," Nansen now offers improved NFT smart money labels. These new sub-markets reflect the nuances and sub-communities that make up the NFT market.

Smart NFT Early Adopters

Let's start with the early birds. These are the OGs (Original Gangsters) who bought the best projects before they exploded. However, they are not just early birds; they are those who did not sell their NFTs at the first opportunity—despite the dazzling investment returns, they always held on. These pioneers are the true market makers, long-term investors, and influencers in the NFT community.

Smart NFT Traders

Next, we have traders. Unlike early birds and seasoned collectors, NFT traders often book their profits. Their ETH net balance is positive. They have proven to make savvy investment decisions. They control gas costs and rebalance their portfolios to ensure they have enough liquidity for reinvestment. They adopt strategies to acquire valuable NFTs while minimizing risks. Using Nansen to research these strategies is like earning a Harvard degree in the crypto world, with the cost being just a small part of the academic content.

Smart NFT Minters

Minting NFT collectibles from contracts or websites is not easy. There are security risks, front-running, gas costs, and a variety of choices among NFT projects. Besides the challenges of minting, the ephemeral nature of projects makes choosing the right exit time critical. Our Smart NFT minters are the best. We have calculated the most profitable wallets across multiple projects over the past 60 days.

Smart NFT Holders

For you and me, the way Hodlers are built is different. Back in 2013, when Bitcoin was priced below $1,000 and frequently surged and plummeted by over 30%, the term HODL seemed like a drunken misspelling urging people to hold rather than sell. Through this event, the HODL mentality was born. Despite significant losses, Hodlers are the strongest hands that can continue to win in NFTs. Nansen has developed a "secret formula" to find NFT holders, unlike influencers and traders who hold large amounts of NFTs between peaks and troughs. #hodlgang

## 10. Conclusion

Nansen Smart Money is not just an alpha tool for investors and traders. These labels represent a new type of economy where knowledge is open, and powerful participants cannot hide their behavior. Our financial future is no longer in the hands of institutions we are forced to trust. Instead, all actions are public and broadcasted for verification. Trust is not a blind risk taken due to a lack of alternatives but a valuable asset that is continuously verified and earned.

This new economy allows information to spread faster across the network, benefiting everyone. To make crypto accessible, tools like Nansen must continue to push the frontier, turning data into meaningful signals. In cryptocurrency, following smart money is more important than ever.