How to become an on-chain analyst? Let's see what skill packs you need to prepare

Written by Ryan S. Gladwin, Decrypt

Compiled by Felix, PANews

"Analytics" is common across all industries, including traditional finance, but crypto analysts have unique data at their disposal.

While price prediction is the primary use of on-chain analytics, users also use on-chain data to assess risks, such as whether whales hold the bulk of the token's liquidity or technical risks, such as being hacked.

On-chain detectives also use on-chain analytics to identify scammers and other bad actors, with Twitter renowned KOL ZachXBT being a prime example.

So are you interested in becoming an on-chain detective? Here's what you need to know to become an on-chain detective.

Knowledge and Tools

In order to become an on-chain detective, the first and most important skill is the mastery of blockchain technology.

Vincent Maliepaard, marketing director at blockchain analytics firm IntoTheBlock, said: "Very specific knowledge is required [in terms of analytics]. You need to know the details. For example, if you want to compare transactions between Ethereum and Bitcoin, you need to understand the subtle differences between the two. ”

You need to understand what it means when gas fees increase, or what an increase in trading volume might mean. Knowledge of blockchain technology is an important foundation to become an on-chain analyst. Just as graphic designers must be familiar with Photoshop, on-chain analysts must be proficient in their tools. (Related recommendations: PANews common tools summary)

Vincent believes that four basic tools will suffice most needs. Any tool that can fetch token prices on a daily basis and compare different token prices, block explorers, professional smart tools such as IntoTheBlock, and social tools such as Telegram or Discord, which are usually the first platforms for updating the dynamics of a project.

Which tool to choose depends on personal preference.

Tools like Artemis, TokenTerminal, and DefiLlama also provide various data indicators for the project, making it easy for users to understand the overall trends in the blockchain ecosystem.

Dune and Flipside, on the other hand, are deeper and more granular in their data research to help you understand why change is happening. Other tools like Arkham and Nansen are specialized in monitoring wallet activity.

Despite these advanced tools, block explorers are still the most important tool for on-chain analysts, and a necessary requirement to become on-chain analysts.

Skills

Since the range of data used by on-chain analysts is wide, the next item requires a mastery of financial mathematics and ratios.

With this skill, nuanced analysis can be carried out through the use of formulas and mathematical theories. For example, on-chain analysts can use linear extrapolation* (note: a mathematical estimation method that can be used to study things that change at a constant growth rate over time**) * to predict how the supply of cryptocurrencies will change over time.

While data analytics is obviously a key part of an on-chain analyst's job, to be a good on-chain analyst, it's important to consider not only market value, but also realized value charts and out-of-the-money metrics.

Patrick Scott, an independent on-chain analyst, said: "A lot of on-chain analytics is actually about tracking different transactions. Need to be patient and pay attention to detail. ”

Anyone who has tried to track on-chain transactions will know that soft skills like attention to detail, perseverance, and curiosity are the keys to success. Tracking transactions with a long list of codes can be a painful job, but it's the key to the job.

Once the on-chain analyst has gathered the required information through his extensive blockchain knowledge, superb technical capabilities, and soft skills, it is time to make an opinion.

Nirmal Krishnan, Artemis' head of engineering, said: "I like to think the scientific way. Start with a hypothesis and test it with data. If the data do not confirm the hypothesis, re-hypothesis and re-test. This is an iterative process until the hypothesis succeeds. ”

Show Yourself

In the beginning, you'll want to build a portfolio to prove yourself.

A spokesperson for Nansen said: "Getting used to actively sharing findings and analytics on X (formerly Twitter) after tracking wallet and on-chain activity helps build a personal image. ”

Start by giving yourself a unique name and showing yourself the right prediction, risk assessment, or on-chain survey.

Next, you have two options: find a company to work full-time, or become an independent on-chain analyst.

Maliepard explains: "We work with recruitment agencies. So the best option is to make sure you have the relevant knowledge so that it only makes sense for the recruitment agency to contact you. Write relevant analysis articles and put them on your LinkedIn to prove that you are good at it. "This way, it's competitive when searching for analyst jobs on crypto job sites like Cryptocurrencyjobs.co, CryptoJobsList.com, and Crypto.jobs."

As of now, although there are 75 job openings with the keyword "analyst" on the Cryptocurrencyjobs.co, it is not easy to find a job in this industry. Unless you may be intentionally free from the 9-to-5 shackles and just want to live a freelance lifestyle, you have to stay "independent."

How to Become an Independent Analyst

OKHotshot is an independent on-chain analyst who has been named "one of the best NFT analysts and security experts" by DappRadar. Before becoming an on-chain analyst, OKHotshot was a trader, but after devoting himself to on-chain analysis, the gains he made were in stark contrast to the losses that traders were prone to before.

"As an on-chain analyst, I use this data in my custom model to predict possible market scenarios and act accordingly," says OKHotshot. Now I focus on on-chain data analysis because of the huge profits. ”

Meanwhile, independent on-chain analyst Patrick Scott began creating educational content about on-chain analytics while working full-time in finance. He slowly began to form his own user base and gradually became a full-time freelance analyst. While his main source of income comes from trading, he also provides services as an on-chain analyst, helping to develop strategies and assess on-chain risk. As a payment for his services, he receives part of the project's tokens.

OKHotshot offers similar services for NFT projects, including XCOPY. OKHotshot explains, "The work I do is very different from each project. On-chain data and trends need to be considered, as well as smart contract auditing and Web3 security, and release strategies, pricing, and incentive models need to be developed. ”

It's hard to get started, and getting your first customers is always the hardest part.

Patrick Scott initially contacted the founders directly on X just to discuss the market, and then one or two project founders asked him to be a consultant. After serving the first few customers, with a good reputation, the rest of the matter fell into place.

If you want to become an on-chain analyst, after familiarizing yourself with block explorers, smart tools, and mathematical formulas, you can try to make predictions and look for security holes. By building your reputation in the industry, you may one day also become a member of the crypto analysts.