How to use AIGC tools to analyze blockchain projects?

Author: Horry Ko, Noah Ho

In the blockchain field, in-depth exploration and analysis of projects are particularly crucial. Before such analysis begins, we first need to conduct extensive data collection. Fortunately, with technological advancements, we now have AIGC as a powerful auxiliary tool. AIGC, or Artificial Intelligence Generated Content, stands out for its efficiency and automation. With the increasing maturity of Natural Language Generation (NLG) technology and advanced AI models, AIGC has begun to receive widespread attention. Among them, tools like ChatGPT, Bing, Claude, and Tongyi Qianwen are highly regarded in the industry. So, how can AIGC assist us in our project analysis? First, we need to build a research framework that covers key aspects such as the track, community, financing situation, smart contracts/open-source code, and token economics. Then, we will explore how to effectively collect and organize the necessary information using AIGC tools, thereby providing strong support for project analysis.

Analysis Framework

Track

When facing web3/blockchain projects, the first step is to position their track. Track positioning not only helps us understand the market positioning of the product but also provides a framework to assess its potential market opportunities and challenges. For a specific track, the core points we need to consider include market size, technological innovation, ecosystem development, profit models, and regulatory compliance.

Public chains, as the foundation of blockchain, have enormous market potential. They need to continuously innovate technologically to ensure security, scalability, and decentralization. The success of public chains largely depends on their ecosystem, such as the developer community and the number of DApps. Profits typically come from token appreciation and network fees, while also facing complex regulatory challenges, as they are the foundation of the entire ecosystem.

Layer 2, as an expansion solution for public chains, aims to address the scalability issues of public chains. As the scalability issues of public chains become increasingly prominent, Layer 2 has significant growth potential. They need to have good compatibility with mainstream public chains and achieve profitability through network fees and related services. Similar to public chains, Layer 2 also faces regulatory challenges, but may be more concentrated.

DeFi and DEX, as core components of decentralized finance, are rapidly changing the landscape of traditional finance. Their market size is expanding rapidly, requiring continuous technological innovation to provide better user experiences and security. The ecosystem of DeFi and DEX is closely integrated with various assets, services, and platforms, with diverse profit models including transaction fees, lending interest, and token appreciation. At the same time, due to their involvement in financial transactions, they also face strict regulatory oversight.

Underlying infrastructure provides critical support services for web3, such as storage, computing, and communication. The market size for these infrastructures is enormous, as they support various web3 applications and services. Technological innovation is key in this track, requiring faster, safer, and cheaper services. Profit models typically include service fees and related product sales, while regulatory compliance depends on specific services and functionalities.

Community

In the analysis of blockchain projects, the community has become an indispensable part, directly reflecting the project's market acceptance, user engagement, and ecosystem vitality. A healthy community often has a large number of followers or members who actively interact on social platforms like Twitter, Telegram, Discord, and Reddit. However, merely looking at the size of the community is not enough; its activity and participation are equally important. By observing the daily interactions of community members, such as the topics discussed, the frequency of feedback, and the communication between the project team and the community, we can gain deeper insights into the community's true vitality. Additionally, the quality of the community is also a key indicator; a high-quality community will focus on discussing core topics such as the project's technology and development strategies, rather than just price or speculation. Globalization and diversity are also important aspects of assessing community health; a global community indicates that the project is welcomed in different countries and regions. Finally, whether the project team provides education and training resources for the community, as well as whether there is a community governance mechanism, are also important criteria for evaluating its relationship with the community. In summary, the community is not only a supporter of the project but also one of the key factors for its success.

Financing Situation

When analyzing the financing situation of blockchain projects, the first focus should be on the project's financing history. Understanding the financing rounds that the project has completed, such as seed rounds, angel rounds, or private placements, as well as the amount raised in each round, can help us assess the market and investors' confidence in the project. Additionally, the identity of the investors is also an important consideration. Participation from well-known investment institutions or individuals often indicates that the project has certain potential and credibility.
Secondly, the project's growth data, such as user growth rate, transaction volume, or other key business indicators, provides clues about the project's health and market acceptance. These indicators typically reflect the project's actual performance in the market and the stability of its user base.
Finally, the project's transparency is another key factor in assessing its financing health. A project that publicly discloses its financial status, fund usage, and business progress is often more likely to gain market trust. This information can help us understand the project's fund management capabilities and long-term sustainability.

Smart Contracts/Open-source Code

When analyzing web3 or blockchain projects, smart contracts and open-source code are key evaluation dimensions. They not only reveal the project's technical architecture and implementation details but also reflect the technical strength of the development team and their attitude towards project maintenance. Through APIs, we can systematically obtain and analyze this information.
First, security audits are an important consideration. While audit reports may not directly provide APIs, many projects publish audit results on their official channels. Additionally, some auditing firms may provide query interfaces, allowing the audit status to be tracked and displayed automatically. The activity and transparency of the code are another key indicator. By using GitHub APIs or other code hosting platform APIs, we can obtain data on the project's commit frequency, number of open issues, community interactions, etc., which provide us with a real-time snapshot of project development and maintenance.
For specific information about smart contracts, such as contract code and transaction numbers, we can obtain this through blockchain explorer APIs like Etherscan. Furthermore, some smart contract analysis tools provide APIs that can help us automate the analysis of contract security.

Token Economics

In analyzing web3 and blockchain projects, token economics has become an indispensable dimension. It reveals the project's value drivers, incentive structures, and risk factors. First, we need to focus on the core uses and functions of the token, such as its role in value transfer, governance, and incentives. Next, the distribution, circulation, and relationship with the total supply of the token provide clues about the project's economic health. Additionally, market depth, liquidity, and performance on major exchanges are also key to assessing its market acceptance. Finally, the incentive and adversarial mechanisms demonstrate how the project ensures that participants' interests align with the project's long-term goals and how it addresses potential malicious behaviors. In fact, many of these data points can be obtained through public blockchain explorers, exchange APIs, and project documentation, making the analysis of token economics both deep and practically feasible.

Introduction to Chat GPT-4

With the continuous evolution of Natural Language Generation (NLG) technology and AI models, AIGC has gradually attracted widespread attention. Currently, well-known AIGC platforms in the market include ChatGPT, Tongyi Qianwen, and Claude. We have chosen ChatGPT-4 as our analysis tool, as it not only understands and generates natural language but also possesses powerful information processing and knowledge retrieval capabilities. With technological advancements, ChatGPT now supports various plugins to help it more efficiently collect, organize, and analyze data. Whether searching for relevant information online or extracting key information from specific data sources, ChatGPT can quickly achieve this through plugins. Leveraging its inherent language processing advantages, ChatGPT helps users build and refine analysis frameworks, providing strong support for various research and decision-making. However, effectively utilizing this tool is key. In the following examples, we will demonstrate how to use ChatGPT to assist in project analysis. Additionally, we list some commonly used ChatGPT plugins:

1. Access Link: Used to access specified URLs.
2. MixerBox WebSearchG: For online news or article queries.
3. Webpilot: For online information queries based on keywords.
4. Diagram show me: To consolidate information into table format.
5. Aaron Chat PDF: To extract information from PDFs.
6. DeFillama: Provides DeFi data.
7. PortfoliosLab: Provides cryptocurrency market data.

Example Demonstration

To gain a deeper understanding of the highly regarded Layer 2 project Arbitrum from last year, we will use the above tools for detailed analysis. Below, we will gradually demonstrate how to use ChatGPT for information gathering and organization.
Finding Project Overview
First, we seek overview information about the project. We simulate ChatGPT as a cryptocurrency analyst and tell it: "Assume you are a cryptocurrency analyst, and you will write a research report for a crypto project." Since ChatGPT's training data only goes up to January 2022, to ensure its information is up to date, we instruct it: "You can search online to obtain the latest information about the project you are analyzing." Next, we direct it: "Please write an overview, introduction, and project summary for Arbitrum." It will search online for relevant information and summarize it. Ultimately, we sent: "If you are a crypto analyst, you are going to write a research report for a crypto project. You can search necessary information so that you have the updated knowledge of the project you are analyzing. Please write an executive summary, introduction, project overview for Arbitrum." Plugin usage: Access Link, MixerBox WebSearchG. ChatGPT will present its response in Markdown format. We can copy and paste it into Markdown-supported software or online tools like Notion. Below is its response content.

Executive Summary

Arbitrum is a Layer 2 scaling solution designed to enhance the capabilities of Ethereum smart contracts by boosting their speed, scalability, and incorporating additional privacy features. Developed by New York-based firm Offchain Labs, Arbitrum aims to address the inefficiencies and high costs associated with Ethereum-based smart contracts. The platform uses optimistic rollups, where transactions are executed off-chain and then bundled in large batches to be submitted on the Ethereum mainnet. This process significantly reduces transaction costs and enhances the user experience. Arbitrum has witnessed rapid growth, with nearly 4 million unique addresses and over 400 decentralized applications (DApps) built on its platform.

Introduction

Ethereum, a leading platform for decentralized applications (DApps), has faced challenges related to high transaction fees and network congestion due to its increasing adoption. While some believe on-chain upgrades are the solution, others are exploring second layer solutions. Among these, Arbitrum stands out due to its innovative approach to scaling Ethereum.

Project Overview

• Background: Arbitrum, developed by Offchain Labs, is a Layer 2 solution built on Ethereum. It offers developers the ability to run unmodified Ethereum Virtual Machine (EVM) contracts on a second layer while still leveraging Ethereum's Layer 1 security.
• Technical Aspects: Arbitrum employs optimistic rollups, where transactions are executed off-chain and then grouped into large batches for submission on the Ethereum mainnet. This method reduces the computational and storage burden on Ethereum, leading to lower transaction costs for users.
• Growth: The platform has experienced significant growth, with close to 4 million unique Arbitrum addresses and over 400 DApps, many of which are in the DeFi sector. Some of its popular DApps have over $100 million in Total Value Locked (TVL).
• Token Utility: The ARB token, associated with Arbitrum, is used for governance within the Arbitrum DAO. Token holders can participate in decentralized governance decisions, which are executed on-chain once approved.
• Ecosystem: Arbitrum supports a wide range of Ethereum DApps and infrastructure projects, including prominent names like Uniswap, DODO, and Sushi. In August 2022, Arbitrum introduced Nova, a new chain designed to further scale the Ethereum blockchain, especially for high-throughput DApps.
• Team: The initiative is led by Offchain Labs co-founders Ed Felten, Steven Goldfeder, and Harry Kalodner, all of whom have strong academic and blockchain backgrounds.

In conclusion, Arbitrum presents a promising solution to Ethereum's scaling challenges, offering a platform that is both efficient and developer-friendly. Its rapid growth and adoption in the crypto community underscore its potential to play a pivotal role in the future of decentralized applications.

Now, we have a general understanding of Arbitrum. Next, we will gradually collect information based on the framework outlined above. Considering the length of the text, we will continue to teach how to use ChatGPT to gather the necessary project information in the next article.

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