Why On-Chain Intelligence Is No Longer Optional with Miguel Morel

Transcript

Even if we're not necessarily trading based off of our information, it costs us millions of dollars a year to run a platform like Arkham. >> These whales just bought over $200 million of ETH. One tweet from Arkham. Next tweet. This guy bought nine figures of ETH yesterday. >> Sort of building out this directory like the yellow pages of crypto addresses and and and they were using it and kind of selling that data. When you guys are building this out, you're kind of open sourcing it for the for the culture. >> Welcome back to the Rowup. We are your hosts. I'm Andy.

>> I'm Robbie. And this is your home to learn from the biggest guest, the brightest minds at the tip of innovation. >> Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. Miguel, welcome to the show. Good to have you, man. We've got you as the state of onchain intel at Arkham. Um I gotta ask, are you do you have some investigative forensics background? Are you just a very curious person? You know, why you know how did you come to the idea of like look, I want to start this kind of this company where we just open up this what what they call actually the dark forest in Ethereum land to everybody. uh kind of give us

some of your background, what inspired you to start Arkham and then we're just gonna jump right into it. >> Yeah, absolutely. Um so, no, I don't come from a from a forensics uh background though given everything that we've built so far, you know, now now I kind of do. Um, you know, the the reality is I kind of when I was in the crypto space previously working on a stablecoin project. Um, you know, I faced a lot of the same issues that uh people have today uh in terms of what they want to see out of the blockchain. Um, so that means actually wanting to know uh for example what the major players in crypto are doing. That means market makers, institutional funds, uh, hedge funds, whales, etc. um you want to

see what they're doing and you want to you want to know what's actually going on, who's buying, who's dumping. Um these are sort of like the the the forever questions of the crypto space. The same questions that people were asking 10 years ago, they ask today. They want to know what's going on on exchanges. Is my money there? Is it not? Uh are people buying my coin? Are they not? Um and are things going to go up or down? These are kind of like fundamental never-ending questions of crypto. And so the question before was how do you do that? How do you actually know uh what's going on? And for me, the the key uh was looking at the onchain information.

Obviously, many people can go on an exchange, try to look at the order book, understand what's going on. They can look at the news, they can look at social media. Um, but really the footprint of uh the patterns of movement of of crypto are all recorded on on the blockchain and will be forever. And all of the information about what has ever happened on chain uh is recorded forever. uh which means that we are able to take it, analyze it, and then produce very useful information and insights for the world to be able to use. And so that's what we decided to do. And that was born out of my own need uh uh for the services that we ended up creating ourselves.

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>> Yeah. I mean, uh, all of us, I mean, if you've been around in 2017ish, even into like like the 2020 era, it was it was it was very much like block explorer based, right? I mean, there there was some kind of these like data companies, but it was very very very like you're you know, you're going to be looking through hashes and clicking different buttons and tracking things. And now we've got a whole I think like the big the big change was like this visual mapping like rather than like numbers and letters and amounts like putting these things into like visual like like mappings I think completely changed the way and like the ability for people to actually like understand how actually how blockchains

work and then also like what's what's happening under the hood. >> Yeah, absolutely. So I I actually you know to put it into perspective I think that we have gone through several different iterations of data analytics in the crypto space. I think in the very beginning um there was none right so you had to actually go onchain run your own infrastructure or node uh and then read the raw information that was coming off of each block in order to understand what was going on. um as you accurately pointed out, you know, let's call that kind of a Vzero. I think V1 was then kind of like the, you know, blockchain.com for Bitcoin, uh Etherscan, of course, uh for for

Ethereum and all of the Etherscan derivatives for the different types of uh uh networks and layer ones that that uh exist that are sort of EVM based um or or even not in some cases like in in Soul Scan. Um and uh and that was kind of v1 where you know without needing to run your own node you can just look at a website um and you have the ability to look at what's on chain but without any labels. So you're just looking at the raw information of what address sent to which other address and how much did they send denominated in the cryptocurrency itself. Later on obviously they then started to add pricing so then you can see okay this guy sent 10,000 bucks but you have no idea who any of the people are.

>> Yeah. >> I think we then kind of pioneered the new era of data analytics for blockchain in particular uh where then we introduced this idea of being able to search for activity by name of an individual or an institution or an exchange without necessarily needing the address. to use something like an Ether scan, you would need to have the contract address. You would need to have, you know, the the zerox or the transaction hash, something to, you know, some sort of grain to start with in order to get what you're looking for.

Uh, with Arkham, I can just start with a name, uh, or with a token, uh, and slowly unravel all of the information that I need and that I'm looking for, uh, uh, without even needing a head start or or or any kind of hunch or inkling uh, of what's going on. let alone a transaction hash or or an address. So, we actually enable people to be able to go both ways. You can go address to name in order to identify what's going on or you can start with the name and then look at all the addresses. Um, and so I think we kind of uh uh made it significantly more user friendly, significantly more accessible um and way more free uh for people to be able to actually understand what's going on on chain without necessarily needing to be ultra sophisticated or already

know what they're looking for. >> Well, that's me uh left curve tapping in uh who is grateful for products like Arkham. Nice hat, by the way. That's a sit. Why don't we talk about what's actually happening on chain then? I mean like like what else would we do here? These whales just bought over $200 million of ETH. One tweet from Arkham. Next tweet. This guy bought nine figures of ETH yesterday. Okay. Um former ETH billionaire seven siblings is selling ETH. So it seems like a lot of the activity right now on chain in terms of size and scale is on Ethereum. um you know you guys have been tracking a lot of these ETF flows I think a lot of

these DAT flows um you know maybe let's start there what what has been the process like for for tracking these these uh treasury companies you know how how are you seeing those play out you know is there any like is there any that are more concentrated than others in terms of like wallets or is there anything that you've seen that is a bit more maybe uh like sophisticated than than others kind of walk us through some of the treasury company happenings that you guys are following specifically with with ETH and some and some of these others. Um, and just kind of what you're seeing from the deep, you know, lens of being on on chain.

>> Yeah, absolutely. So, I think there's a bunch of stuff going on on chain right now. Uh, obviously we had that tweet about Vitalic becoming a billionaire again, which people thought was pretty funny. >> Go viral. >> Yeah. Yeah. Exactly. Um, aside from this, you're right that there's a lot of activity now going on in the treasury space. Um, obviously we started out, you know, kind of focusing on Bitcoin because those are the ones that were most kind of popular uh to begin with, but now the Ethereum ones are the ones that are getting the most traction. Um, and to be honest, I think that a lot of the information um that we use in order to to track those um is actually coming from um you know, just being able to look on chain at who the

people who are making the largest transactions are in general sort of period because um in a period of one week or in the time span of you know a couple of days it is really unlikely that there would be you know so so much movement of Ethereum uh you know on on chain. It is really unlikely that an individual out of nowhere um will just go and purchase you know 500 million 600 million 900 million of a particular cryptocurrency um that quickly. It's just it's super unlikely. Um, and so I think in general, um, what we're looking for, uh, is very abnormal movements of large amounts of, uh, cryptocurrency on

chain, uh, in a pattern that actually matches, um, these kind of treasury company or reserve movements. And these are patterns of accumulation um that are different from the types of movements that you would see from a market maker for example uh or from a trading firm or even from an individual whale uh who's trying to accumulate uh uh cryptocurrency. They're they're very different. Um and so once you start to detect and look at all of these different patterns, you start to become aware of, okay, this wallet looks like it belongs to an exchange. This wallet looks like it belongs to a market maker.

this wallet looks like it belongs to some other kind of trading firm and ah whenever these types of wallets do XYZ um that actually means that it's a treasury company. Um and so this is something that we've also kind of learned uh and over time begin to track and we see more and more of them coming online and then based on their public reporting or information that exists about them online uh we are then able to say oh this is you know ex treasury company because they have you know ABC filings or they've said this particular type of information online which matches the behavior which we're seeing on chain. Um so that's generally the way uh in which we kind of go about the uh identification generally of the type of

wallet that we're looking at and the kind of onchain activity that we're looking at and then how we specifically then say okay this is that type of treasury company or this is this particular one. There is a I I remember back I think it was chain analysis back in 2020 was sort of building out this directory like the yellow pages of crypto addresses and and and >> and they were using it and kind of selling that data when you guys are building this out you're kind of open sourcing it for the for the culture right and so >> yes >> I'm curious like >> open sourcing that that subscription cost but yeah you know for the culture for the culture of Miguel's business Well, well, actually for most people the

the platform is just free. You can just go on and use Arkham as much as you want without needing to without needing to pay anything. So, a lot of it is has been kind of, you know, we'll monetize it kind of downstream of all of the positive, you know, net benefits that come from, you know, producing a product like Arkham and giving it up to the world. >> This is kind of what I was getting at though is like the monetization strategy here. you guys are kind of price, you know, subscription gating kind of like the more the more valuable insights, if you will, or downstream of of the free version. Are you guys also >> uh like putting your own money at stake and like putting your money where your mouth is when it comes to these to this intelligence and kind of like taking

some trades back and forth based on some of the the insights that you gain? >> Well, to be honest, in that sense, no. We don't actually trade ourselves as a company or me as an individual. I'm not I'm not really a a crypto trader. are more kind of, you know, focused on actually providing the infrastructure. And then you can use our data for for whatever you want, which is a whole bunch of different reasons. Some people use it for trading, some people use it for compliance, some people use it for investigations and research and due diligence, and you know, there's a whole kind of menu of reasons why somebody would want to use the Arkham Intelligence platform. Um, that being said, uh, we are still putting our money where our mouth is where, you know, even if we're not necessarily trading based off of our information, it costs us

millions of dollars a year to run a platform like Arkham, right? We need to hire engineers. We spend money on compute. Uh, we spend money on data storage. Um there's a number of different things um that mean that you know we have expenses related to every single chain um that we decide to integrate and all of the work that actually goes into you know labeling all of these different types of uh of wallets. It's not free. And so in that sense the business um is investing money into making sure that the information is accurate because if the information is not accurate or we suck as a product people will stop using it and so we don't get any value back. Whereas now we're getting value in the form of community in in the form of brand um and in a bunch of these other kinds of you

know really interesting ways uh where you know now we've become one of the major players uh in crypto with respect to kind of being a s source of truth um that people trust and go to in the industry to figure out what's going on. Um and again downstream of that uh now that we have kind of uh uh uh grown as a company uh we you know we we've just become you know one of the main places that people go for for information and so obviously that has a bunch of positive benefits. >> Yeah. Yeah. I mean and I imagine that that the uh that the customer base has varied right from individuals to organizations. I actually had an old college friend uh hit me up and say this was like two days ago. He texted me.

He's like, "Yo, what do you think about Arkham?" And I was like, "Oh, I I don't have a sub, but but I know it's, you know, solid and it's good." He's like, "Oh, well, my company is subscribe to it." I was like, "Oh, that's cool." >> So, like I imagine that you guys have a varying customer base, right? And then I also imagine that and and I've seen that you guys have taken like uh AI, right? and like integrated AI into the the product as well uh for you know a variety of use cases as well as launch per kind of like like a trading platform which I imagine the thought was like provide information give people a idea allow them to trade on it same platform um similar thought um what is what is uh next for for Arkham what what are the

next features that people want what is the next way that you want to launch uh you know a different vertical of business what can you share with us uh for you know what's coming down the pipe. >> Absolutely. So I think in terms of kind of immediate changes and things that we're intending to add and do um we are currently building out a mobile app uh which will be very helpful for a bunch of people in crypto who obviously don't necessarily use or even own computers right there are a number of people um especially in Southeast Asia who you know they don't necessarily have a you know high-powered laptop or desktop where they're doing this research and trading it's all just happening on their phone um and so imminently uh we intend to launch a a mobile app which I think

uh will be very helpful for people and people have been asking for that for a very long time. Um we're intending to um additionally uh launch a DEEX. Um so we will be adding more uh kind of decentralized trading capabilities um to the Arkham platform generally um which will allow people to obviously have significantly more access to uh tokens uh without you know uh uh uh necessarily going through a kind of centralized process, right? They can just access uh whatever exists on the blockchain. And it's more in keeping with the nature of um you know the crypto ecosystem that people will have uh significantly more freedom with respect to what assets they decide not just to research um but also

to to trade swap or you know whatever it is they they want to do with them. Um so that's also super promising and uh coming down the pipeline. Additionally, we're obviously still continuing to work on new AI products. Uh we launched our AI insights feature a couple of weeks back um which has been a hit and people really like uh and this is just again a way for people who you know being even a bit lost or not necessarily knowing what they're looking for uh being able to come in and actually get information about what's going on uh on chain directly from the platform um based on signals of things that are either abnormal or really interesting or very large um in a way that is automated.

such that people can then go and then you know Arkham itself can give you a crumb or or you know a string to tug on um to then begin unraveling more of a story of what's going on on chain and then from there you know maybe the investigation gets interesting you come up with a trading thesis um or it just kind of generally allows you to understand more uh about what's going on uh uh in any of these crypto ecosystems. Introducing extended exclusively on Stark, a nextg per trading platform live today. With 50 plus trading pairs from crypto to tradi, you get the best experience on chain today. Deposit in the community vault for attractive returns and engage in a fully unified

experience for spot trading, lending, and per trading exclusively live at extended.app on Starknet today. >> Go. I got maybe a long shot like is there obviously we talked about B you know institutions retail buying selling ETH that's a lot of the onchain activity happening right now in recent weeks is there any information or intelligence that you've gained through Arkham that has kind of flown under the radar like maybe didn't really get picked up too much and it was kind of an insight that piqued your interest but the rest of the community you know for for whatever reason kind of didn't really didn't really focus on it too to be honest, all of the stuff that we find uh you know even remotely

interesting, we post online. >> Like anything that uh we think like, hey, this is cool or this is worth looking at. Um even if you know, you can kind of think about our content uh strategy and what we've put online into a few different buckets. Obviously, there's the stuff that everyone's talking about that's super interesting, like, okay, by bit just got hacked, you know, whatever. Um, that's the kind of thing everyone's going to be talking about it. It's going to be all over the news. We're just providing supplemental info in a way that is already kind of being talked about and people have already chimed in on and we're just tagging along, right? And those are the kind of blockbuster sort of viral stories. Um, then there's the stuff that is actually produced by us uh without

any kind of external source. So, for example, um we posted about that hack that we discovered which we think is the largest theft in human history of Bitcoin from a Chinese miner. Um and we posted that uh I think it must have been 10 days ago or close to two weeks ago at this point. Um and that was something that we discovered on our own, broke that story. Um and you know, it took off. It was viral. It probably has like a million views on it or something like that. Um but it's something that came organically from us without an external kind of source um coming onto it. Um and so that those are kind of interesting.

And then we have the much smaller stories which are just interesting things on chain. You know this guy got sniped or this person you know sold x amount of ETH or you know y person is currently underwater on their trades on this you know perex or something. Um, and those are, you know, those are also quite interesting. But generally speaking, our strategy has always been to share as much as possible of what we find kind of interesting within the space without necessarily holding anything back. Um, and most of the time it ends up getting some attention.

Man, I think that uh I think that um having having like having the ability to to use like use onchain data as a process for what you're trying to do in the space with when it comes to investing, trading, I mean, it's it's not even an edge anymore, but it's just like a an an additional step of process to like be looking at tracking wallets, be looking at what people are doing. um you know and and I think that what you guys have built is is going to keep kind of scaling into this yeah this full intelligence platform for uh you know for probably nation states around the world big corporations family offices etc. So, you know, I think you're

probably scratching the surface of that now and I just I encourage you just to keep pushing that forward and would love to have you on again in the next couple of uh months closer to the end of the year maybe and see where we're at and uh see if we can try to figure out >> in this mania phase that that we're kind of in uh kind of what the whales are doing on on chain. >> Absolutely. Well, thank you very much for having me. >> Yeah, man. I appreciate it.