Nansen’s analytics are gradually labeling global wallets.
Nansen CEO Alex Svanevik sat down with Cointelegraph for an exclusive interview during Token2049.
Public blockchains can be accessed and read by anyone, but creating meaningful insights from this data is no easy feat. Millions of transactions are recorded across a variety of chains and layer-2 protocols, creating petabytes of data daily.
Services like Google transformed the early internet, accomplishing a significant engineering task by structuring and curating millions of websites to serve simple user queries. A handful of blockchain analytics platforms are looking to do the same, with Nansen distinguishing itself by processing on-chain data into a growing database of wallet labels.
Cointelegraph visited the Singapore office of the growing firm during Token2049 for a one-on-one conversation with co-founder and CEO Alex Svanevik. Occupying a dedicated space in a co-working environment, the office was abuzz with employees in town from the company’s hubs in Lisbon, Miami, London and Bangkok.
Svanevik’s background is rooted in artificial intelligence. Graduating from the University of Edinburgh in 2010, the Norwegian’s dissertation focused on building models based on how children learn mathematics. His first foray into the world of work involved the establishment of a business-focused AI consultancy before moving into management consulting.
A stint as a data scientist for a media company preceded his eventual move into the world of cryptocurrencies, with Svanevik introduced to Ethereum in 2017. His first job for a cryptocurrency firm bankrolled by a $15 million initial coin offering lasted about a year, as the company became one of many to boom and bust post-2017.
Svanevik, Lars Krogvig and Evgeny Medvedev then teamed up to create Nansen AI, eyeing a gap in the market for an on-chain analytics tool aimed at investors:
“On the one hand, you had the free tools that all crypto investors had access to, like CoinMarketCap and Etherscan. And then on the other extreme, you had very expensive tools that were used exclusively by enterprises, like Chainalysis.”
Nansen was formed in late 2019 to provide high-caliber analytics tools to investors delivering blockchain data and insights in real time. Svanevik admitted that the platform originally attracted sophisticated cryptocurrency traders with large holdings but has since evolved to have a 50/50 split of retail and institutional users:
“We started with what you might call the ‘degens’ right before DeFi summer. A lot of them were using Nansen to navigate DeFi summer — which DeFi pools should you allocate your capital to, which tokens should you buy, and so on.”
The ongoing cryptocurrency bear market, which is mirrored by traditional stock markets, leads Svanevik to believe that Nansen’s sector will trend toward greater institutional use over the next two years. Individual investors may take a break from crypto and cut back on analytics services, but continued institutional investment efforts will demand data-driven insights:
“There are a lot of companies, funds, operators, and blockchain and crypto projects where the businesses that raise money are doing fine from a financial perspective. They’re not just going to wind down their operations because crypto tanks 70%. They still need to have really high-quality analytics and information.”
Nansen has slowly garnered a reputation for its wallet labeling efforts across the cryptocurrency ecosystem. Again, this hardware and labor-intensive endeavor is a testament to the platform’s joint AI and human efforts.
Svanevik estimated that Nansen scans nearly a petabyte of data daily from the variety of chains it keeps tabs on. This also accounts for nearly 20% of the company’s running costs. Svanevik described Nansen as a “Google Cloud maximalist,” with the computing service being its infrastructure platform of choice since its inception.
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This speaks to the fact that despite public blockchains being available to all and sundry, there is inherent value in bringing order to data and gleaning valuable information from it. This is where Svanevik drew parallels to the platform and what Google did with the wider internet:
“If you think about Google as a search engine, every website is public, right? But this is a huge engineering task to actually structure, curate and serve up the relevant websites for your query. I think Nansen is somewhat analogous to that. But, we also have proprietary data that we enrich the public data with, which is kind of one of the things we’re known for.”
Nansen has over 130 million addresses that it has labeled with additional information directly accessible from blockchains. This allows the average user to find out which addresses are held by notable entities such as Binance, Alameda, Celsius and Hodlnaut, Svanevik highlighted.
When asked if the labeling feature was a focal point from the outset of Nansen’s existence, Svanevik noted that the first iteration of the platform was a database in which a user could look up addresses and get wallet labels:
“We realized that that alone is not very helpful. You need to combine it with the transactional data, and you need to have some kind of user interface, something that’s valuable.”
The evolution of Nansen’s platform was a result of combining “man and machine” into processes and an architecture to compile the information. A network effect led to compounding returns, as identified wallets that have been labeled often lead to the identification of other wallets interacting with them. Ninety-nine percent of this work is still done by AI, while Nansen’s research team plays a role in connecting the dots for the remaining 1%.
The labeling of wallets and individuals has also been a point of much debate in the wider cryptocurrency ecosystem. Privacy is an inherent value touted by blockchain technology, but the transparency of public blockchains means that analytics tools can now identify who is in control of specific assets and wallets.
Svanevik said that Nansen is mainly focused on labeling projects and corporations rather than individuals, save for those deemed to be notable public figures:
“We don’t really put a lot of effort into tagging individuals. If we do, it’s typically because they’re noteworthy. They’re founders of projects — imagine, you know, Do Kwon or Vitalik. These are notable public figures. And we think it’s in the public interest to have them labeled.”
The Nansen co-founder also believes that the labeling of wallets belonging to major exchanges, institutions and individuals has led to people becoming more privacy-aware. Curating, compiling and serving up information in a convenient way is the goal, which in itself raises some ideological considerations:
“There is a fundamental dilemma with transparency and privacy in blockchain, and something that people should think about and be mindful of.”
“Bad labels” vs “good labels”
Nansen is one of a handful of well-known analytics firms bringing sense and order to blockchain data. Distinguishing the product offering of these similar firms, Svanevik highlighted platforms such as Chainalysis and its focus on tracking the illicit use of cryptocurrency as a key difference from what Nansen focuses on:
“Chainalysis tends to focus on the illicit use of funds, what you might consider ‘bad labels.’ This is sanctioned, this is a scam, and so on. Whereas Nansen tends to focus on ‘good labels.’ This is a smart money address that you might want to follow because they made good investment decisions in the past, that this is a fund you might want to know about, and so on.”
Given that 99% of cryptocurrency transactions are above board, Nansen chose to focus on crypto-native investors and operators while market participants such as Chainalysis, Elliptic and PRM Labs cater more toward public institutions and government agencies.
Nevertheless, Nansen has played its part in analyzing major cryptocurrency events, including its role in tracing token movements linked to major firms during the infamous Terra crash in April 2022:
“LUNA is one example, where we had the labeled Terra data and we had Ethereum data to complement it because of the wrapping of LUNA and the curve pools that actually triggered the collapse of TerraUSD. But also things like Hodlnaut and their involvement in it and our ability to look into that.”
Nansen’s tools and its recently launched research department helped journalists at Tech in Asia piece together questionable practices by Hodlnaut, one of a number of cryptocurrency lending firms that shuttered in the wake of the Terra collapse in 2022.
Settled in Singapore
Cointelegraph’s in-depth conversation with Svanevik concluded with his take on Singapore as a cryptocurrency hub of Asia. Token2049 attracted thousands of attendees and certainly left the impression that the island nation, with its towering skyscrapers and futuristic buildings, is a center for the ecosystem.
Svanevik believes Singapore is in a unique position to be one of the world’s crypto hubs for a few different reasons. First and foremost, the country is “a place where finance meets tech,” which is in contrast to its closest Asian contender, Hong Kong, which Svanevik described as more finance-oriented.
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Regulators in Singapore are also aware of this fact. Having participated as a panelist at a recent Monetary Authority of Singapore event, Svanevik highlighted tight controls having both positive and negative effects:
“In the time I’ve lived here, they have become more strict. They are not with open arms, inviting in everyone who does anything with crypto. So, it is quite difficult to get a license here. There’s a long queue, and they’ve received quite a fair amount of criticism for that.”
While it’s a tough environment to set up shop, the Nansen CEO believes it puts the country in a good position to be a respected jurisdiction to operate out of.
For the duration of Token2049, Nansen CEO Alex Svanevik sat down with Cointelegraph for an exclusive one-of-a-kind interview.
Public blockchains may be accessed and studied with the aid of anyone, but developing significant insights from this fact isn’t any clean feat. Millions of transactions are recorded throughout a whole lot of chains and layer-2 protocols, developing petabytes of facts daily.
Services like Google converted the early internet, carrying out an enormous engineering project with the aid of using structured and curated hundreds of thousands of websites to serve easy individual queries. A handful of blockchain analytics structures are trying to do the same, with Nansen distinguishing itself with the aid of using processing on-chain facts right into a developing database of pocket labels.
For the duration of Token2049, Cointelegraph visited the Singapore workplace of the developing organization for a one-on-one conversation with co-founder and CEO Alex Svanevik. The workplace became buzzing with personnel on the town from the company’s hubs in Lisbon, Miami, London, and Bangkok, who occupied a dedicated area in a co-working environment.
Svanevik’s history is rooted in synthetic intelligence. After graduating from the University of Edinburgh in 2010, the Norwegians dissertation focused on developing models based on how children learn mathematics. His first foray into the sector of labor concerned the establishment of a business-targeted AI consultancy rather than getting into control consulting.
Nansen CEO and co-founder Alex Svanevik chats with Cointelegraph at Nansen`s workplace in Singapore at some stage in Token2049 in September 2022.
A stint as an information scientist for a media agency preceded his eventual circulation into the sector of cryptocurrencies, with Svanevik brought to Ethereum in 2017. His first task for a cryptocurrency corporation bankrolled through a $15 million preliminary coin offering lasted approximately a year, because the agency became one of many to increase and bust post-2017.
Svanevik, Lars Krogvig, and Evgeny Medvedev then teamed up to create Nansen AI, eyeing an opening inside the marketplace for an on-chain analytics device aimed toward traders:
“On the one hand, you had the loose equipment that every crypto trader had gotten admission to, like CoinMarketCap and Etherscan. And then, on the alternative extreme, you had very steeply-priced equipment that had been used completely through enterprises, like Chainalysis. ”
Nansen was fashioned in late 2019 to offer high-quality analytics equipment to traders handing over blockchain information and insights in real time. Svanevik admitted that the platform initially attracted state-of-the-art cryptocurrency investors with massive holdings, but has since developed to have a 50/50 cut up of retail and institutional users.
“We began out with what you would possibly name the degens proper earlier than DeFi summer. A lot of them have been the use of Nansen to navigate DeFi summer — which DeFi swimming pools you need to allocate your capital to, which tokens you need to buy, and so on.
The ongoing cryptocurrency marketplace, that’s reflected through conventional inventory markets, leads Svanevik to accept as true that Nansens area will fashion in the direction of extra institutional use over the following years. Individual traders may profit from crypto and reduce returns on analytics services, but continued institutional funding efforts will necessitate information-driven insights.
From an economic perspective, there are lots of companies, funds, operators, and blockchain and crypto tasks wherein the agencies that increase cash are doing satisfactory work. They’re now no longer simply going to wind down their operations due to the fact that crypto tanks 70%. They nonetheless want to have outstanding analytics and information.
wallets with labels
Nansen has slowly garnered popularity for its pocket-labeling efforts throughout the cryptocurrency ecosystem. Again, this hardware and labor-intensive enterprise demonstrates the platforms’ collaborative AI and human efforts.
Svanevik predicted that Nansen scans almost a petabyte of facts day by day from the form of chains it maintains tabs on. This also owed money for nearly 20% of the company’s walking costs.Svanevik defined Nansen as a “Google Cloud maximalist,” with the computing provider being its infrastructure platform of desire since its inception.
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This speaks to the reality that no matter public blockchains being available to all and sundry, there’s an inherent price in bringing order to facts and gleaning treasured data from them. This is wherein Svanevik drew parallels between the platform and what Google did with the broader internet:
“If you reflect on Google as a search engine, each internet site is public, right? But that is a big engineering mission to absolutely structure, curate, and serve up the applicable web sites in your query. I suppose Nansen is truly analogous to that. However, we also have proprietary facts that we increase the general public’s knowledge of, which is a type of one of the matters we were considered for.
Nansen has over a hundred thirty million addresses that it has categorized with extra data immediately reachable from blockchains. This permits the common consumer to discover which addresses are held via the means of super entities including Binance, Alameda, Celsius, and Hodlnaut. Svanevik highlighted
When asked if the labeling function turned into a focus from the outset of Nansens existence, Svanevik mentioned that the primary generation of the platform turned into a database wherein a consumer ought to look up addresses and get pocket labels:
“We found out that on my own isn’t very helpful. You want to mix it with transactional data, and you also want to have a few different types of consumer interface, something valuable.”
The evolution of Nansens platform turned into an end result of combining “guy and machine” into methods and a structure to collect the data. A community impact brought about compounding returns, as recognized wallets that have been categorized regularly cause the identity of different wallets to interact with them. Ninety-nine percent of this work is still done with AI, while Nansen’s research group is involved in connecting the dots for the remaining 1%.
The labeling of wallets and people has additionally been a factor of a great deal of debate within the wider cryptocurrency ecosystem. Privacy is an inherent price touted via means of blockchain technology, but the transparency of public blockchains means that analytics gear can now perceive who’s on top of things, in particular property and wallets.
Svanevik stated that Nansen’s work is especially focused on labeling initiatives and organizations instead of people. He chose the ones deemed to be super public figures.
“We don’t truly position quite a few attempts at tagging people. If we do, it’s normally due to the fact that they’re noteworthy. They’re founders of initiatives — imagine, you know, Do Kwon or Vitalik. These are very public figures. And we believe it is in the public interest to categorize them.”
The Nansen co-founder additionally believes that the labeling of wallets belonging to fundamental exchanges, establishments, and people has brought about human beings’ turning into extra privateness-aware. Curating, compiling, and serving up data in a handy manner is the goal, which in itself increases a few ideological considerations:
“There is an essential catch-22 situation with transparency and privateness in blockchain, and it’s something that humans must reflect on and consider.”
Good labels versus “bad labels”
Nansen is certainly considered one among a handful of famous analytics companies bringing feel and order to blockchain records. As a key distinction from what Nansen focuses on, Svanevik highlighted systems such as Chainalysis and its focus on monitoring illicit cryptocurrency use:
“Chainalysis has a tendency to raise awareness of the illicit use of funds, what you would possibly consider terrible labels. This is sanctioned, that is a scam, and so on. Whereas Nansen has a tendency to focus on appropriate labels This is a clever cash deal with which you may need to comply due to the fact they made appropriate funding selections in the past, that that is a fund you would possibly need to be aware of, and so on.
Given that 99% of cryptocurrency transactions are above board, Nansen selected to focus on crypto-local traders and operators even as marketplace individuals like Chainalysis, Elliptic, and PRM Labs cater extra in the direction of public establishments and government agencies.
Nevertheless, Nansen has demonstrated its element in reading predominant cryptocurrency events, such as its position in tracing token moves connected to predominant companies in the course of the notorious Terra Crash in April 2022:
“LUNA is one example, in which we had the classified Terra records and we had Ethereum records to supplement them due to the wrapping of LUNA and the curve swimming pools that sincerely induced the crumble of TerraUSD. But additionally, such things as Hodlnaut and their involvement in it and our capacity to inspect that. ”
Nansens gear and its recently released research branch assisted reporters at Tech in Asia in piece collectively questionable practices via Hodlnaut, which is certainly considered one of the cryptocurrency lending companies that closed in the aftermath of the Terra Crash in 2022.