Zima Red ep 104: Alex Svanevik - Nansen: NFT Alpha Via On-Chain Data

Primer: Alex Svanevik is the Co-Founder of Nansen, a blockchain analytics platform for investors and traders in the crypto space. In this episode of the Zima Red Podcast, Alex discusses his background, what led him to found Nansen, the products that they have, and possible future products.

Background

• Background in artificial intelligence/machine learning

• Did a few years of management consulting

• Started an AI consultancy company in 2010

• Worked as a data science manager for 4 years at a European media group

• In 2017, he learned about Ethereum

• Left his job to start working in crypto full-time

• Did some work with 0x

• Founded Nansen at the end of 2019

Learning About AI

• Studied cognitive science for his Bachelor’s degree. The program discussed about AI

“I think I always had like a deep fascination for AI.”

- Alex Svanevik

• Did a Master’s in AI at the University of Edinburgh

• It is philosophically interesting and the career prospects were good

Describing AI To The Laymen

• Most AI stuff that happens today is through machine learning

• At a high level, it is the creation of artificial systems that can think or act rationally and respond to the environment in intelligent ways

• For a long time, people tried to program machines to be intelligent but it did not scale well

• Needed to have learning algorithms to get artificial intelligence systems

• The term “data science” has also been used to describe machine learning. These concepts overlap with one another

Learning About Ethereum

• Learned about Bitcoin in 2013 but did not find it interesting

• When Ethereum came out, there were 2 things that he liked about it:

  • Ethereum was a platform and could be a contender to what Bitcoin might be

  • Ethereum enables permissionless innovation

When Did He Decide That He Needed To Build Something In Crypto?

• Crypto is both intellectually stimulating and appeals to the greed of people

• In 2017, a colleague of his had talked to someone who said that he did not know of any Solidity developer who’s not a millionaire

• Solidity is the programming language that’s used to create apps on Ethereum

• The market had demand for those with technical know-how to join the space

“I guess we reflect a bit on that and thought, well, the market is kind of screaming for us to have someone who has a bit of technical know-how, and so on, to join this space, right? There's a lot of demand for it.”

- Alex Svanevik

• Joined crypto 6-7 months later at a startup in Hong Kong

What Did He Do At That Startup?

• Was the 2nd employee at the market intelligence startup

• Idea was to aggregate as much information about the crypto space and offer it to users

• The company had a token

• Was difficult to build a good product and fit the token into it

• His job was to build out the data team

• They did not manage the treasury well and when the bear market arrived, his team was laid off

What Happened After That?

• Had Evgeny, who is one of his co-founders

• Had a research engineer and a data engineer who came on board Nansen later on

• Operated in the same space as that startup did, except they have a laser focus on on-chain data

Nansen

• A blockchain analytics platform for investors and traders in the crypto space

• Helps customers discover new opportunities, perform due diligence, and receive real-time notifications on important events on the blockchain

• Recently, Nansen has been used a lot by NFT collectors

• People often ask him “isn’t the information public?”. It’s partially true and people need at least 3 things to surface the signal from the data:

  • Pull out the data from the nodes to make it accessible to querying

  • Transform the data. Each DEX/protocol has their own data format. They need to standardize and harmonize it

  • Add the real-world contextual layer on it. Involves associating addresses with entities in the real world (e.g. Binance, Coinbase, a16z, Three Arrows, Alameda, etc.)

Why Do They Focus Only On On-Chain Data?

• Intellectual curiosity and a fascination for this unique data asset which doesn’t exist in TradFi

• Evgeny, his Co-Founder, created Ethereum ETL, which is the most used open source library to pull data from Ethereum to use for analytics

• Some of the analytics products on the market try to replicate what is used in TradFi in crypto

• For on-chain data, there’s no precedent to it. It is more challenging and they have to create the playbook for it

• Their users have discovered things happening on-chain and have benefitted from it

Token God Mode

• The first dashboard that became very popular

• Users can plug in any ERC-20 token and have a God Mode view on the token:

  • Who owns it?

  • What does their cap table look like?

  • Who are the owners today?

  • Who has been accumulating the token for the last 7 days?

  • Who has been selling them off?

• Their on-chain data is different from CoinGecko or CoinMarketCap, which uses self-reported data

• Deployed NFT God Mode for NFTs

The Smart Money Feature

• Smart money is displayed in 2 ways:

  • Smart Money Dashboard that focuses on the segment of smart money (e.g. what tokens have they been accumulating in the last 24 hours, what tokens have they been getting rid of, etc.)

  • A feed (e.g. Alameda has approved usage of this token for a new smart contract, etc.)

• There’s also smart money wallets. Users could get real-time notifications whenever certain things happen

The Wallet Profiler

• Users can plug in an address and get to see its activity profile:

  • Time of day/week

  • Time zone they are located in

  • When they are trading

  • Related wallets

• Before Nansen launched, this kind of intelligence was reserved for on-shore analytics companies that focus on government agencies, tax authorities, etc.

What Other Cool Features Have They Got?

• For the past few months, he has been using the NFT Dashboards

• NFT are conceptually easier to understand than DeFi

• Have a NFT Blue Chip Index. Consists of the top 20 NFT collections

• Can drill down to NFT God Mode for specific collections

• Has a Mint Master section that shows which NFTs are being minted in real-time

• There are also some underappreciated dashboards that people may not be aware of:

  • Token movements across a specific time period

  • Top transactions that took place

  • Token overlap (overlap of holders between 2 assets)

  • Sandwich Attack Dashboard (see if an address has been the victim of a Sandwich Attack)

Cool Examples Of People Finding Alpha From Using Nansen

• Twitter account called MEV Collector

• He turned 11 ETH to 862 ETH in 33 days flipping NFTs using Nansen

What Are Some Possible Products They Want To Build In The Future?

• The lesson he learned from the startup in Hong Kong is focus

• Hard thing is to figure out what not to do

• They are reinvesting into the company to become a gateway into the crypto world

• Will be serving both the retail and institutional markets

• Moving forward, they want to build a stronger institutional offering

• Their next product will be an API

• Will be adding multi-chain support and cross-chain analytics

• Considering enabling transactions through the Nansen interface, but there’s a regulatory aspect to that

Will Quants Or Retail Investors Dominate The Market?

• DeFi will be dominated by whales

• NFTs are more retail friendly

• Funds have been quite slow to get into NFTs

• NFTs are unique assets. Buyers have to determine what the price should be for each item in each collection

“If you're a fund, you can't just take this kind of retail mindset of apeing into different collections because you kind of like the aesthetics or because you want to make a punt on it right? You have to be more sophisticated with regards to justifying the investment thesis and so on.”

- Alex Svanevik

Single Favourite NFT

• His Twitter profile picture

• It’s a Viking Pudgy Penguin with a kimono

Most Controversial Thought On NFTs

• Thinks that NFTs are massively underrated

• Don’t think that people have understood how big this asset class could be

If He Could Improve Something In The Space

• Better user experience for newcomers

Who Is Someone He Look Up To And Why?

• Have many people he look up to in this space

• CZ from Binance is amazingly successful as an entrepreneur and has done a lot for the crypto space

NFT Ecosystem In 3 Years

• Gaming is a short-term/mid-term applications for NFTs

• Expect that leading game studios and game developers will use NFTs in their games

• Hope to see more music NFTs

• Expecting that many top artists would release their own NFTs

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