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February 13, 2024 · 5 min · SQD Team

Why leverage blockchain data?

Blockchain Data Analytics Use Cases
Why leverage blockchain data?

Introduction

Successful web2 companies derive competitive advantages from data stored in centralized, private databases. By contrast, blockchains are just databases that store a complete history of all transactions and activities — and this data is publicly available to anyone.

What is Blockchain Data?

Blockchain data, also called on-chain data, encompasses publicly available information about transactions, wallets, and network activity. This data is tamperproof and verifiable against consensus rules.

Key retrievable information includes:

  • Wallets: Creation counts and activity levels
  • Transactions: Frequency, timing, gas fees, and user authenticity
  • Decentralization: Node distribution and validator participation

Accessing Blockchain Data

Block Explorers

Tools like Etherscan enable transaction verification but lack analytical capabilities for trend identification. They are useful for looking up individual transactions but fall short when it comes to aggregating data across many blocks or contracts.

Analytics Platforms

Popular solutions include:

  • Dune Analytics: SQL-based querying with dashboard visualization
  • Nansen: Wallet tracking and ecosystem health analysis
  • Glassnode: Institutional-grade metrics for quantitative trading
  • Chainalysis: Compliance and fraud investigation tools

Indexers

Protocols like The Graph and Subsquid crawl blockchains and standardize data into queryable formats, serving as middleware between blockchains and applications. They transform raw blockchain data into structured, efficient databases that applications can query directly.

Use Cases

DeFi

Cross-chain liquidity visibility and unified trading interfaces. By indexing data across multiple chains, DeFi applications can present users with the best rates and deepest liquidity pools regardless of which chain they originate from.

NFTs

Multi-chain marketplace displays and dynamic NFT functionality. Indexed data enables marketplaces to aggregate listings across chains and power dynamic NFTs that change based on on-chain events.

Personalization

Privacy-preserving recommendations based on wallet activity. On-chain data can be used to tailor user experiences without requiring users to share personal information, since wallet activity already reflects preferences and interests.

Social

Decentralized graph curation and reputation systems. On-chain activity provides a foundation for building social graphs and reputation scores that are portable across applications.

Conclusion

Unified, accessible blockchain data represents a foundational requirement for next-generation decentralized applications across all sectors. As the ecosystem continues to fragment across more chains and layers, the tools that make this data accessible become increasingly critical.

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