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In the world of cryptocurrencies, rug pulls and fraudulent schemes can pose significant risks to investors. However, the use of On-chain analysis tools can be instrumental in uncovering such deceitful activities and help you understand the inflow of money on a project that can guard your Investment.
Ella like most newbies in the crypto space had the desire to make it big in the space. She was looking for the next 100Ă token that'll change her life. She had like $90,000 in debt and had to figure out a way to get rid of it cause they've been giving her lots of discomfort. Aside the debt she had just $3,000 and had the plan to trade all of it in a project she just read about - "Moondog"... Different influencers promoted the coin and were positive about it. Ella felt same, she wants to get rid of the debt she had Soo bad and fast.
She was at the point of going in, risking her last $3,000 when her roommate- Noah, suggested she tried Etherscan- an On-chain analysis tool to track the inflow of money in the project and check the probability of it being a scam. At first she was skeptical about it, I mean big influencers where promoting it so "what could possibly go wrong", she thought.
Noah explained that those influencers where probably paid and it won't hurt to "Do Your Own Research" and so they did.
Ella and Noah logged into Etherscan on etherscan.io and started to look at the data for Moondog. As Ella and Noah pasted the contract address of Moondog into the search bar on Etherscan they were presented with a wealth of data and insights about the token. Etherscan's interface provided them with a comprehensive overview of Moondog's on-chain activities, allowing them to assess its authenticity and potential risks.
The first thing that caught their attention was the "Contract Overview" section, which displayed crucial information about Moondog's smart contract. They were able to verify the contract's source code, ensuring it was not a clone or a maliciously modified version of another project. This gave them some confidence in the legitimacy of Moondog.
Moving on, Ella and Noah explored the "Token Holders" section. Here, they found a list of addresses that held significant amounts of Moondog tokens. By analyzing the distribution of tokens among these holders, they could gauge the potential for market manipulation or concentration of power. They were relieved to see a relatively fair distribution, indicating a more decentralized ownership structure.
To further assess the project's credibility, they dived into the "Transaction History" section. Etherscan provided a comprehensive record of all transactions related to Moondog. Ella and Noah meticulously reviewed the transactions, paying close attention to large transfers and interactions with other addresses. They were on the lookout for any suspicious or abnormal activity that could signal a rug pull or a pump-and-dump scheme.
As they delved deeper into the transaction data, they discovered an interesting pattern. They noticed a significant amount of Moondog tokens being transferred to a particular address that belonged to the project's development team. While it was not uncommon for projects to allocate tokens for development and marketing purposes, the sheer magnitude of the transfers raised their eyebrows.
Curious to investigate further, they utilized Etherscan's "Token Analysis" tool. This feature allowed them to track the flow of Moondog tokens, enabling them to follow the money trail. They discovered that a substantial portion of the tokens received by the development team's address was subsequently sold on decentralized exchanges. This raised concerns about the team's motivations and potential conflicts of interest.
In their quest for transparency, Ella and Noah explored the "Verified Contract Source Code" section. Etherscan's integration with contract verification services provided them with additional assurance that the code had not been tampered with and was audited by reputable entities.
As they continued their exploration of Etherscan, Ella and Noah also leveraged the platform's "Community" and "Discussions" sections. Here, they found valuable insights and discussions from other community members, sharing their experiences and raising awareness about potential scams. This collective intelligence reinforced their suspicions and prompted them to exercise caution.
With all the information gathered from Etherscan, Ella and Noah started to piece together the puzzle. The large transfers to the development team, combined with the subsequent selling of tokens, painted a concerning picture. It seemed that the team had a significant incentive to dump their tokens on unsuspecting investors once the price reached a certain level.
Armed with this knowledge, Ella and Noah made a wise decision. They chose to steer clear of Moondog, avoiding the potential loss of their hard-earned money. Instead, they redirected their funds towards projects with more transparent and trustworthy practices, using on-chain analysis as their guide.
Noah who was now Ella Web3 bestie, educated her on the importance of On-chain analysis tools. He defined them as the Detectives in Cryptocurrencies that will save you lots of tears and money. He quoted a definition made by the DeFi play gurl in his teaching: "On-chain analysis tools are software platforms that analyze transactional data on a blockchain, providing insights into token transfers and transaction histories."
This ushered in a course on On-chain analysis tools by Noah.
He named other Onchain analysis tools aside from Etherscan. His other favorite trio was:
Dune Analytics: Another powerful on-chain analysis tool that Ella and Noah explored was Dune Analytics. Known for its user-friendly interface and robust data querying capabilities, Dune Analytics allowed them to gain deeper insights into the blockchain data of various projects. By creating custom queries and visualizations, they were able to track the movement of funds, analyze token distributions, and even monitor specific smart contract interactions.
With Dune Analytics, Ella and Noah could uncover patterns, trends, and anomalies within the data, helping them make more informed investment decisions. They particularly appreciated the ability to save and share their queries with the Dune Analytics community, fostering collaboration and knowledge sharing among fellow investors.
Bubblemaps: As Ella and Noah delved further into the world of on-chain analysis, they stumbled upon Bubblemapsâa unique tool that visualized token transfers on the blockchain in an intuitive and engaging manner. Bubblemaps represented token movements as bubbles, with the size of each bubble indicating the transaction volume, and the color representing different token types or addresses.
Using Bubblemaps, Ella and Noah could track the flow of funds across different addresses, identify major token holders, and detect potential liquidity movements. They found it especially useful for quickly assessing the liquidity distribution of a project and identifying any concentration of tokens in specific wallets. The visual representation offered by Bubblemaps provided them with a comprehensive overview of token movement patterns, empowering them to spot potential red flags or unusual activity.
Artemis: In their quest for comprehensive on-chain analysis, Ella and Noah also discovered Artemis, a robust platform that specialized in transaction monitoring and risk assessment. Artemis leveraged advanced algorithms and machine learning techniques to analyze on-chain data, detect suspicious patterns, and identify potential fraud or money laundering activities.
With Artemis, Ella and Noah could gain a deeper understanding of the inflow of money into a project and assess its authenticity. The platform provided them with real-time alerts on high-risk transactions, potential Ponzi schemes, or suspicious addresses associated with fraudulent activities. By leveraging the power of artificial intelligence and data analysis, Artemis served as a valuable detective tool, allowing them to stay ahead of scammers and protect their investments.
Incorporating these additional on-chain analysis tools into their repertoire, Ella and Noah now had a more comprehensive toolkit for evaluating projects and making informed investment decisions. The individuality and sometimes combination of Etherscan, Dune Analytics, Bubblemaps, and Artemis empowered them to dive deep into the blockchain data, uncover hidden risks, and spot potential fraudulent activities.
As they continued their crypto journey like refined detectives, terminating the Rug Devs in their territory and Cashing out big, Ella and Noah recognized the importance of conducting thorough research, relying on accurate data, and leveraging the power of on-chain analysis tools to safeguard their investments. By being vigilant detectives on-chain, they not only protected themselves from potential scams and rug pulls but also contributed to the overall integrity and transparency of the crypto ecosystem.