DISCOVERY AND DUE DILIGENCE
Token Flow
Disclosure: The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.
STEP ONE
Home
Dashboard:
N/A
Inputs:
Smart Money Token Holdings; Smart Money Token Inflow; Smart Money Token Outflow
Widgets:
Positive changes in token balances (or positive inflows) that are significant in the last 24 hours.
Note, negative changes in token holdings doesn't necessarily mean the token is being sold off. Rather it can mean a number of things such as depositing funds into a pool or a staking contract. Hence, there is alpha in tracking token outflows as well.
What You Are Looking For:
Step 1
Smart Money labeled wallets are often indicative of signal amongst the numerous wallets and contracts that live on-chain. Given they buy or sell a significant amount of a certain token, it could be a positive signal for both the upside and the downside.
This is actionable for the user as he/she can choose to front run the market given they were equipped with Nansen data. There are countless examples of such, seeing inflows/outflows into Smart Money addresses and corresponding increases/decreases in the price.
Why
Step 1
For inflows, anything above $8M is in the top 10% of daily inflows and anything above $20M is within the top 5%. This is to ensure you filter out noise on low volume days.
Note, there are further things that can be concluded from these inflows and outflows such as retroactive airdrops, future incentives, high yield, etc. For example, if USDC was being accumulated heavily during a given day, a Nansen user can now see where Smart Money addresses are putting their USDC to work.
Pro Tip
Step 1
STEP TWO
Smart Money Token Holdings
Dashboard:
N/A
Inputs:
Token Holdings
Widgets:
What were the changes in holdings for that token in the last 7 and 30 days.
What You Are Looking For:
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Step 2
To see whether this positive change in holdings is a recent thing or has been going on for a few days.
Why:
The number of smart money addresses owning that token is also shown in the column far right. More smart money owners might represent a broader consensus about the investment value of that token, but might also mean that it's late to acquire it.
PRO TIP
Step 2
STEP THREE
Token Movements
Dashboard:
Yesterday's and today’s dates
Inputs:
Balance Change in the Period
Widgets:
The single entities/wallets that account for the overall change in token holdings/inflow of the discovery dashboards between the two specified dates (i.e. last 24 hours).
What You Are Looking For:
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Step 3
Gives us a macro perspective of where a given token is flowing on-chain. This is particularly useful to see changes over a given timeframe that may be indicative of ongoing developments or trends in the market. In addition, we can now tell whether that change/inflow was caused by just one entity or many, and who where they - contextualizing flows is signal, rather than taking an aggregate across the market.
An example can be tracking $WETH token movements over the last 2 months and seeing a general trend of $WETH flowing into the Avalanche bridge.
Why:
Step 3
This widget will also be able to show that the change in holdings/inflow at times was not determined by purchases alone, but by sales too.
An increase in holdings of 30M might be 40M bought and 10M sold. Moreover, a single entity could have both bought AND sold for the same amount, which would return a 0 change in balances. But the transactions would show in the next widget of Token Movements.
Another way this dashboard is useful is that it shows if a given wallet DCA or accumulated a position over a given timeframe. For instance, if we track the token movements for $wLUNA over the last 2 months, we can see Parafi has put on a big position. However, this might have been hidden in the token flows dashboards.
Pro Tip
STEP FOUR
Wallet Profiler
Dashboard:
Wallet address of the entities highlighted by Token Movements
Inputs:
Token Balances
Widgets:
How big is that token for that wallet. Are they "whales" or just casual hodlers of it?
What You Are Looking For:
Step 4
It's important to contextualise as much as possible what you are seeing. Even balances of millions of dollars could be a very small percentage of the holdings of that address, which puts a completely different level of importance to your current discovery.
Why:
Token Balances gives an understanding of the overall allocation of this wallet's crypto portfolio. Regardless of the relative size of their position against the rest of the wallet's token holdings, you will need to drill down into the 'Wallet Profiler for Token' tab to see what their strategy is with this particular asset.
PRO TIP
Step 4
STEP FIVE
Option 1
Wallet Profiler for Token
Dashboard:
Wallet address of the entities highlighted by Token Movements
Inputs:
Token Balance overtime for Address
Widgets:
Simply, the buying and selling of the token by that address and over time.
What You Are Looking For:
Step 5.1
Have they kept accumulating?�Or are they continuously buying and selling?�Smaller and smaller amounts? Or larger and larger?
This is easy to track with the trend line at the top.
Why:
Give it a few seconds to load as the current token balance may take some time to reflect the current token price in USD. The First Received section and Token Balance at the top can contextualize the size and date of entries for the given address.
PRO TIP
Step 5.1
STEP FIVE
Option 2
Wallet Profiler For Token
Dashboard:
Wallet address of the entities highlighted by Token Movements
Inputs:
Largest Token Transaction
Widgets:
Who were the counterparties of the buying and selling of the graph above and when exactly did the recent transactions happen?
What You Are Looking For:
Step 5.2
Knowing who the wallet sold to and who it bought from can be important.
Also, the transactions in this table have a specific time assigned, which can be useful to understand timing and price action better.
Why:
If a particular change in token balance piqued your interest, it is definitely necessary to track that under token transactions. For instance, if you see a large decrease in balance, it does not necessarily mean they sold the token. Rather, they could have staked a given token or provided liquidity for it in a given pool. These key distinctions are vital when coming to conclusions based on token balance change over time.
PRO TIP
Step 5.2
STEP SIX
Token God Mode�Notable Wallets
Dashboard:
Token Symbol
Inputs:
Top Balance
Widgets:
After having seen how those wallets have behaved with that token in recent times, it's good to have an overall snapshot of the current ownership. Are those wallets major owners of that token? Or just minority holders? Token God Mode allows you to drill down even more on a given token.
For instance, tracking the number of unique addresses for token can be indicative of the token holder base. The larger the number of addresses for a token, the higher the distribution and vice versa. Use the 'Hodlers' tab to better understand distribution amongst current holders of a token.
What You Are Looking For:
Step 6
Token God Mode allows you to drill down into the token’s specific holders and see any significant counterparties. Users can use this dashboard to see top balance changes in the last week, top transactions and top balances for the given token.
For all of these tables under ‘Notable Wallets’, users can filter for specific transactions by using the data filter tab and find significant addresses that may be interesting to track. Token God Mode gives more information over varying timeframes which compliments Token Movements because you may find new stuff.
Why?
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Step 6
Similar to what we did with 'Top Transactions' under the 'Token Movements' dashboard, you will want to toggle with the data filter button to drill down further.
First, check out the macro picture of the given asset by viewing the 'Hodlers' tab to see distribution and then the 'Trades' tab to see the general price trend and volumes of the asset.
Next, it is nice to see who are the big holders by selecting the 'Notable Wallets' tab. Here, you can sort by a number of features such as positive/negative changes or even when a given entity/wallet was first into a token.
You will find interesting wallets that might interest you.
PRO TIP
Step 6