Open-source On-Chain Analytics Platform by Xeptagon

Nov 2022

Xeptagon will be releasing and maintaining open-source repository for On-Chain Analytics developed in partnership global research driven universities. But before we dive deep, let's first get to know about the industry.

Blockchain is a distributed database or ledger that stores the record of transactions made in cryptocurrencies like bitcoin, in digital format and shared among the nodes of a peer-to-peer network. On-Chain Analytics is the act of analyzing all trading and investment activity, extracted from this public ledger. This allows traders and investors of cryptocurrencies to gain insights into the overall attitude and behavior of others in the network. Furthermore, crypto is highly volatile and has large amounts of irreversible transactions that make businesses and customers vulnerable to fraud.

Even though this is a relatively new field, a few big players such as Glassnode and Cryptoquant are dominating the current market for On-Chain Analytics. But there are issues with the existing tools. A couple to mention be the ambiguity of the methods used to derive the analytics provided by these tools and the requisition of a subscription, making these tools less reliable and affordable.

These observations led to Xeptagon initiating a solution, which is a proper open-source and lightweight application for On-Chain Analytics with the possibility of extending in the future to detects anomalies. The first phase of the development was carried out by the students of School of Computing, National University of Singapore (NUS) as a capstone project in partnership with Xeptagon. NUS is the No. 01 ranked university in Asia while being 8th in Global Employability, and 19th in World Reputation rankings.

The On-Chain Analytics platform provides users with two categories of metrics, basic and computed. Basic metrics are those whose data is readily available without any need for additional computation, while computed metrics are those whose values are derived from the computation of basic metrics. For example, Market Value to Realized Value (MRVR) ratio to understand whether a cryptocurrency is undervalued or overvalued, Spent Output Profit Ratio (SOPR) to identify whether a crypto coin was sold at a profit or loss, and Relative Unrealized Profit/Loss to gauge investor's sentiment, are few of the wide range of metrics offered. These metrics have been consolidated based on their relevance and usefulness.

Initially On-Chain Analytics are calculated for Bitcoin (BTC) with metrics such as Average Transaction Value, Average Transaction Fee, Average Coin Dormancy, Thermocap, Balanced Price, Market Cap to Thermocap Ratio, Difficulty Ribbon, Market Value to Realized Value (MVRV) Ratio, Market Capitalization, Net Realized Profit/Loss, Realized Price, Net Unrealized Profit and Loss (NUPL), Realized Capitalization, Network Value to Transaction (NVT) Ratio, Relative Unrealized Profit, Transferred Price and Spent Output Profit Ratio (SOPR) being produced among others.

In addition to the metrics provided, Xeptagon has initiated development of an anomaly detection framework to assist regulatory and audit purposes as well as to reduce fraudulent cryptocurrency transactions. One such anomaly detection is 'Address Detection' to identify the potentially dangerous address to transact and where there might be criminal activity involved. The aim is to identify addresses that show signs of fraud daily via supervised learning methods.

Going forward the project will be maintained in collaboration with top global research universities under the sponsorship of Xeptagon. We are currently working on the hosting and a live demo system. While the current stages only support Bitcoin, it will be expanded to cater to other currencies like Ethereum (ETH), Tether USD (USDT - ETH), BNB, Cardano, Solana, Polygon, AVAX among others.

Stay Tuned for the release of the live system!

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