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Blockchain goes beyond just cryptocurrencies. While it was initially conceived to decentralize power, blockchain has evolved into an infrastructure technology. Even during bear markets of crypto, the blockchain sector continues to process, consolidate, analyze, and refine data for crucial infrastructure services.

The equation that associates blockchain with cryptocurrency still prevails in the public perception. Consequently, skepticism often persists within the industry when cryptocurrency markets face prolonged downturns. In 2018, during Bitcoin's slump to $3000, there was even a trend of people "Exiting Crypto."(Tal-Bl, In Korean)

However, long-time blockchain builders argue that "Blockchain is a data-driven infrastructure technology." Unlike Web2, where data is mostly closed, Web3 makes all data accessible. How effectively a company manages this data can determine its success or failure. Coindesk Korea met with Ingyo Chung, Chief Data Officer (CDO) of CryptoQuant (TeamBlackbird), who has been working with on-chain data on the blockchain for four years. The discussion took place on August 17th, focusing on blockchain as an infrastructure technology.

Data for All, but Readable by a Few

CryptoQuant is an on-chain data solution platform developed by Team Blackbird. Leveraging cryptocurrency wallet identification technology, it processes on-chain data such as cryptocurrency transaction histories, wallet addresses, and coin holdings into an index and provides this information to investors. Currently, it offers data services to over 200 organizations, businesses, foundations, and funds across more than 150 countries, including Bloomberg and CME.

While blockchain on-chain data is publicly available, raw data, composed of complex numbers and alphabets, is not easily decipherable by everyone. Ingyo Chung explained that CryptoQuant serves as a platform that enables anyone to "read" this data, aiding informed decision-making in the investment process.

He elaborated, "In traditional stock market investments, you have various valuation metrics based on financial statements, such as PER or EV/EBITDA (enterprise value/earnings before tax), alongside price data. However, cryptocurrency lacks such standardized metrics. CryptoQuant provides services similar to banks and stock exchanges on the blockchain, processing data to allow for crypto asset comparisons through standardized financial statements."

5 Years of On-Chain Data Analysis: Harnessing Technical skills

On-chain data is accessible to everyone, and in the Web3 environment, data is equitable for all. This means that many similar services are likely to emerge if a service gains popularity. CDO Chung noted that while it's possible to develop similar products, and not able to replicate technical skills.

He explained, "On-chain data on a blockchain is elaborately encrypted. If someone wishes to analyze blockchain data, it's challenging to derive insights from it because it's encrypted. So It's essential to decode or decrypt the data, transforming it into meaningful information for the average user. Since TeamBlackbird establishment in 2018, CryptoQuant has applied its decoding technology, through experience, to provide users with meaningful on-chain data."

Ingyo Chung, CDO, joined CryptoQuant during the final semester of his master's program at KAIST. During this time, he applied for domestic(South Korean) patents (Patent Nos. 10-2112798 and 10-2113347) for an exchange wallet tracking algorithm based on on-chain data. This technology utilizes AI to classify and visualize on-chain data, enabling rapid analysis of blockchain data, which accumulates vast amounts of data every second.

On-Chain Data: Advancing into Infra Tech

Data analysis isn't limited to on-chain data. To provide concrete evidence rather than conjecture, various off-chain data is collected to validate on-chain data.

Chung explained, "In addition to the technical skill of decoding, off-chain data collection and analysis constitute another strength of us. While on-chain data represents transaction data that accumulates over time, off-chain data, such as market data and labeling data, can be seen as exclusive technical skills and know-how."

For five years, CryptoQuant has consistently gathered proprietary labeling data, including metrics like Bitcoin mining electricity consumption, institutional investment returns, total Bitcoin deposits on exchanges, activity of long-term Bitcoin investors, and NUPL. complex on-chain data are readably visualized and reprocessed into Web3 infrastructure services by CryptoQuant

Crypto Market Cools Down, Web3 Demand Heats Up

CryptoQuant primarily offers investment-related data analysis services. Consequently, it could be heavily impacted by the cryptocurrency market. However, Chung disagrees.

He explained, "The number of transactions generated on the blockchain has quadrupled compared to two years ago, before the crypto winter. This growth in transaction volume has accompanied the emergence of various services and an increase in user numbers."

He said that CryptoQuant began B2B sales earnestly in the third quarter of the previous year, and now, as renewal time approaches, most clients are renewing their contracts. Chung stressed that, unlike the crypto-winter mood, the demand for Web3 infrastructure remains steady.

He noted that this period offers an ideal opportunity for identifying talented hires and promising projects. He said, "The crypto cycle, temporarily, has been a market downturn, but in the long term, it's an excellent time to attract talent and discover promising companies and projects. This is why we have been focusing on the B2B market. From an investment perspective, it's an excellent timing for institutional investors to get involved." CryptoQuant is also concentrating on talent acquisition for penetrating the U.S. market and expanding our domestic(Korean) development hub.

To establish blockchain as an infrastructure technology, He emphasized the importance of catering to the many, not just a few.

He stated, "If the data is only useful to a few people, it won't become a foundational infrastructure. It needs to have meaning for many people to serve as an intermediate step toward mass adoption. Everyone should be able to access and utilize the data where needed, deriving value from it. That's our vision."