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The variety of platforms that generate income in the DeFi space has exploded. DeFi, or Decentralized Finance, is the representation of finance on a decentralized blockchain. Old financial products are being moved to the new blockchain, and new innovative financial solutions are being created on it.
Data in the DeFi Space
Major investors are now looking into crypto as the new frontier in a response to uncertainty in traditional markets. Dawn Fitzpatrick, the CIO of the $27 billion Soros Fund Management family office, said in an interview
, “We own some coins — not a lot — but the coins themselves are less interesting than the use cases of DeFi and things like that... I’m not sure bitcoin is only viewed as an inflation hedge here, I think it’s crossed the chasm to the mainstream.”
Decentralized protocols and smart contract applications provide DeFi users with features such as yield farming, staking, and lending, allowing them to gain in ways that simply aren't possible in the established financial markets. Do Your Own Research (DYOR) is the golden rule of investment for successful investors. The ability to track the data on a DeFi platform and understand its dynamics is extremely important – and an overall view of the crypto market is equally vital.
“We’ve seen a lot of demand for projects like Nansen that give users access to various crypto assets in real-time,” said Jason Yanowitz, Co-founder of Blockworks, “But many platforms are still lacking when it comes to sophisticated trading tools. We will see a wave of acquisitions from crypto exchanges in the next few years.”
It all comes down to data, and there are a few companies that can help any investor stay on top of the DeFi space – as well as the wider cryptocurrency markets. While the returns that are available in the DeFi space are impressive, from an analytics standpoint, the DeFi space is woefully underdeveloped. There is a need to create data analysis tools that dive deep into crypto market data that are easy and practical for investors of all types.
Cryptocurrency projects without safeguards may suffer regulatory action or exclusion from the financial system as a result of rising oversight
of cryptocurrencies from regulatory institutions. To meet legal obligations and maintain relationships with important stakeholders, businesses benefit from an automated mechanism to detect risks of fraud.
is becoming quite well known and provides data, software, services, and research to government agencies, exchanges, financial institutions, insurance companies, and cybersecurity corporations in over 60 countries. The platform's tools provide in-depth analysis as well as compliance and market intelligence software. The user-friendly interface makes it easy to identify the source and provenance of cryptocurrency transactions. Anti-money laundering compliance protocols were considered when designing the user interface as well.
These tools have successfully supported various high-profile criminal cases around the world. Law enforcement and financial institutions can use Chainalysis cryptocurrency investigation tools to detect and stop criminals that use cryptocurrencies for illegal activities including fraud, extortion, and money laundering. The services of Chainanalysis have recently been engaged by BadgerDao, a DeFi application after it was hacked
for over $120 Million. Ironically, this hack took place due to deprecated Web 2.0 technology (via a Cloudflare API), not smart contract auditing or blockchain.
When it comes to creating tools for data-driven DeFi and crypto investments, Defy Trends
is a very promising new project. The platform was created to help investors from all walks of life to comfortably engage in the cryptocurrency markets and better work towards financial autonomy.
This Chrome extension is a simple, real-time analytics tool that provides traders with actionable market data to help them make better decisions. The platform provides data about every popular token, and many of those on the smaller blockchain networks as well.
Defy Trends suite of tools combines real-time market data, qualitative data, and Artificial Intelligence (AI) projections to give cutting-edge crypto market insights to retail and institutional investors.
Each coin is ranked in the Defy Trends Index based on valuation and is also given an overall market score. The AI, machine-learning algorithms analyze historical data points to estimate future trends. By running scans throughout all social media platforms, the AI can determine social sentiment around the coin and provide insight into other investors’ behavior. It even provides global trends based on which ecosystems your coins interact with the most.
Any trading operation needs access to top-notch data and data analysis. Messari is a New York-based company
that offers its clients access to market data, charting, reports, and a lot more. It has risen to the top of the competitive space and delivered quality products to its clients.
The data analysis tools that Messari offers aren’t limited to simple access to market data. It allows its clients to turn raw data into a number of charts, and apply multiple chart analysis tools to the graphics. All of this is available in real-time so that traders have an up-to-the-second view of the markets.
Messari also offers both watchlists and reports. With watchlists, clients can keep an eye on numerous tokens across a number of blockchains. In addition to live prices, these watchlists also can be configured to display price changes over time, and also volume, in addition to other useful metrics.
The reports issued by Messari are also attractive to traders. The company delivers daily reports to its clients that inform and educate so that any new trends or hot trades are on the radar. Overall it is a useful platform that has succeeded in attracting a firm client base.
is a crypto financial intelligence platform. Users have access to over 100 assets with 300 metrics for each. It offers more information than perhaps any other platform out there to make informed trading decisions. It also provides more specialized metrics like ‘free float supply’ and ‘realized cap’. Charts can be downloaded or imported in CSV, PNG, or Excel.
For professional traders looking for technical data, there is nothing out there like Coin Metrics. It offers a giant range of metrics and asset correlations. However, it does not offer social sentiment tools and can be a little overwhelming for beginner or even intermediate traders.
Coin Metrics offers more than just trading tools. Their ATLAS search option operates as a blockchain search engine to analyze transactions. This has applications for large-scale compliance and regulation as well as individual queries. Coin Metrics has also created its own series of indexes, the Coin Metrics Bletchley Indexes (CMBI), which is aimed mainly at institutional investors.
In comparison to Defy Trends, Coin Metrics is aimed more at governments and institutions as opposed to individual traders and investors, though both have a degree of overlap.
The Unspoken Advantages of Crypto Data Analytics
For a market to grow, evolve, and stabilize (a keyword for DeFi and the wider blockchain ecosystem) data analytics
are necessary. Analytics is the information-gathering mechanism of the financial industry, decentralized or otherwise.
The fact of the matter is that crypto investment is not safe without analytics. Institutional investors are not veering clear of the space purely because they want to maintain the status quo or because of a lack of open-mindedness. It’s (partially) because you can’t invest client money in an asset without a historical record of performance, key performance indicators, and benchmarks.
The entire financial investment model is based on being able to explain why you invested in a certain asset, with accompanying reports. Investing in lucrative sounding assets without accompanying data is one of the most amateur moves a financial professional can make.
So while everything is evolving, the fundamentals still need attention. Data analytics can help to provide reliable models for investing in certain cryptocurrencies. In an area rife with hacks, scams, and failures, data analytics are highly necessary to mitigate risk, and not merely to chase maximum rewards.
High-quality data analytics can help bracket cryptocurrencies and their associated risk ratios. As with classical investing, you could invest in certain crypto groups depending on your risk tolerance and expectations. But first, we need toolkits for establishing and grouping certain crypto projects aside from pure speculation through an impressive-looking whitepaper.
DeFi: The Future of Finance
DeFi is here to stay. As the market matures, larger investors will want to gain from the recent and foreseeable surge in growth. The returns are far greater and the flexibility is unparalleled in comparison to the legacy finance model.
Of course, the benefits go far beyond institutional investment and actually have even more use cases for everyday investors. You don’t pay for fund storage or third parties, and no expensive third-party consultations are necessary. Participants all over the world are receiving annual yields that are far better than bank savings rates by deploying their crypto assets in relatively safe decentralized protocols.
Any network participant can leverage their assets to produce passive income, and some platforms offer double-digit annual percentage yields. While there is always a risk when making an investment, advanced market data can help to de-risk DeFi markets.
Vested Interest Disclaimer: The author holds tokens in Defy Trends. The opinions in this article belong to the author alone and should not be considered investment advice.