NFT Analytics: How to Use On-Chain Data to Get an Edge

NFT Analytics: How to Use On-Chain Data to Get an Edge

Nansen demonstrates how to use on-chain data in NFT analytics

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Introduction

A core characteristic of blockchains is immutability, which in this context means that every single transaction on a blockchain is stored and freely auditable forever. Given that a blockchain is a public database shared across multiple nodes, the record of transactions is viewable by anyone in the world.

Investors can leverage this on-chain data to gain an edge over other market participants by employing information asymmetry to make better and more consistent trades. Often referred to as ‘Alpha’, this clandestine intel helps specific traders outperform others. One of the critical areas where alpha divides investors is NFT trading and minting.

NFT stands for Non-Fungible Token, and an NFT is a cryptographic asset possessing a unique identification code. If something is fungible, it means it can be swapped; a dollar is fungible because it can be swapped for another dollar. An NFT is distinctive, and it is impossible for one NFT to be equal to another. However, ownership of NFTs is transferable, which allows NFTs to be traded and sold on the open market. For more in-depth information on NFTs, check out this guide: Nansen's Guide to NFTs

The popularity of NFTs continues to increase, which is partly speculative but primarily driven by real-world use cases that include connecting creators and consumers directly without intermediaries and most recently, due to asset tokenization – for example, tokenized real estate.

This article investigates how traders can use on-chain data and analysis from Nansen as a tool to exceed and surpass other investors. Nansen features several dashboards of NFT collection analytics and NFT data analytics, and this on-chain data, or alpha, helps investors stay ahead when trading NFTs.

Read more on the best NFT analytic tools here.

Follow Smart Money

By analyzing over 130 million Ethereum addresses, Nansen has formulated a list of wallets that have made consistent profits in the NFT sphere through a variety of means, thus earning them the moniker ‘‘Smart Money’’.

Found under the NFT Paradise tab, the leaderboard is comprised of the best NFT traders on-chain. This dashboard is perfect for finding models or mentors for NFT trading to copy-trade. Simply select a profitable wallet, and copy the trades made by that account. Copy-trading is a brilliant strategy and can be utilized by anyone regardless of experience level.

The Smart Money Tracker is a live data feed showing the real-time transactions of the most profitable wallet addresses. Investors can see what collections smart money is minting, the collections smart money is selling, and use this data to augment their own NFT trading strategy.

Nansen's NFT Paradise Profit Leaderboard Dashboard
Nansen's NFT Paradise Smart Money Tracker

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Keep Track of Latest Market Activity

The Market Overview NFT data analytics dashboard provides a rundown of the NFT collections and the fluctuations in their floor price. This allows investors to track trends within the NFT sphere and gauge the general sentiment. By filtering by the change in floor price, investors can find NFT collections rising in prominence and mint or purchase them. This dashboard facilitates trend trading, where investors utilize Nansen’s collection analytics to trade alongside momentum.

Nansen's NFT Paradise Market Overview

Find New Mints

This dashboard provides investors with a wonderfully simplified outline of the NFT space. This tab shows investors the latest volume of NFT mints, the most recent projects Smart Minters are minting, and a leaderboard of the most profitable wallets.

This is true alpha; instead of wading through Discord groups and Twitter, investors see the entire space and the trends developing within it from a single source. Investors gain access to the newest mints, and when trading NFTs, timing is paramount.

Investors can follow price trends, volume, and the top NFT flippers from a single dashboard. With the proliferation of NFTs finding profitable projects early on has become more complex, and thus why investors need a blockchain analytics platform to ensure they stay ahead of the market. 

Nansen's Mint Master
Nansen's Mint Master Volume

Track Specific Collections

Once investors have selected an NFT collection, the next dashboard is Nansen’s NFT God Mode. This is the specialized analytics tool if the other dashboards are considered generalist. Providing in-depth collection analysis, including a basic overview of trading volume, transactions and buyers, holders, trades, listing, related collections, how much smart money is holding, sale platform, and the addresses buying.

This dashboard offers investors a true insight into the current trends of specific NFT collections. Visualizing price trends and volume allows investors to determine ideal selling conditions, and tracking smart money wallet addresses gives insight into whether the project is best to hold or flip. 

Nansen's NFT God Mode: Bored Ape Yacht Club
Nansen's NFT God Mode: Bored Ape Yacht Club

Check Rarity

Nansen’s algorithms use statistical uniqueness analysis to calculate NFT rarity. The rarer the traits associated with an NFT, such as diamond teeth on Bored Apes, the higher the value of the artwork. Most projects have an extreme curve, with the rarest combinations having significantly higher values.

Nansen’s Rarity Profiler allows investors to search for specific traits, view the wallets holding those NFTs, and calculates a rarity score for each NFT. This is ideal for NFT traders looking to acquire highly specific members of a larger collection. 

Nansen's Rarity Profiler

Conclusion

Nansen is the one stop shop for NFT alpha, distilling vast amounts of data and presenting it in a digestible format. It is without a doubt an essential tool for every NFT trader who wants to outperform their peers. Not only does Nansen track the most profitable wallet addresses and facilitate copy-trading, but it also gives investors the chance to seek developing trends in the market and capitalize upon them. Information is the tool that sets profitable NFT traders apart from those who make losses. Nansen’s analytics display the broader market trends cutting through the masses of unnecessary information and delivers specialized data to help the investor find the best NFT of any given collection. Nansen provides the data advantage investors require to outpace other market participants.

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