On chain analysis has been widely reputed to provide users with valuable market insights. Whether you are a beginner or an experienced trader, by harnessing the immense potency of on chain data and its analysis, you can achieve massive success in the industry, as well as multiply your profits by a huge margin.

Before you begin with on chain analysis, there will definitely be several questions in your mind. It is essential for you to be well versed in the basics of the concept before you actually try to employ it for your benefit. Keeping this in mind, we have compiled a detailed article on chain analysis that you can refer to at how to effectively do crypto on-chain analysis.

Another very common query is, which platforms are reputable and accurate when it comes to on chain analysis. You can’t use any and every project available in the market that claims it can perform on chain analysis. The platform you decide to refer to must not just be precise but also should be able to give you a holistic understanding.

We have covered several such websites you can use for on chain analysis in our article: Best Crypto On Chain Analysis Tools to Use in 2023

Dune Analytics stands out amongst several platforms. It can help you examine projects and currencies in a never done before way. Many users have harnessed the functionalities of Dune Analytics and have been able to find the next 100x coin. In this article, we will take you through the ways in which you can use Dune for On chain Analysis.

use dune analytics for on-chain

Dune Analytics Dashboard: Understanding the Basics

Before you delve deeper into the world of Dune Analytics, it is essential for you to learn how to find an alpha using the platform. The analytics that can help you with this are absolutely free on Dune.

Dashboards are your go-to on the platform. You can filter these dashboards according to your needs and also search for specific ones. They help you visualise the data so that you can apply it more efficiently in your analysis. Here is my pick for the top dashboards you must refer to, especially if you are a beginner

  • DeFi users over time dashboard: This dashboard gives you a general idea of the market sentiment and how is the adoption of decentralised finance faring in the industry.
  • Ethereum Staking dashboard: The Ethereum Staking dashboard is super helpful for Ethereum users. Here you can access information about who has a hold in the staking market share and how much ETH has been staked. Additionally, there is also a lot of information about total validators, liquid staking percentage, distinct depositor addresses, etc that can help gain a well-rounded insight.
  • DEX metrics dashboard: The DEX metrics dashboard is a great tool if you want to focus on decentralised exchanges only. It gives you data on Which DEXs have been acquiring the most volume, the market share that is held by each DEX, the ongoing trends in the DEX volume, aggregator information, etc.
  • NFT Market Overview dashboard: This one is a more Non-Fungible Token specific dashboard. The NFT Market Overview dashboard lets you see the volumes on each platform, the market rankings for NFTs according to trade volume, the top NFTs that are trending, etc.

Use Dune Analytics to Understanding Long and Short Open Interest

One analysis strategy you can apply is using information associated with Long and short open interests to decide whether or not to invest in the market. You can use the data presented by GMX, the biggest decentralised perpetual exchange, to get an accurate understanding.

These help you envision the way the market would move and by using the given metrics you can multiply your earnings

  • Open interest: Open interest is basically the number of outstanding contracts that users in the market hold and have not been settled. It highlights the open positions that are active on the exchange. After analysis, you can notice that the long open interests were very highly concentrated pre the two market crashes that happened in June and November. This highlights that in the time of huge skews in either shorts above longs, or vice versa; the market shows an opposite trend.
  • Current open interest: With current open interest, it is easy to identify the current state of the market. As of now, we can observe a trend more inclined towards skewed to being short.
  • Specific cryptocurrency open interests: Another thing you can do is to analyse the open interest of the particular coins you are interested in. You can begin by looking at the behaviour of retail investors and how short or long they are on tokens and currencies like:$ETH, $BTC, $UNI, $LINK
  • Top traders: This is an added layer of information that you can put to use without basing your decision on it. Sometimes in the market, it is the traders who win. Hence by seeing what accounts are winning trades, you can observe their positions and gain some insight.

Analysing stablecoins

At Crypto Bulls Club, we have covered stablecoins extensively. These are crypto coins that have their value pegged to a fiat currency. These stablecoins provide users with several benefits over the traditional cryptocurrencies that we are aware of. Analysing these coins can grant you a comprehensive look at market movements.

Here are some of the metrics that could be useful for you to analyse

  • Daily stablecoin transfer volume: The Daily stablecoin transfer volume is very helpful in understanding where do stablecoins stand in the entire industry. If this metric starts rising, then it is advisable for you to move toward where the smart money is going and move your funds to stablecoins.
  • Weekly stablecoin senders: Understanding Weekly stablecoin senders can aid you in staying a step ahead always. In historical context, it usually grows before the volatility and big red candles for crypto, and it staggers down prior to the green candles.
  • Stablecoin peg overview: By analytically looking at an overview of Stablecoin, you can keep up with the state of its volatility and peg values. This can enable you to safeguard your funds and keep them from being lost.
  • Stablecoin inflows/outflows: With Stablecoin inflows and outflows, you can very easily and efficiently access the information on the number of stablecoins that are entering into exchanges, and those that are exiting respectively. Generally speaking, when inflows increase, bullish trends are indicated and when outflow rises, we can suspect a bear market. However, right now the situation has a few variables and exceptions. There is currently a growing distrust in CEXs, due to which we are witnessing that outflows have become more common.
  • Stablecoin user trend: Like many other metrics, by evaluating the trends amongst stablecoin users, you can speculate the direction the market is picking up. If the usage rises, we can assume a positive and growing overall trend for the market, whereas if there is a stark diminishing of users, speculations on a downtrend hitting the market can be made.

Narrative hunting

Chasing and understanding what narratives are prevalent and attractive in the industry can be extremely advantageous in making smart investment decisions. You can operate Dune to draw comparisons between and understand what are the new narrative-driven protocols making rounds in the market.

A dashboard constructed by Mochi, can help you easily grasp layer 2 trends. Some of the most important parts of this dashboard are as follows

Transactions overview: This metric basically shows you all the ETH, ERC-721, and ERC-20 transactions that have taken place in a span of the last 3 months. This is useful in highlighting what activity has been materialising on the chain for a while. Right now we can notice that Polygon is topping most charts especially since its coin is amongst the top ones. There is also a close competition between Optimism and Arbitrum.

Daily users Overview: Under daily users, you receive data that shows the number of users that are engaging with the chain on a daily basis and also trading with ETH, ERC-721 or ERC-20 tokens. If there is a sharp rise in users of Optimism that are using ERC-20 coins, it could indicate a growth in the Defi area. Similarly, when we see ERC-721 users grown on Polygon but the curve remaining flat on Arbitrum and Optimism, it can reflect a growing narrative around Non Fungible Tokens.

User wallet overview: When we look at an overview of the users, we can find the different kinds of users engaging with different chains like Smart money, Retail money, Degen money, etc. According to hoeem, a very famous crypto influencer, “Evidently there is a constant sharp rise in the amount of wallets that are coming in to each L2. The new wallets coming into Polygon is vast due to their excellent business development. Optimism is gaining a lot of new wallets compared to Arbitrum. You can also see the battle between both Arbitrum and Optimism with gaining new wallets, every time it flips is there a narrative switch in play? Is there a larger % of smart money over retail money? Is there a increase % of whales? Follow the money, find the opportunity. Additionally, you can also use other dashboards to follow wallets that have a high percentage of winning and see what they’re investing in.

Also read

DEX metrics

By using the metrics related to Decentralised exchanges, you can further gain a more comprehensive view of the market. Here are some parameters that can prove to be useful for you

DEX 7 days trailing growth can help you observe if the market has been witnessing a period of great volatility or not. If the metric is on a downtrend, it means that volatility is low and the interest of investors is diminishing. The opposite is true when DEX 7 days trailing growth is on an uptrend.

If you constantly track DEXs ranked by volume, you’ll notice changes in the hierarchy. One tip you can keep in mind is that when there is a loss in the volume of a new chain, there is an opportunity

You can also check the Daily DEX volume for a similar purpose. In a scenario where there is a ton of activity, then you should dive deep into getting to the root of it.