Arkham Ten Thousand Characters Research Report Business, Track and Valuation
Arkham Research Report Business, Tracking, and Valuation
Project Introduction
Blockchain transactions are fundamentally public and allow any third party to view and investigate them. However, the raw transaction data is by default unprocessed and anonymous, making it of limited use. It is only after analyzing and de-anonymizing this transaction data that it becomes useful. Arkham is a cryptographic intelligence platform specifically designed to systematically analyze blockchain transactions and de-anonymize them, revealing the individuals, companies, and data and information related to the transactions to users for further analysis of their behavior.
In order to generate intelligence on a large scale, Arkham employs a proprietary technology called Ultra, which is an AI-driven algorithmic address matching engine. By systematically associating blockchain addresses with real-world entities and providing aggregated data and analysis, Arkham is able to gain a comprehensive understanding of their behavior and reveal the activities driving the digital asset market. This allows market participants to go beyond the overall market performance and seize more profit opportunities.
Table of Contents
1. Key Research Points
1.1 Core Investment Logic
1.2 Valuation
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2. Project Overview
2.1 Project Scope
2.2 Past Development and Roadmap
2.3 Team Information
2.3.1 Overall Situation
2.3.2 Core Members
2.4 Financing Situation
3. Business Analysis
3.1 Target Audience
3.2 Business Classification
3.3 Business Details
3.3.1 The Intelligence Platform
3.3.2 Intel Exchange
3.4 Industry Space and Potential
3.4.1 Classification
3.4.2 Market Size
3.5 Business Data
3.6 Project Competitive Landscape
3.6.1 Competing Projects
3.7 Token Model Analysis
3.7.1 Token Total Supply and Distribution
3.7.2 Token Value Capture
3.7.3 Token Core Demand Parties
4. Preliminary Value Evaluation
4.1 Core Questions
4.2 Valuation Level
5. References
1. Key Research Points
1.1 Core Investment Logic
The Arkham project is an on-chain data analysis platform aimed at solving the problems faced by current on-chain data analysis platforms. Traditional on-chain data analysis platforms suffer from user incompetence, unreasonable compensation for data analysts, and additional manpower costs for project parties, which limit the industry’s development. The Arkham project forms a business closed loop by connecting users, platforms, and professional analysts, providing personalized and customized data services, and enabling data flow between different platforms through intelligence transactions, thus providing richer data for various platforms.
The advantages of the Arkham project lie in its provision of a new solution that connects users, platforms, and professional analysts to provide personalized and customized data services for users. Through intelligence trading, it enables the flow of data between different platforms, providing richer data for various platforms. This business closed-loop model provides Arkham with a differentiated advantage and creates additional value.
However, Arkham also faces some challenges. Established blockchain data analysis platforms in the current market already have a large amount of data foundation, research methodology, and bilateral resources. Simply launching intelligence exchange products may not be enough to build a strong competitive barrier, as other platforms can also replicate this model. Therefore, Arkham needs to further consolidate its differentiated advantage and create more additional value in order to stand out in the market and sustain development.
In terms of future plans, Arkham plans to release AI-driven data exploration features and add support for DeFi data in Q4 2023. In addition, Arkham plans to implement the Chainlink DON smart contract for intelligence exchange verification and achieve cross-chain support in the future.
In conclusion, the Arkham project has the potential to solve the current problems of blockchain data analysis platforms and provide personalized and customized data services for users through its business closed-loop and intelligence trading model. However, it needs to further consolidate its differentiated advantage and create more additional value. Overall, the Arkham project has potential and deserves attention, but its development and market competition need to be further observed.
1.2 Valuation
The valuation of this financing round is approximately $68.57 million. For detailed information, please refer to section 4.2.
2. Project Overview
2.1 Business Scope
The business scope of the Arkham project is to achieve transparency and traceability of blockchain data by using artificial intelligence technology to de-anonymize pseudo-anonymous metadata on the blockchain. The core tool of this project is the Ultra AI engine, which can match blockchain addresses with real-world entities, providing users with key data and analysis. Through functions such as entity analysis, token pages, and visualization tools, Arkham helps users understand the entities behind cryptocurrency transactions and provides decision support.
In addition, Arkham has launched the Intel trading platform, which provides a marketplace for buying and selling intelligence for cryptocurrency users and the blockchain detective community. Through smart contract bounties and auction mechanisms, users can purchase valuable intelligence data, while detectives can also receive corresponding rewards. Arkham also collaborates with multiple major blockchains to support data analysis and display for Bitcoin, Ethereum, and other chains. Overall, Arkham aims to promote transparency and stability in the crypto industry, providing participants with clear information and data support.
2.2 Past Developments and Roadmap
Future Roadmap:
2023 Q3:
Public release of Arkham Ultra
2023 Q4:
● Release of AI-driven data exploration feature.
● Launch of Chainlink DON for intelligence exchange verification: The Chainlink DON will be used to verify the intelligence exchange, improving its security, decentralization, and reliability.
● Addition of DeFi data support: Current and historical data analysis pages for DeFi protocols.
● Cross-chain support for Arkham Intel Exchange.
2.3 Team Situation
2.3.1 Overall Situation
According to LinkedIn data, the main leadership members include Miguel Morel, Zachary Lelangis, John Kotlovski, Alexander Lelangis, etc., forming a team with expertise in strategy, business, consulting, analysis, and technology.
2.3.2 Core Members
Miguel Morel Founder
Currently the CEO of Arkham and co-founder of the Reserve Protocol. He is a technology entrepreneur with years of experience in strategy, management, recruitment, and fundraising. Miguel Morel, the founder of the Arkham project, previously launched the token Reserve Protocol ($RSR) on multiple exchanges, including Binance, with investments from well-known institutions such as Coinbase Ventures.
Henry Fisher Co-founder
Henry Fisher is the co-founder and Chief Strategy Officer of Hanway Associates. He previously served as a research project manager at Grow Biotech PLC. He studied at the University of Oxford and has led protocol development in multiple blockchain projects. Prior to his involvement in the cryptocurrency industry, he was a software engineer at Tesla, responsible for the release of new features for Tesla’s car reservation platform and website.
2.4 Financing Situation
Arkham completed Series A financing on April 17, 2023, raising over $12 million. Investors include Digital Currency Group, Coinbase, Geoff Lewis, Tim Draper, Sam Altman, co-founder of Y Combinator and the cryptocurrency project Worldcoin, and Peter Thiel, founder of data analytics company LianGuailantir.
3. Business Analysis
3.1 Target Audience
The target audience of the Arkham project includes but is not limited to:
1. Cryptocurrency traders: Arkham’s de-anonymization services and data analysis tools can help cryptocurrency traders better understand the entities behind transactions, providing decision support and risk management for traders, investors, journalists, researchers, etc.
2. Cryptocurrency Companies and Projects: Arkham’s data analysis and visualization tools help cryptocurrency companies and projects understand the behavior and transaction habits of their users in order to optimize their products and business strategies.
3. Blockchain Investigators and Regulatory Agencies: Arkham’s de-anonymization services and intelligence trading platform provide powerful tools for blockchain investigators and regulatory agencies to track and analyze cryptocurrency transactions, helping them combat money laundering, fraud, and other illegal activities.
In summary, the target audience of the Arkham project includes individuals, companies, and institutions who want to understand and utilize cryptocurrency transaction data, including traders, companies and projects, investigators and regulatory agencies, as well as the cryptocurrency community and investors.
3.2 Business Categories
The Arkham project’s business can be divided into the following categories:
1. De-anonymization Services: Arkham uses an artificial intelligence engine called Ultra to de-anonymize pseudonymous metadata on the blockchain, matching blockchain addresses with real entities, thereby revealing the people and companies behind cryptocurrency transactions.
2. Data Analysis and Visualization: Arkham provides features such as entity analysis, token pages, and visualization tools to help users gain a deeper understanding of the entities behind cryptocurrency transactions, providing key data and analysis reports to support user decision-making.
3. Intel Trading Platform: Arkham has created a marketplace for buying and selling intelligence data called the Intel trading platform. Users and the blockchain investigator community can trade on this platform to purchase valuable intelligence data.
In summary, the Arkham project aims to enhance transparency and stability in the cryptocurrency industry by providing de-anonymization, data analysis and visualization, and an intelligence trading platform, offering clear information and data support to participants.
3.3 Detailed Business Description
Arkham has two main products: The Intelligence Platform and the Transaction Platform for Address Information Analysis.
3.3.1 The Intelligence Platform
There are three main challenges in generating cryptocurrency intelligence:
– Data Collection: Locating online and offline data sources related to the blockchain and reliably collecting this data continuously.
– Data Integration: Consolidating these data sources into a searchable and authentic source to generate any desired information.
– Identity Attribution: Matching real-world identities with addresses using this data.
To address these challenges, Arkham has developed Ultra. Ultra is a proprietary AI system for synthesizing blockchain data from multiple sources, online and offline, into a scalable and easily modifiable authentic source. Ultra enables Arkham to transform raw blockchain transaction information into a clear view of entities and their activities using cryptocurrencies, including exchanges, trading companies, and individuals. Currently, the Arkham platform contains over 350 million tags and 200,000 entity pages.
The core of the Arkham platform is Profiler. Profiler provides a comprehensive view of the activities of an entity or address, including:
– Transaction history that can be filtered and sorted by USD value, tokens, counterparties, and time.
– Portfolio Holdings
– Balance History
– Profit and Loss Situation
– Exchange Usage
– Top Counterparties
The Profiler is the core of the platform, as it provides a set of intelligence about the activities of entities or addresses, to display their complete activity situation. Other features also allow for deeper insights using this entity information:
– Customizable visual tools for network analysis, analyzing entities/addresses and their counterparties, and filtering by any key dimension
– Ability to create private address labels and entities
– Custom alerts based on transactions, which can be set based on scale, entity, blockchain, and tokens
– Dashboard for customized entity groups to display key information at a glance
– Ultra Direct Interface for custom queries
– Historical point analysis at any given time to understand the entity’s cryptocurrency investment portfolio
● Multi-Chain Integration
The scope of on-chain analysis is rarely limited to a specific blockchain, but the analysis tools often are. To provide a complete intelligence picture, Arkham by default collects, integrates, and attributes data across chains, and uses Ultra to coordinate cross-chain data. However, Arkham can also differentiate and segment data by chains, to analyze specific chains or subsets of chains as needed.
● Arkham Filters
Traditional blockchain analysis lacks systematic transaction filtering. It requires browsing through numerous pages of transactions or exporting to external sources to find the desired data. Arkham introduces systematic transaction filtering, which allows for filtering and sorting of transactions across the entire platform based on key indicators, including time, tokens, USD value, and counterparties. Transaction filtering greatly improves the efficiency of many analysis tasks. The work that previously took hours to browse through transaction pages can now be done instantly with Arkham’s filters.
● Profiler
The overall information of entity or address activities is at the core of Arkham’s intelligence model. The Profiler is a platform feature for viewing the complete real-time situation of entities on-chain, both current and historical. The Arkham user interface displays information using components called Units. The Profiler includes four Units:
– Portfolio: Current and historical holdings over time
– Performance: Balance history and historical profit and loss
– Counterparties: Exchange usage and top address/entity counterparties
– Transactions: Comprehensive real-time updated transaction history
The Portfolio Unit displays the current portfolio holdings of entities on-chain, segmented by tokens and chains. It also includes a record that allows for comparing portfolio holdings at any two points in time.
The Performance Unit displays the total portfolio balance (in USD) that changes over time.
It has two views: total balance history and profit and loss history. The profit and loss are calculated using the USD value of tokens transferred to the entity as the cost basis at that time.
The Counterparties Unit displays the exchange usage categorized into deposits and withdrawals, which change over time based on transaction volume. It also shows the top counterparties ranked by transaction volume.
The Transaction Unit allows for the most detailed analysis of entity activity. It displays the complete transaction history of an entity in real-time. Importantly, as detailed in section 2.3, transactions can be sorted and filtered by multiple dimensions, allowing even key transactions buried deep in an entity’s history to be brought to the surface.
Overall, Profiler Units provide a multi-granular level view of entity activity across multiple chains, displayed over time. This comprehensiveness makes it highly useful for the entire scope of analysis tasks. Profiler observes an entity from multiple perspectives and merges these views into a complete picture.
Visualizer
The Visualizer allows for network analysis of relationships between entities, generating a network graph for a selected address or set of entities. The Visualizer network consists of nodes representing entities connected by transactions. Using Arkham’s filters, the display can be customized to show only the transactions of interest.
Profiler provides a complete picture of entity behavior, while the Visualizer is suitable for analyzing entity relationships. It allows for an intuitive understanding of the relationships between entities, generating insights that were previously difficult or impossible to obtain.
● Alerts
Alerts are used to monitor and respond to interesting activities in real-time. They notify Arkham users on the selected platform of transactions that meet the criteria set by custom Arkham filters, capturing interesting transactions in network activity instantly.
● Dashboard
The Dashboard allows users to collect interesting entities and addresses and build custom data sources. The homepage of the Dashboard displays tracked entities and their recent transaction lists. Users can create custom dashboards for entities and data of interest, such as “Market Makers,” “ETH Whales,” “OTC Desks,” etc. These dashboards include various types of custom Units, such as holdings, balance history, and transactions, applicable to one or multiple entities. Users can easily share dashboards with others via URL.
3.3.2 Intel Exchange – Trading Platform for Address Information Analysis
Arkham Intel Exchange is a platform connecting people who wish to buy and sell cryptographic intelligence. It is a decentralized intelligence economy where anyone can engage in information transactions using the native currency ARKM, such as entity tags, hacker tracks, and curated data sources. Buyers request intelligence by posting bounty tasks, while sellers provide intelligence through auctions. Both bounties and auctions are conducted through audited smart contracts, without any central entity taking control of funds. By creating an intelligence marketplace, Arkham Intel Exchange and the associated DATA plans enable the creators of intelligence to capture a portion of the labor value, referred to as “intelligence revenue.” Intelligence revenue incentivizes the production of intelligence as a public good.
Arkham Intel Exchange addresses the fragmentation and inefficiency of the blockchain intelligence economy by providing a platform for buyers and sellers to interact and exchange intelligence. Traders, journalists, researchers, and other observers have a significant demand for intelligence, while the vibrant on-chain detective community generates a wealth of intelligence, but there is no intersection between these two markets. By facilitating the free flow of intelligence, the exchange improves the efficiency of the intelligence market and the entire cryptocurrency market.
Arkham Intel Exchange is the first platform based on a decentralized network that promotes, incentivizes, and rewards large-scale on-chain analysis. It allows Arkham and its users to obtain intelligence from the thriving on-chain detective community, which has been steadily growing over the past two years and expanding rapidly in 2022. Currently, these detectives do not receive income for their work and technical expertise, but this will change with the emergence of Arkham Intel Exchange and intelligence rewards.
Buyers seeking specific intelligence can post bounty tasks by staking ARKM. The staked assets serve as the initial bounty. Once the initial bounty task is posted on Arkham Intel Exchange, anyone can increase the value of the bounty task and the incentives for bounty hunters by staking the same amount or more ARKM. Anyone can compete for bounty tasks by submitting their work, which will then go through an intelligence verification process. The first verified work will receive the staked bounty.
Sellers can also set up auctions for intelligence. If sellers have intelligence they consider valuable to the market, they can submit it for verification. Once verified, the intelligence will be put up for auction. Sellers can set standard auction parameters, including end date and buyout price. Interested parties then bid for access to the intelligence.
Bounty stakers and auction winners will have exclusive access to the purchased intelligence for a period of 90 days. After that, the intelligence can be disseminated to the wider Arkham platform for everyone’s use. All staking and payments in ARKM are controlled by audited smart contracts, ensuring that Arkham does not hold ARKM.
To support the network, Arkham charges a 2.5% provider fee on bounty and auction submissions, and a 5% recipient fee on bounty payments and successful auction bids.
The intelligence submitted for bounties and auctions is reviewed by the Arkham Foundation, which approves or rejects it. The Foundation’s response is validated on-chain using the Chainlink decentralized Oracle Network (DON), which acts as an Oracle for the bounty and auction smart contracts. The use of DON ensures and decentralizes the intelligence verification process, reducing the risk of false validation. It also lays the foundation for fully decentralized intelligence auditing, which is described in section 3.5 below.
These mechanisms create an ecosystem of overlapping market roles:
– Bounty seekers, who post bounty tasks seeking specific intelligence
– Bounty hunters, who search for intelligence to obtain the posted bounty tasks
– Intelligence merchants, who auction intelligence they have collected themselves or obtained from others
– Intelligence collectors, who gather intelligence from auctions rather than targeted bounties
ARKM is the currency of Arkham Intel Exchange.
1) Bounty Tasks
Buyers seek intelligence by posting ARKM bounty tasks on the exchange. To post a bounty task, they must write a detailed specification of the required information and then lock the amount of ARKM they wish to offer as a reward in the bounty contract. Anyone looking for the same intelligence can participate in the bounty by locking an equivalent amount of ARKM and adding it to the total reward.
If the original publisher of the bounty task wishes to remain the sole recipient of the intelligence even after others join, they can achieve this by buying out the participants’ shares. For example, if the original publisher placed a bounty task of 1000 ARKM and two additional individuals each joined with 1000 ARKM, then the original publisher can buy out the bounty task by staking an additional 2000 ARKM. Participants can withdraw their ARKM, while the total value of the bounty task remains at 3000 ARKM, reflecting the increased demand for the intelligence. The bought-out participants can rejoin the bounty task by staking the new total reward amount (3000 ARKM in this example).
Bounty hunters claim bounty tasks by submitting intelligence on the exchange. To prevent spam, bounty hunters must stake 10 ARKM in the smart contract, which will be forfeited if the submission is rejected.
If a submission is approved by the Arkham Foundation, the DON of the exchange will record the response and report it to the bounty smart contract, triggering a 15-day unlocking timer. After this period ends, bounty hunters can withdraw all the ARKM in the bounty contract, deducting the exchange fees, and withdraw it to the address used to stake the submitted ARKM. They can also make an early withdrawal with a 10% fee before the 15-day lock-in period ends. On the other hand, if a submission is rejected, the submitted ARKM will be kept in the smart contract to increase the value of the bounty task.
2) Auction
Sellers sell intelligence through auctions. The Arkham Intel Exchange’s auction follows the auction model in the NFT market, where sellers can set the purchase price, minimum bid, and auction duration. After the seller submits an auction post, the intelligence will go through Arkham’s verification before the auction starts. To prevent spam, auction holders must stake 10 ARKM at the time of submission, which will be forfeited if the submission is rejected. Similar to bounty tasks, auctions have a 15-day lock-in period before the winning bid can be withdrawn from the auction smart contract, but the auctioneer can make an early withdrawal with a 10% fee.
3) Implementation
Bounty tasks and auctions can be used for any type of intelligence, not limited to tags and entity attributes. For example, a victim of an attack may crowdfund a high bounty for intelligence on the attacker, or a detective may auction a specific method of collecting tags. The intelligence traded on the Arkham Intel Exchange will be exclusively held between the acquiring trading pairs for 90 days, after which the intelligence will be distributed to all users of Arkham. The time-limited exclusivity is necessary so that Arkham is not restricted from adding requested intelligence to the platform and contributes to the ultimate decentralization of community intelligence. If exclusivity was unlimited, Arkham would not be able to add the same intelligence to the platform even if independently obtained. The user interface interacting with the Arkham Intel Exchange will be deployed on the Arkham platform. This interface will display searchable lists of existing intelligence bounties and auctions on the exchange and provide a portal for publishing new bounties and auctions. The bounty and auction listings will show descriptions of the sought or offered intelligence, as well as options for claiming or bidding. Bounty task publishers input descriptions of the sought intelligence, time limits for the bounty task, and the scale of the bounty task. They then stake the ARKM for the bounty task in the bounty smart contract using their browser wallet. Once the transaction is complete, the bounty task will be posted on the exchange. Auction holders input a public description and set the parameters of the auction, then submit the intelligence for sale for review. Once their staking transaction is complete, the submission will be reviewed and, if approved, be posted on the exchange according to the auctioneer’s set conditions.
4) Oracle Problem in Intelligence Market
The intelligence market poses a unique challenge as it requires indirect verification. Buyers cannot directly evaluate intelligence before the sale, as they would then possess the intelligence and there would be nothing left to sell. To address this issue, buyers typically rely on proxy indicators of intelligence quality, such as the reputation of the seller. However, these methods are prone to errors and always limit the potential sources of intelligence. For example, relying solely on reputation would not uncover cryptic intelligence provided by amateur detectives or individuals who wish to remain anonymous. Arkham solves this problem by directly verifying intelligence, allowing participants in the marketplace to know that the intelligence in the auction or successfully submitted bounty tasks has been screened by the Arkham team using proprietary technology. Ultimately, intelligence on the Arkham Intel Exchange will be verified in a decentralized manner. This requires solving the oracle problem for encrypted intelligence. Arkham is soliciting funding proposals for solving this problem. The difficulty level of the oracle problem for intelligence is higher than that of general oracle problems because it requires indirect verification. It is not as simple as reliably retrieving correct off-chain information. The accuracy of information must be reliably verified in a decentralized manner, without the verifiers having direct access. Existing solutions, such as Chainlink DONs, provide a potential starting point for solving the oracle problem for intelligence. However, DONs currently only address the decentralization of oracles and do not solve the problem of indirect verification. Promising approaches to solving indirect verification include zero-knowledge protocols, which are designed for this purpose. So far, they have mainly been used to verify the validity of private keys, which is less challenging than indirect intelligence verification as it is less subjective. Intelligence verification always involves a certain degree of uncertainty and ambiguity, making it particularly suitable for direct human analysis.
However, existing methods for zero-knowledge evaluation in the fuzzy domain provide promising avenues for research. In short, a zero-knowledge decentralized solution to the oracle problem for intelligence could include a decentralized network of intelligence analysis nodes that use zero-knowledge protocols to verify hidden intelligence. The work compensation for these intelligence verification nodes can be achieved by allocating a portion of the pledged bounties in the Arkham Intel Exchange protocol. The benefit of obtaining compensation for verifiers from pledged bounties is that larger bounties will be prioritized for verification, providing additional incentives to increase the scale of bounties. Arkham Intel Exchange will use DONs in the intelligence verification process. DONs are used for decentralizing and protecting the intelligence verification oracles for bounties and auction smart contracts, but the verification itself remains direct. Once indirect verification methods are established, DONs can be easily modified to accommodate this new approach.
5) Data Plan
Arkham’s Decentralized AI Training Accelerator (DATA) plan is a complementary intelligence profit system for the marketplace. In the DATA plan, detectives earn ARKM income by submitting intelligence for training Ultra and enhancing the platform’s data. In addition to specific tags and entity attributes, data sources and other clues can also be submitted. The Arkham Foundation will review the submitted content and make ARKM payments according to the approved DATA price list. The direct submission system provides detectives with a way to earn income while creating a decentralized community of intelligence analysts that provide intelligence sources and training data to the platform. Direct submission is how Arkham directly obtains intelligence and training data from the community, while detectives can earn ARKM by submitting intelligence, avoiding the uncertainty of auctions and the restrictions of bounty tasks. Through direct submission, rewards will be given for any approved intelligence submissions based on the predetermined price list (Table 1). There are three types of submissions: address tags or disputes, entity submissions, and high-priority intelligence. High-priority intelligence includes various non-address, non-entity submissions, such as data sources that generate many tags or intelligence on an urgent and high-profile case. Detectives participate in the DATA plan by directly submitting intelligence on the platform using a simple form, where they showcase their findings and prove their effectiveness. Approved submissions will receive the specified payment amount.
3.4 Industry Space and Potential
3.4.1 Classification
Arkham (ARKM) is the 32nd LaunchLianGuaid project to be launched on Binance. It is a platform that uses AI technology to provide on-chain data and intelligence analysis and receive rewards.
On-chain data can be roughly divided into three categories:
1. Transaction data, such as sender and receiver addresses, transfer amounts, address balances, etc.
2. Block data, such as timestamps, miner fees, miner rewards, etc.
3. Smart contract code, which is the encoded business logic on the blockchain.
On-chain data analysis is the process of extracting desired information from these three types of data.
From the perspective of the data stack, blockchain on-chain data analysis tools can be divided into three categories: data sources, data development tools, and data apps. Arkham belongs to the data app category.
From the perspective of the target audience, there are two main types:
One type focuses on developer and user community building, mainly targeting developers and technical personnel. By incentivizing community contributions and encouraging users to independently publish data insights, a positive feedback loop is established for the product, such as Dune.
The other type is based on its own product’s strong analytical capabilities, mainly targeting professional institutional investors, providing exclusive customized data insights services, such as Nansen and Glassnode. Arkham belongs to this type, but most of its functions are currently free to use.
In the early days when public chains were not abundant, data analysis tools were mainly used to analyze simple indicators such as the number of addresses, holding amounts, holding time, and transaction volume on Bitcoin and Ethereum.
With the rise of many public chains, the gradual development and growth of DeFi, the explosive growth of NFT cross-chain trading volume, and the enrichment of on-chain social activities, users’ demand for on-chain data analysis has increased, and the dimensions of analysis have become more complex.
In recent years, there have been many excellent products in the field of on-chain data analysis, with valuations in the hundreds of millions or even billions of dollars in primary investment markets.
Some well-known on-chain data analysis tools include Nansen, Glassnode, Token terminal, Eigenphi, Dune Analytics, DappRadar, Messari, Footprint Analytics, and other products.
3.4.2 Market Size
Based on the current data services, overall on-chain data analysis products generally operate on a subscription-based profit model. TAM = Number of customers * Average consumption frequency per cycle * Average customer price
1. Currently, data analysis businesses can be divided into two types: 2B and 2C. The data services they provide include data APIs, higher granularity/customized data tables, data research reports, etc. Although on-chain data is publicly transparent and can be accessed by anyone, its effectiveness can only be realized through effective data analysis. Therefore, on-chain data analysis products have high added value, and many on-chain data products are targeted at professional users with higher average customer prices (above $200/month).
2. Currently, there are 41.71 million unique addresses for trading DeFi assets. Assuming 1% of them are potential users and taking Nansen’s VIP monthly fee of $1000 as an example, TAM = 41.71 million * 1% * $1000/month * 12 months = $5 billion/year.
Due to the significant differences in VIP tier prices among various products, even reaching several times, and the significant differences in the willingness and threshold for data service payments between institutions and individual users, relying solely on the TAM formula cannot accurately estimate the market size of on-chain data services. For reference, we can compare the current global data market size and the valuations of data service giants:
According to data released by Statista in February 2023, the global Big Data and Business Analytics (BDA) market value in 2022 was approximately $274.3 billion. The market value of traditional financial data service provider Thomson Reuters is approximately $59.396 billion. Even commercial data analysis and visualization tools, such as Tableau, have reached an acquisition value of $15.7 billion.
As a reference, the current valuation of the unicorn on-chain data analysis platform Dune has just reached $1 billion.
Currently, the total market value of the cryptocurrency market is around $1.2 trillion, and the total TVL of the DeFi market is $44.1 billion. However, during the bull market, the total TVL exceeded $178.6 billion.
According to a report published by Grand View, the compound annual growth rate of the global Web3.0 blockchain market from 2023 to 2030 is 47.1%. A report from Markets and Markets predicts that the global blockchain venture capital market will reach $67.4 billion by 2026.
Currently, with the recovery of market confidence, the valuation of the DeFi market will be restored, and on-chain data products still have broad application prospects. The on-chain data market should currently have a market size of over tens of billions.
With the formation of a multi-chain landscape (including Layer 1 and Layer 2), the field of on-chain data analysis is a huge cake in the visible future, with great development space in terms of depth and breadth. Arkham (ARKM), the first tokenized on-chain data analysis tool, has triggered new thinking in the market.
However, due to the full transparency of data on the blockchain and the lack of moats in terms of data sources like Web2 companies, data analysis tools can only continuously polish their products, iterate quickly, and provide more and better indicators in order to attract users to continue using them.
3.5 Business Data
Currently, the official Dashboard data is not publicly available, so the analysis will be based on the information currently available.
● Basic Operational Data
Currently, Arkham has been monitoring the data of eight chains, including Ethereum, Polygon, BNB, Arbitrum, Avalanche, Optimism, Bitcoin, and Tron. In addition, Arkham also monitors the network status of each chain and basic information of the latest leading projects, including but not limited to holders, market value, growth rate, etc.
● Number of Users
According to official sources, Arkham’s number of users has been steadily increasing in the past 8 months. Especially in the recent 3 months, the number of users has significantly increased. As announced by the official, as of now, the number of Arkham users has exceeded 10,000. However, the official announced that in April 2023, the Bitcoin network will support Arkham, and it is expected that the number of users will exceed 100,000 by the end of that month. Please note that the above is an official statement, and the specific results may be affected by various factors. Investors and users should treat these news with caution.
● Social Media Data
As of July 14, 2023, ARKHAM’s performance on social media platforms is relatively good. Currently, ARKHAM’s Twitter account has attracted over 200,000 followers, becoming one of the most popular channels. At the same time, users actively participate in discussions in the Discord community, and the community atmosphere is active. Below are the specific data for each platform:
- Twitter: 205K followers
- Discord: 31K followers
- Telegram: 9.3K followers
3.6 Project Competition Landscape
Currently, there are many blockchain data analysis platforms in terms of quantity and subfields. Some mainstream blockchain data analysis platforms include Nansen, Dune Analytics, DeFiLlama, Footprint Analytics, 0x Scope, Token Terminal, etc.
3.6.1 Competing Projects
1. Nansen
Nansen is a company that focuses on tracking on-chain activities and is known for labeling on-chain addresses, with the most famous label being “smart money”.
Addresses labeled as smart money usually belong to elites in the crypto world, and their trading behaviors often bring considerable profits. Other traders naturally hope to follow their trading behaviors to gain better investment opportunities.
Smart alerts: Nansen allows users to subscribe to smart alerts and receive notifications when activity occurs in the addresses they have subscribed to.
Watchlist: Users can add wallet addresses they want to monitor to the Watchlist to track their movements at any time.
Currently, Nansen provides some free features, but the majority of features require payment, which is also the main source of revenue for Nansen.
2. Dune Analytics
Dune Analytics is one of the earliest platforms to provide users with autonomous query capabilities for on-chain data analysis. It is also one of the platforms with the largest analyst team and user community. Through Dune Analytics, users can access highly granular raw on-chain data and freely use this data for custom queries and analysis.
In addition, Dune Analytics provides the Abstraction feature for project teams, allowing them to create more suitable data tables based on their own protocol data for use by analysts. This allows project teams to have a more accurate understanding and evaluation of their protocol performance and provide more valuable data insights to their users and investors.
However, autonomous querying has certain requirements. Analysts need to have the ability to write PostgreSQL to create data queries that meet their own needs. Query latency is also highly dependent on the analyst’s SQL writing skills and familiarity with the data tables provided by Dune Analytics.
Dune Analytics provides extremely fine data granularity and high query freedom. However, compared to other tools, Dune Analytics has certain SQL coding requirements for analysts, so using the platform for more personalized data queries may require proficiency in writing PostgreSQL. Despite the threshold for autonomous querying on Dune Analytics, it is still a powerful and user-friendly data analysis tool.
3. Footprint Analytics
Compared to Nansen, which only provides standardized information interfaces with low thresholds, and Dune Analytics, which provides autonomous query capabilities but requires analysts to have knowledge of writing PostgreSQL, Footprint Analytics provides a solution that combines free query capabilities with reduced thresholds.
On-chain data is very complex, and calculating a single metric may require analysts to write hundreds or even thousands of lines of code. To address the issue of high analysis thresholds, Footprint cleans and integrates on-chain data and gives it business meaning, allowing users to analyze blockchain data without the need for SQL queries or programming skills. Anyone can build custom charts and interpret on-chain data to discover the value trends behind projects in a matter of minutes through a rich chart interface.
Footprint Analytics not only provides raw on-chain data but also categorizes the data. The most raw on-chain data is at the Bronze level, while the data that has been filtered, cleaned, and enhanced is at the Silver level. Further organizing the data to have business significance results in the Gold level.
The survival of data analysis platforms mainly relies on the payment from professional data analysts, capital financing, and cooperation with project teams. Excluding capital financing, the remaining two revenue streams do not have strong growth potential. Most on-chain data analysis platforms still rely on capital financing to sustain their own development. In the foreseeable future, the revenue model of on-chain data analysis platforms is not clear.
As a tool-oriented track, in addition to Web2 revenue models such as charging users and advertising, Arkham provides a new answer.
From the pain points of different market participants:
1. Most users are not good at using on-chain data analysis platforms. The use of such tools is limited to searching for data organized by others and does not involve fetching the required data based on their own needs. The level of customization is limited.
2. The relevant data organized by professional on-chain data analysts does not have reasonable feedback, and can only be one of the means to obtain traffic.
3. Most project teams need to spend additional manpower costs to hire professional analysts in order to obtain the desired data.
4. Web3-related institutions, such as investment research and media, need more diverse information.
From the perspective of market pain point analysis, the on-chain data intelligence exchange platform Arkham Intel Exchange can solve the above problems. This platform connects users, platforms, and professional analysts through a data exchange platform, forming a commercial closed loop.
A larger vision is that the intelligence trading platform can become the interface for the traffic of various platforms, accepting and integrating the capabilities provided by other data analysis merchants. At the same time, Arkham Intel Exchange also provides a new direction for revenue models, namely the model of earning revenue through intelligence, which may become a new revenue channel for tool-oriented tracks, bringing more returns to investors.
However, we also need to see that established on-chain data analysis platforms have accumulated a large amount of data foundation and research methodology, and have accumulated rich dual-sided resources. The moat of only launching intelligence exchange products is not deep, and other platforms can easily replicate it. Perhaps, we will soon see other data analysis platforms developing this model.
However, in any case, Arkham’s innovation brings new scenarios to the tool-oriented “old track” of on-chain data analysis platforms, adding new narratives and the opportunity to become a traffic port in this field.
It is not new for on-chain data analysis platforms to receive large-scale financing from key institutions or go public on leading exchanges. However, we believe that Arkham is not on the same competitive dimension as its “competitors” in the same track, especially its launched intelligence trading platform, which introduces elements such as token economy and open data trading. It may bring new vitality to the entire on-chain data analysis field.
3.7 Token Model Analysis
3.7.1 Token Total Supply and Distribution
Initial distribution
The initial supply of ARKM is 1,000,000,000 tokens, and the circulating supply after listing is 150,000,000 (15.00% of the total token supply), distributed as follows:
1) Ecosystem incentives and subsidies: 37.3%
[Further breakdown of the ecosystem fund]
—–Community rewards: 28.7% (10.7% of the total)
—–Contributor incentive pool: 26.8% (10.0% of the total)
—- DON PoS Reward: 26.8% (10.0% of the total)
—– Ecosystem Subsidy: 17.7% (6.6% of the total)
2) Core Contributors: 20%
3) Investors: 17.5%
4) Foundation Treasury: 17.2%
5) Binance Launchpad: 5.0%
6) Advisors: 3.0%
Token Sale Information
Unlock Schedule
The total supply of ARKM will be fully unlocked in the seventh year after listing. The initial circulating supply will be 15% of the total supply.
Investors, core contributors, and advisor tokens will be locked for one year after listing. These tokens will be linearly unlocked over a period of three years starting from the first year after listing. The ecosystem fund will have a lock-up period of over five years. The foundation treasury will be unlocked after more than seven years. The design of ARKM is not intended for inflation, and there are no plans to mint more tokens.
3.7.2 Token Value Capture
ARKM is the native utility token of the Arkham platform. It is used for:
● Intelligence Data Analytics Platform: ARKM is the currency of the Arkham data analytics platform, which is the first open market for trading encrypted data analytics.
● Governance: Token holders have governance rights and can vote on the strategic direction of Arkham.
● Incentives: Users are rewarded with ARKM for submitting information intelligence, referring new users, and other behaviors that contribute to the ecosystem’s development.
3.7.3 Core Demand for Tokens
The core demand for Arkham tokens (ARKM) includes the following:
1) Data Analysts: Data analysts are key users on the Arkham platform who use ARKM tokens to purchase and access encrypted data intelligence on the platform. For data analysts, ARKM tokens are essential tools for acquiring and exchanging data.
2) Data Providers: Data providers are individuals or organizations that supply data intelligence. They can upload their data intelligence to the Arkham platform and receive rewards in the form of ARKM tokens. These data providers rely on ARKM as a currency for monetizing and profiting from data.
3) Users: Other users are also demanders of Arkham tokens. They may be regular users, businesses, or organizations interested in encrypted data analytics. They can purchase ARKM tokens to access and use data intelligence services on the Arkham platform.
4) Governance Participants: ARKM token holders also have governance rights and can participate in important decision-making processes on the Arkham platform. Governance participants need to possess ARKM tokens to exercise their governance powers.
4. Preliminary Valuation
4.1 Core Questions
Which stage of the business cycle is the project in? Is it in the mature stage or in the early to mid-stage of development?
The Arkham project is currently likely in the early stage or preliminary stage of development. This means that the project is still building and developing its user base, improving its products and services, and has not yet reached a mature market position and profitability. At this stage, the project may face a series of challenges and opportunities, including market competition, user satisfaction, financial resources, and other issues.
Does the project have reliable competitive advantages? Where do these competitive advantages come from?
1) Intelligence profit economy: As a cryptographic intelligence token, Arkham has unique practicality, supporting its economic system through intelligence profit. The core practicality of this intelligence profit gives Arkham great potential in the global blockchain intelligence field.
2) Incentive system: The Arkham project adopts an incentive system to motivate user participation and holding of Arkham tokens through rewards and discounts. This incentive system helps to establish a stable and prosperous Arkham ecosystem, providing users with lasting incentives and rewards.
3) Solving the oracle problem: The Arkham project is committed to solving the oracle problem to achieve fully decentralized operation of exchanges. This effort helps the project to have a competitive advantage in the blockchain industry, as decentralized and trustworthy oracles are crucial for secure and transparent exchanges.
4) Ecosystem collaboration: The Arkham project focuses on the Ethereum and other blockchain ecosystems, providing users with opportunities for on-chain analysis and content contribution, and collaborating with other blockchain projects. This collaboration helps expand the influence and user base of the Arkham project.
What are the main variable factors in the project’s operation? Are these factors easy to quantify and measure?
1) User count and activity: Measures the project’s ability to attract and retain users, including metrics such as the number of registered users, daily, weekly, or monthly active users, etc.
2) Transaction volume and value: Evaluates the project’s transaction activity and value, including metrics such as average transaction volume, total transaction volume, average transaction value, etc.
3) Market share and competitive position: Identifies the project’s position in a specific market, measured through market share, user surveys, and competitive analysis.
4) User satisfaction and feedback: Evaluates user satisfaction and opinions of the project through user surveys, evaluations, and feedback, thereby measuring the project’s quality and room for improvement.
5) Revenue and profitability: Measures the project’s revenue sources, sales volume, profit margin, and other financial indicators to evaluate the project’s profitability.
These variable factors can be quantified and measured using different metrics and tracked and analyzed regularly.
What is the project’s management and governance model? How is the level of DAO?
The project is still managed by the team and will gradually be transferred to the DAO in the future.
4.2 Valuation Level
According to the information provided, the Arkham project completed Series A financing on April 17, 2023, raising over $12 million in funding, with investors accounting for 17.5% of token distribution. Based on this, the valuation of this financing can be estimated through calculation.
The valuation can be obtained by dividing the financing amount by the token distribution ratio. According to the calculation, $12 million divided by 17.5% (0.175) is approximately $68.57 million. Therefore, based on the given token distribution ratio, the valuation of this financing is approximately $68.57 million.
It should be noted that this number is only an estimate based on the given financing amount and token distribution ratio. The actual valuation may be influenced by other factors such as market conditions, competitive pressure, and investor valuation expectations.
4.3 Risk Analysis
According to the information provided, the updated risk analysis of the Arkham project is as follows:
1. Privacy Leakage Risk: Arkham uses user referral codes for user acquisition, but users have discovered that additional data can be obtained and decoded from the referral links, revealing the referrer’s full email address. This may raise concerns about privacy leakage, especially in privacy-focused crypto communities. Arkham needs to take measures to protect user privacy, such as using encryption technology or anonymization schemes to protect user personal information.
2. User Experience Risk: Arkham’s background theme is currently only black, and the smoothness is not very good. As the number of users increases, the platform’s performance may be affected. Arkham needs to ensure a smooth user experience even with a large number of users, such as improving performance through optimization techniques and increasing server capacity.
3. Registration Association Risk: Technically, Arkham only authorizes wallets through generating invitation links, and there are certain risks in other registration methods. For example, joining the waiting list after registering through other channels instead of being able to use the platform immediately. In order to use the platform immediately, users need to register using an invitation link generated by someone who has already registered. This registration association may violate the conventions of web3 and may cause concerns and resistance among some users. Arkham needs to consider improving the registration process to provide registration methods that are more in line with user habits and expectations.
4. Competition Risk: Arkham needs to be aware of situations where users advocate switching to competitor CoinGecko following Binance’s acquisition of CoinMarketCap. Competitors may emerge in the Arkham field, and users’ shifting may create competitive pressure on Arkham. Arkham needs to provide unique value, meet user needs, and establish long-term trust relationships with users to withstand challenges from competitors.
In conclusion, the Arkham project faces risks such as privacy leakage, user experience, registration association, and competition. The project team needs to take these risks seriously and take appropriate measures to mitigate and manage them. Investors should consider these risk factors and approach investment decisions with caution.
5. References
1. Official website: https://codex.ArkhamIntelligence.com/ARKM-incentives
2. Official intelligence trading platform: https://platform.ArkhamIntelligence.com/
3. Official website whitelist registration address: https://platform.ArkhamIntelligence.com/waitlist
4. Binance IEO research: https://research.binance.com/cn/projects/Arkham
5. Project whitepaper: https://assets-global.website-files.com/62879326fd745f7489b43224/64abc4471879916bc4e2aeb0_Arkham_WhitePaper_FINAL.pdf
6. LinkedIn: https://www.linkedin.com/company/ArkhamIntelligence/about/
7. On-chain data analysis: Insights into the value of the rapidly growing DeFi world: https://news.marsbit.co/20230213144328119685.html
8. Article: https://mp.weixin.qq.com/s/UzeL6y8iKN4am6xgPlj3wA
9. NANSEN official website: https://www.nansen.ai/
10. Smart money labeling: https://pro.nansen.ai/smart-money
11. Dune Analytics: https://Dune.com/browse/dashboards
12. Footprint official website: https://www.footprint.network/
13. Arkham’s intelligence trading platform brings new narratives to the data analysis track: https://www.odaily.news/post/5188332
