What is an Onchain metrics analysis

Onchain metrics are data points that are recorded on a blockchain and can be used to analyze the health and activity of a blockchain network. These metrics can provide insight into a variety of aspects of a blockchain, including the level of adoption, the degree of decentralization, the volume of transactions, and the security of the network.



Some common onchain metrics that are used to analyze blockchain networks include:

Network hash rate: This is a measure of the overall computing power of the network, and is used to gauge the security and resistance to attacks.

Block size and block time: The block size is the amount of data that can be stored in a block, while the block time is the interval between the creation of new blocks. Both of these metrics can affect the speed and scalability of the network.

Transaction volume and fees: The number of transactions being processed on the network, as well as the fees being paid for those transactions, can provide insight into the level of adoption and usage of the network.

Number of active addresses: The number of unique addresses that have conducted a transaction on the network can be used to gauge the level of adoption and engagement with the network.

Degree of decentralization: The distribution of mining power and the number of nodes on the network can be used to gauge the degree of decentralization and the level of control that any single entity has over the network.


The most widely used blockchains for on-chain analysis? 

Ethereum, the platform where the vast bulk of DeFi's Total Value Locked is located, is arguably the most popular blockchain for on-chain analysis (TVL).

On-chain analysis has become a new area of study thanks to the development of DeFi and the spread of wallet labeling; Nansen is a pioneer in this arena. Nansen aims to map out DeFi and economic activity on-chain at a hyper-granular level and assist investors in making better, more knowledgeable investment decisions by examining capital flows between smart contracts in DeFi, fund movements between sovereign blockchains, and observing how individual market participants engage in the environment. ‍


Onchain metrics can be useful for understanding the current state and trends of a blockchain network, and can be used to inform investment and strategic decisions.


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