How To Analyze Any Crypto Token in 5 Minutes (Dune Analytics)

How to Analyze Any Crypto Token in Just Five Minutes

Welcome back to Web3 Data Djends! In today’s article, we will explore a new dashboard that allows you to analyze any crypto token in just five minutes. This revamped dashboard consists of 13 charts that provide all the context you need to know about any ERC20 token. Whether you are new to ERC20 tokens or an experienced investor, this article will guide you through the process of analyzing crypto tokens quickly and efficiently.

Understanding ERC20 Tokens

Before we dive into the analysis, let’s briefly discuss what ERC20 tokens are. If you are unfamiliar with ERC20 tokens, I highly recommend checking out the newsletter below for a detailed explanation. In summary, ERC20 tokens are a type of cryptocurrency token that adhere to a set of standards on the Ethereum blockchain. These tokens are widely used in governance, membership, and decentralized finance (DeFi) applications.

Analyzing the Optimism Token (OP)

For the purpose of this article, we will be analyzing the Optimism token (OP), which serves as the governance token for the Optimism chain. The Optimism team has done an excellent job in distributing tokens to the community, including Web3 Data Djends. Now, let’s dive into the dashboard and explore the three key categories for analyzing tokens: momentum, liquidity, and distribution.

Momentum Analysis

Momentum analysis focuses on how many wallets are interacting with the token and how they are interacting with it. By examining the number of addresses interacting with OP, we can see that it has been increasing exponentially since September 2022. This indicates a healthy and growing community. Additionally, we can break down the actions of these wallets into new acquisitions or accumulations. Most of the wallets interacting with OP are either new or accumulating, which further supports the notion of an active and engaged community.

Liquidity Analysis

Liquidity analysis involves examining where tokens are coming from and where they are going. In terms of token sourcing, we can see that wallets have obtained 4% of their tokens from unknown contracts, 29.5% through wallet-to-wallet transfers, 19% from multi-sig wallets, 12% from decentralized exchanges (DEXes), and 35% from Optimism contracts. Over time, the token sourcing has shifted, especially after OP got listed on centralized exchanges in June. It is worth investigating the specific protocols, such as Rubicon, Song Finance, and Iron Bank, to gain a deeper understanding of their involvement in token sourcing.

When it comes to token destinations, it is important to consider where the tokens are being held or deposited. Some tokens may be in liquidity pools, staking contracts, or other protocols. By examining the netflow and value in and out, we can gain insights into the movement of tokens and their distribution across various platforms.

Dex Analysis

No liquidity analysis is complete without examining the token’s liquidity on DEX protocols. By analyzing the liquidity per DEX protocol and the trading volumes, we can identify the top protocols for swapping or providing liquidity. In the case of OP, Uniswap and Velozerum are the leading protocols, with a slight difference in liquidity but similar trading volumes. This suggests that there may be incentives or farming opportunities associated with these protocols. Traders and liquidity providers can use this information to make informed decisions about where to trade or provide liquidity for OP tokens.

Distribution Analysis

Distribution analysis focuses on the distribution of tokens among holders. By examining the percentage of holders and the number of tokens they hold, we can gain insights into the distribution pattern. In the case of OP, an exponential distribution is observed, which is not surprising for a governance token with over 500,000 holders. However, it is interesting to note that a significant number of wallets hold only a small amount of OP tokens. Further investigation into this phenomenon could provide valuable insights into the token’s distribution dynamics.

Token Performance Metrics

In addition to the analysis mentioned above, the dashboard also provides token performance metrics such as total supply, average holdings, and the Gini coefficient. These metrics offer a comprehensive view of the token’s performance and can be used to assess its overall health and stability.

Frequently Asked Questions (FAQs)

Q: How can I access the dashboard mentioned in this article?

To access the dashboard mentioned in this article, please refer to the newsletter below for more information.

Q: Can I analyze tokens from other EVM chains using this dashboard?

Yes, the dashboard allows you to analyze tokens from any EVM chain. Simply input the desired token and select the appropriate chain to analyze.

Q: How often is the dashboard updated?

The dashboard is updated regularly to provide the most up-to-date information on token analysis. However, the frequency of updates may vary depending on the availability of data.

Q: Can I share my findings from analyzing a token with the author?

Absolutely! If you have found something interesting while analyzing a token using the dashboard, feel free to share the chart with the author or tag them on Twitter. They would be very interested in seeing the patterns and insights that others discover.

Conclusion

Analyzing crypto tokens can be a complex and time-consuming task. However, with the help of the revamped dashboard mentioned in this article, you can now analyze any ERC20 token in just five minutes. By examining momentum, liquidity, and distribution, you can gain valuable insights into the token’s performance and make informed investment decisions. Remember to stay curious and explore different tokens to uncover unique patterns and trends. Happy analyzing!