Venture capital’s excitement over blockchain analytics has spilled over into decentralized finance (DeFi).
Nansen, a DeFi-native crypto tracer, has raised $12 million in a Series A funding round led by Andreessen Horowitz (a16z). Also participating in the round was Skyfall Ventures, Coinbase Ventures, imToken Ventures, Mechanism Capital and QCP Capital.
Tracking crypto as it flows from wallets to exchanges and other platforms has become a whole sub-industry within the digital-asset space, with major funding rounds for Chainalysis, CipherTrace and TRM Labs in recent weeks.
But blockchain analytics is often associated with regulators and law enforcement, meaning that, perhaps unfairly, it has a boomer feel about it. Not so for Singapore-based Nansen.
“Blockchain analytics has been focused on law enforcement, government agencies, tax authorities and so forth,” said Nansen CEO Alex Svanevik. “But our philosophy has always been that people on the ground floor of crypto, the actual market participants, should have access to the best on-chain analytics as well.”
Crypto-tracking boom
Since the explosion of interest in DeFi, Nansen’s take has been to track flows of money between different smart contracts, identifying the hottest yield farming platform, for example. Currently, the platform has labeled some 90 million addresses, equating to about 70% of all on-chain DeFi volume, according to Svanevik.
“As participation in the first truly open global financial markets grows, traders and collectors of all kinds – retail novices, institutional professionals, independent experts and more – will want to understand what the smart money is doing across all blockchains,” a16z General Partner Chris Dixon said in a statement.
It’s worth noting that major blockchain analytics platforms like Elliptic and CipherTrace are highly adept at following fund flows through decentralized exchanges and DeFi pools. Unlike those firms, Nansen isn’t focused on risk scoring per se, but the service provides the data to allow users to make up their own minds, said Svanevik.
“We don’t have any specific position with regards to regulations on how we think things should develop. We’re not basing our company on some KYC’d version of DeFi coming out in the future,” he said, referring to know your customer rules.