Illuminati Round Table Call Notes:
On-Chain Wizard - Crypto Research & On-Chain Analyst
Twitter: @OnChainWizard
Came from the TradFi world - spent a decade in equities (long, short, hedge funds, trading stocks) which helps a lot with crypto
Came into crypto in May 2021 - during the retail peak
He began watching wallets, and this brought him success
Building chainEDGE - a software tool, ‘degen version of Nansen’ - a list of intelligent money wallets, and you can monitor what they’re buying and establish ideas of new narratives and tokens that may pump up later on
Where Should a Beginner Start with On-Chain Analysis?
Ask yourself, ‘why are you going to learn it?’ - looking at just the movement of money from 1 wallet to another is of low informational value
The easiest way to learn is by finding wallets you like and monitoring them - bought projects that performed well early on
Tools to use - Nansen, chainEDGE, Dune
Build a list - watch the list - what tokens they like - why they want them
You'll want to develop your style/criteria for monitoring to perform well
Wizard leans more towards unknown/less-known tokens
“If your taxi driver tells you about it, sell it” - if you see it on TikTok, sell it
Build a wallet map by monitoring the community and tagging all the important wallets - the team wallet, individual member wallets, advisors, etc.
Focus on the top wallets (top 10-20)
You rig something in your favor by knowing something in advance or buying early on
On-chain, you should be ready to watch wallets keenly and be prepared to pounce on the opportunity
If you see a wallet suddenly stop selling off a token and stop depositing fresh capital, you may have a chance to take a bounce trade
How Do You Account for Risk When Trading Like This?
Strategic position sizing - always be diversified and do not over-invest. Do not abuse leverage either, or use a smaller margin capital with leverage to manage risk but still be open to solid profits
How Can Publications Better Leverage On-Chain Data for Content?
Pair fundamentals (data) with qualitative data (events) to establish a narrative to state how crowded this trade is in the content. Is smart money involved or fading it?
TVL can be an indicator to tell you if a narrative/protocol is gaining traction like the external is saying or not
Wizard uses the data to round out his articles and content instead of making it the forefront
What is Catalyst Trading?
With the flows of crypto, there are the people who pay attention every day and the retail money that runs where the hype is
Catalysts can help to push capital into projects without initial traction
You can use on-chain data to see open interest and positioning on CEXs to see how crowded the trade is
It is essential to determine the catalyst, when it is, know when to get out of the trade. This is a PVP market, so you need to take from the market as much as you can.
You can analyze historical token unlocks and see if people are dumping them by setting a filter to a set of wallets above a certain $ amount and monitoring what those wallets are doing
Wizard is currently trading Arbitrum tokens on and off and believes this ecosystem to have a significant potential to explode upwards when capital starts flowing back into crypto
It reminds him of BSC from when he first got into crypto
chainEDGE
They took an unconventional approach to build this platform - no funding rounds, all in-house building custom to Wizard’s liking
This allows the team to be able to adapt it quickly to users' needs and wants
‘HotHands” - a feature that highlights ‘players’ (traders) who have the best PNL record and shows users what they’re doing with their money
“New launch Paradise’ - list focused on projects with $2 million and under market caps and, again, see where the smart money is going
Purpose of the platform - protect your capital & increase your capital
Monitors wallet token movements and let you see that very easily
Longer term - looking for a creative way to make wallet labels and give them context (tag them clearly and gives an idea of what type of wallet user it is)
It will be relatively comparatively cheap to purchase and use chainEDGE
Hope is to onboard people into on-chain analysis so they can avoid being exit liquidity - gives you an edge to profit from
The basic package - smart money movements, on-chain analytics - is very affordable - for new people
The premium package - hot hands, liquidation maps - for the advanced user
Using this market downtime to develop it with user requests
Final Thoughts
Most tools will focus on seeing when someone sends tokens to another wallet, etc. We need to focus on WHO is doing it and how profitable they are, to make money - you need actionable insights, not just seeing the movement
This platform is built from the perspective of someone with Tradfi insight and applying it to crypto
On-Chain Analysis & Catalyst Trading