#756 Creating The New Standard For On-Chain Metrics w/ Artem Lazarev & Andy Bohutsky

Artem Lazarev & Andy Bohutsky are the Founders of Whalemap, an on-chain analytics platform. In this conversation we discuss on-chain metrics, how centralized exchanges make money, the metrics they are building that give information before actions happen, and their Web3 focused business model ======================= Matrixport is Asia’s fastest-growing digital asset platform founded by crypto veterans Jihan Wu and John Ge. With $10 billion in assets under management and custody. Matrixport offers one-stop crypto-financial solutions including fixed income, Defi in 1-click, structured products, Cactus Custody™, spot OTC and lending. You can earn a high double-digit yield with the Dual Currency Product or opt for the lucrative potential of our new product, Range Sniper. If you hold crypto and are actively looking to do more with your precious asset, then this app is one you don’t want to miss. Download the Matrixport App and enjoy a welcome offer of 30% APY on Fixed Income for new users. Visit invest.matrixport.com/en today. ======================= Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Today's episode is with Artem and Andy from Whale Map. They've built an on-chain analytics platform that allows you to go in and analyze all sorts of fascinating data around Bitcoin and other cryptocurrencies. In this conversation, we talk about everything from on-chain metrics, how centralized exchanges actually make money, what are some of the metrics that they are actually building that give you information before actions even happen, and also how they have a different business model that is much more web three centric. I really enjoyed this conversation with Artem and Andy, and I hope you do as well. Before we get into this episode, though,

• 0:44Anthony Pompliano?

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• 1:26Anthony Pompliano?

  looking to do more with your precious assets, then this app is one you don't want to miss. Download the Matrix Port app and enjoy a welcome offer of very high APY on fixed income for new users. Again, go either download the Matrix Port app, or go to matrixport.com today. Next up is Gemini. Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn Bitcoin, Ether, and over 40 other cryptocurrencies. They offer industry-leading security, insurance, and uptime. Gemini is the go-to trusted platform for beginner and sophisticated investors alike. Open a free account in under three minutes at gemini.com/pomp and get $20 of Bitcoin after you trade $100 or more within 30 days. Open a free account today.

• 2:10Anthony Pompliano?

  Under three minutes at Gemini.com/pomp and get $20 of Bitcoin if you trade $100 or more within 30 days. All right, let's get in this episode. Hope you guys enjoyed this one.

• 2:19Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 2:42Anthony Pompliano?

  Artem and Andy from Whalemap, how are you guys?

• 2:44Speaker 02

  Hey guys, how's it going?

• 2:46Anthony Pompliano?

  We're doing fantastic. How are you? Oh, look, you know they're geniuses because they show up and they literally have all sorts of drawings on the background behind, behind them. You gotta be a genius if you show up with all sorts of designs like that. All right, let's talk analytics first. All these on-chain metrics, obviously, this is something that isn't available in the legacy finance world. We've seen that things like Bitcoin analytics have absolutely kind of taken over Twitter and the public sentiment. One of you talk to me about what the importance of this is and why you guys think this data set is so crucial moving forward in this digital financial world.

• 3:21Speaker 02

  Yeah, Andy, do you want to go first? Yeah, let's go. Basically, it's quite interesting to understand that the whole idea of blockchains is basically it's a database all the transactions that are happening, right? And in legacy markets, of course, you cannot get that. And a lot of like, for example, New York Stock Exchange, NASDAQ, they're using that information to sell it to funds, to big players to influence their markets, their market positions. And what on-chain brings is the democratization of that data. So everybody is kind of on the same playing field. So no matter how many, how much money you manage, you can get access to all of the data. And what we at Whalemap do, we just try to visualize it in an accessible and actionable way.

• 4:01Speaker 02

  So it's understandable to everybody who is trying to get into like crypto trading and crypto investment. So I think it's very important to understand.

• 4:09Speaker 03

  And the value of like all of the transactions that are happening there on chain. So this is the most fundamental data you can get like out there. And yeah, so this is why we jumped on this whole on chain analytics. And this is why we decided to build a product like that to kind of democratize it.

• 4:28Anthony Pompliano?

  Yeah.

• 4:28Speaker 03

  Bring power back to traders.

• 4:30Anthony Pompliano?

  I love it. Orum, talk to me about the technology that you're building. How hard is it to get this on chain analytics? Like, we obviously have Dylan Leclerc and Will Clemente. We've had Willie Wu, Plan B, David Puel, like a bunch of these on chain analysts who have become very popular. They've been on the podcast, they've been on this show and they're analyzing data, but they're getting it from other platforms that are providing them that data. So talk to me about what like, how, what is the technical architecture of how you actually grab the data? How hard is it? And how do you ensure that it's actually accurate when you're pulling it into a product like Whale Map?

• 5:03Speaker 03

  Yeah, I mean, definitely. So blockchains, they were not originally built for, you know, being analyzed. So you have a lot of, you know, data coming in all the time. What we do at Whale Map, we basically have nodes, Bitcoin nodes scattered around, you know, like Asia, Americas, Europe. And that allows us to get the precision that we have by, you know, collecting the most up to date transactions from different areas, because obviously, as you know, transactions, it's a network. So transactions come in from different places at different times. And it takes time to propagate to other parts of the world.

• 5:45Speaker 03

  But in terms of like the actual analysis, Bitcoin, even though you have 18 million Bitcoins in existence, well, around 18 million, it, you know, Bitcoin is actually built on top of this like UTXO technology. So you have UTXOs for Bitcoin and there's actually around 80 million of those UTXOs. And each UTXO is basically an unspent transaction. And each transaction has like a lot of letters and, you know, symbols in it. So in order to be able to look up transactions that are coming.

• 6:19Speaker 02

  The new ones, you have to go back and look it up from a database that you already had up to date. And that's how you are able to, you know, analyze them. But the problem with that is, you know, that's a lot of data. So you have to like do it really quickly. And that's where the trouble comes in. And, you know, that's where, you know, on-chain analytics thrive as well. You know, they build the solutions that, you know, other people don't have to build. So, you know, not reinvent the wheel, basically.

• 6:51Anthony Pompliano?

  Absolutely. And Andy, talk to me about what people are doing with this data, right? So they come here, you guys are doing a great job. You're running the nodes, you're gathering all the information, you're presenting it in an interface so that people can actually look at the on-chain metrics. But what are the actions that people take once they actually get this information? Is this just to create content and do more kind of analyst-type work? Are people trading with this information? What are they doing?

• 7:13Speaker 02

  Well, there are a lot of utility for this type of data. For example, what we focus on is making our charts very actionable. So for example, our large wallet influence chart is very popular for how accurately it can it can locate good supports and resistances. Because we look at which price points have big wallets with 10K plus BTC in their wallet. When did they accumulate their coins and are they still holding it? And if they do, it is a very good indicator of where the price is gonna be supported or where it's gonna bounce from. But there are a bunch of applications. You can look at, for example, NPL, where if there are a lot of people selling at a loss rather than a profit, it indicates a panic on the market.

• 7:59Speaker 02

  And when the panic peaks, it's a very good price point to buy. So, I mean, this is what we focus on. We focus on creating trading tools that are understandable to even people who are just beginning. But with regards to on-chain and where it's gonna grow, there is

• 8:14Speaker 03

  So much application that that that is possible. But yeah.

• 8:19Anthony Pompliano?

  Got it. And so in terms of uh trading, that seems to be a really big activity a lot of people are doing. What's the single most important piece of information that people come to Wellmap to get for trading? And what do they do once they get that piece of information? Like, what would you do if you were a trader?

• 8:35Speaker 03

  Yeah, definitely. So I actually started off as a trader myself. So I went on, I I've been on that path. From around 2017, I think that's when a lot of people got in into crypto. But you know, for us, the most popular charts are the one that Andy just mentioned. So the chart shows where big guys buy and that in turn shows where the supports and resistances lie for Bitcoin. And that proved to be super, super first interesting. You know, that's a standard question that people may ask, where do the big guys buy? But then, you know, when we asked that question, that was interesting. We also found out that, you know, that

• 9:20Speaker 03

  those prices are actually quite important. So, you know, when the price gets to that level, the supply and demand mechanics for, you know, what's happening on the market change. And that's why there is a support there. So, you know, we have another chart, volume profile. It's actually not the you know, just the regular volume profile. It's the on-chain volume profile, which shows at which prices Bitcoins are accumulated at. And, you know, if you go to the chart, you will be able to see that there's like 1.2 million Bitcoins at like $0, for example, and that's the Satoshi coins. And then you have,

• 10:02Speaker 03

  you know, around like 500,000 Bitcoins that are at 65K right now. And basically, those levels where there's a lot of Bitcoin lying unspent, that's also good support and resistances. And yeah, as Andy mentioned, panic selling, super actionable as well. I mean, that's quite a no-brainer when there's a lot of

• 10:24Speaker 02

  Panic on the market, definitely, I think a lot of people, it's hard psychologically to, you know, get yourself together and, you know, go in when there's a lot of panic on the market, like it was recently with the Corona drop. Well, not recently, but like relatively recently. But yeah, that's a really good chart that we have as well.

• 10:45Anthony Pompliano?

  Andy, talk to me about centralized exchanges. I think a lot of people think that they just make money off of commissions. But obviously, they do a lot of selling of data. Talk to me about if that's good or bad? And then how you all think about, you know, where your role is compared to centralized exchanges in that selling of data?

• 11:01Speaker 02

  Well, the point is, if it's good or bad, I mean, it's good for centralized exchanges. That's how they make a lot of their money. But basically, I mean, a very good example would be Robinhood. If you look at Robinhood's business model, their actual, a large customer base, so rather than user base, customer base that they have is all the big funds that buy data from them of what do people, like retail people do on the market. So basically what onchain gives to you. So I think why blockchains are very good is because they provide all of this information to everybody, pretty much for free. You just need to know how to code. And I think this is, this is a very good step forward in making the market overall a much fairer place.

• 11:45Speaker 02

  And I think if everybody has access to the same level of data, I mean, it just, just makes the market more, more fair and it just makes more advanced. So I think what blockchain is becoming, it's becoming what the legacy market was supposed to be before it got corrupted with all of the inequality of data. And I think with the new technologies that are coming out, that inequality is being battled and we're trying to be one of those technologies that are, that are making it happen for retail traders.

• 12:15Anthony Pompliano?

  Got it. And then when you guys think about your business model, you have a very unique kind of

• 12:20Speaker 02

  Business model here. Talk a little bit about that.

• 12:22Speaker 03

  Sure, Artem. Do you want to talk about R2 economics and how we utilize it? Yeah, well, actually, it's quite interesting. I can go on about it for some time, but basically, you know, Bitcoin originally and blockchain in general as a technology was invented as electronic money, right? So that was Satoshi's original idea, but you know, as time goes on, you know, it's been, you know, more than 10 years since Bitcoin went live.

• 12:52Speaker 03

  Like blockchains, they proved to have other applications as well. So that's a store of value and also that's a tool to, you know, raise capital and create new business models. So that's really cool because, for example, you have regular business models like other analytics companies like, you know, Glassnode, CryptoQuant, Nansen, I mean, there's a lot of them. And the only way you can have, the only way that they do their business models is a freemium model where, you know, you have some data for free and then you get a higher subscription for the more advanced data.

• 13:34Speaker 03

  But with, you know, tokens, you can basically have a win-win situation where, first of all, you raise capital and good ideas are able to get funding really quickly compared to if you look at legacy markets where in order to go through the fundraising process, you have to go to, like, you have to cope with a lot of legal problems. And then if you want to do an IPO where, you know, regular investors are exposed to, you know, companies, not just angels and VCs, that's even a harder project. But obviously for blockchains, it's a bit easier. But also you can have situations and business models on the blockchain where,

• 14:18Speaker 03

  you know, people can get a subscription basically for free. So for example, if they hold the token, they stake it and then they farm another token and that's the token. That you know, gives you access to the platform. Basically, not only the people who hold the token get rewarded as the platform usage increases. And there is like rewards from people using the platform going back to the yeah, original hodlers. You know, the project itself is able to, you know, you know, get more money for their idea, basically.

• 14:56Anthony Pompliano?

  Got it. Now, talking about the mempool analytics in terms of, I think this is like a very different way to look at this. And I know that you guys think this is kind of the road to mainstream adoption. So what exactly is this, Andy?

• 15:08Speaker 02

  Well, the point is what we're trying to do with Wellmap. We're very strong believers of the fact that on-chain analytics is going to become an integral part of a mature crypto economy. And in order to achieve that, we need to increase the amount of engagement that people do with with on-chain analytics. And what we have now, even even with Wellmap, last and crypto, all the analytics companies, they look at the data that is of confirmed transactions in the last block. But before transactions get into a block, they're first put into a mempool when they aren't confirmed. And by looking at a confirmed transactions, what you're essentially doing is you're looking back on what has happened already. But by analyzing mempool transactions, and this is what we're trying to do with our pro platform,

• 15:52Speaker 02

  you will be able to see what is happening right now at the moment. So for example, imagine where you would be able to set up an alert of like, okay, ping me on my telegram or on my phone or whatever. Whenever a whale is sending more than 5,000 bitcoins to an exchange, that information will be very valuable. And especially if you find that out before the transaction is even confirmed. So as soon as it happens, this is what will bring the most amount of engagement and the most amount of eyes on on-chain analytics. And it is possible. And this is why we believe that mempool analytics, it is the road to the mainstream adoption of on-chain. And apart from that, there has to be educational content around it.

• 16:32Speaker 02

  But feature wise, like usability wise, I think we need as on-chain analytics companies, we need to stop looking at what has already happened.

• 16:40Speaker 03

  And we need to start looking at what's happening right now.

• 16:42Anthony Pompliano?

  Okay.

• 16:43Speaker 03

  Giving that edge to people.

• 16:44Anthony Pompliano?

  This is absolutely fascinating. I want to make sure that people really understand this. So most on-chain analytics platforms, especially in their early days, but but still most of them, will look at what's happening on-chain, what's actually in the blocks themselves, right? And so the way to think about that is the block has been mined, there's information in there, and we can understand what has just occurred, but the action already occurred, right? And that's through the process of the block being mined. What you all are talking about here is, yes, we should look at that because it tells us what just occurred. But also, we should have mempool analytics that will tell us what is about to occur.

• 17:24Anthony Pompliano?

  So you almost get a kind of an alert or an understanding of there is a probability that X is about to happen, and then confirmation of, yes, X did just happen, once you actually look at the true information within the block. And so when you think about that, there's obviously technical hurdles to doing the mempool analytics. What is those technical hurdles, or how do you guys think about solving those problems?

• 17:48Speaker 03

  Yeah, I can go for it. So basically, as I mentioned before, it's really important to get even just for block-by-block data, which is just analyzing the historical data for Bitcoin. It's really hard to go, when a new transaction comes in, you have to go back and look into the database of all transactions that ever happened to, you know, find out where was the original purchase price of the Bitcoin that is being sent right now. For example, and with mempool analytics, you just have to go like 100% on speed, and you have to create like really super, you know, fast pipelines that are able to, you know, you know, have multiple streams of data coming in and being analyzed at the same time

• 18:33Speaker 03

  in the database of the transactions. So, I mean, speed, it's the architecture. And yeah, I mean, it's mostly about the architecture and being able to get the get the transactions real quickly from the

• 18:50Anthony Pompliano?

  The network. Got it. And then the last thing I want to ask you guys about is all the DeFi stuff. So obviously, we spent a lot of time talking about Bitcoin on-chain metrics with Dylan and Willie, Will, David, etc. But there's all these other kind of products out there as well. Do you see people having a demand to get the on-chain metrics for that stuff as well? Or is it still pretty much in the, you know, two or three top tokens that people are looking for?

• 19:16Speaker 02

  To be honest, and I can get that, to be honest, I think the one thing that people will always be looking for is fundamental data. I mean, there is a lot of DeFi analysis at the moment, on-chain DeFi analysis. But it basically looks at basically the volume and how much is transacted, how many people are holding it. But a lot of, there is not a lot of data around what the underlying smart contract of a particular token is doing. And this is where we believe is going to be a very good value add to all those people who are trading altcoins and who are into DeFi. Is, for example, if we take Uniswap, right? There is Uniswap token and the Uniswap token's price largely depends on how well the Uniswap exchange itself is doing.

• 19:58Speaker 02

  Right? And if we can get that fundamental data of, okay, how many transactions are happening right now? It's like, how many people are interacting with the smart contract? What, how many people are holding the token? How well distributed? All of that is that basic fundamental data that the people, they have to have access to that because it's, it's, it's, it's an open market. It's a free market. And this is actually one of the other things that we're developing is providing that fundamental data of the underlying asset behind the token. The performance of an underlying smart contract behind the token, which we believe is very important.

• 20:35Anthony Pompliano?

  Got it. Joe, John, what questions do you guys have?

• 20:37Speaker 04

  Hey guys. So my question would just be around pricing and like how much progress you guys have made. If you could just walk through kind of how people sign up, who this is really meant for, and then like what progress you guys have made so far?

• 20:48Speaker 02

  Yeah, I can take that. Basically, what we've done so far, we already have a working product, wellmap.io. That doesn't include the Mampal analytics, but includes all of our charts and all the data for Bitcoin. And you can go. To our website, you can sign up for a subscription and you can get access to that data. But for the pro version that we're developing right now and that is going to be coming out in 2022, the only way to get access to it is we'll be through holding and staking our WMP token that's going to be coming out quite soon as well. And yeah, so I think any person that feels that they have the need for that type of data, that feels that they that they want that edge, that is a trader, I think they will find this useful.

• 21:32Speaker 02

  So I mean, you can always go to our website. It's all explained pretty well there. And yeah, so if you believe in the future of on-chain data and if you share the belief that it's an integral part, I think you should check it out and see if you like it.

• 21:49Anthony Pompliano?

  John, what do you got for us? Yeah, so my question would be around Bitcoin in general. Where do you guys see Bitcoin going and the price going in 2022?

• 21:56Speaker 03

  Yeah, well, so since we're an on-chain analytics company, we can take a slightly different maybe approach to what usually people say. So, you know, since we are quite good at, you know, finding the supports and resistances, I think the, you know, most important level for Bitcoin is 47 right now. And I think, like, we already posted on our Twitter, I think, like, almost exactly a month ago, on the 16th of November, that, you know, there's two main key levels for Bitcoin, that's 57 and 47.

• 22:36Speaker 03

  And currently, yeah, we're at 47. Obviously, we're getting some, you know, traction, you know, going down to, you know, lower levels. But in general, I think, yeah, if we continue going, you know, holding 47, we can definitely go to the upper supports.

• 22:56Anthony Pompliano?

  What do you guys think in terms of long term with Bitcoin? For the 2022, do you think that we can see, you know, $100,000 price point, 500,000, a million, 20,000? What's kind of price action in 2022 over a longer period?

• 23:10Speaker 02

  Well, it's, uh, to be honest, on-chain analytics company, we're not traders, not financial advice. This is just what we believe. We're strong believers in the technology. And like, the, the, the one thing that we have to understand, blockchain technology, it is superior to what is currently out there in the market. And there is a finite, uh, number of Bitcoins out there. Uh, the US government is printing money like crazy. And there are these fundamental, like, very logical reasons to believe that there is, there is a lot of potential for Bitcoin's price appreciation to go up. I mean, it's the biggest, um, crypto asset at the moment. Uh, so, and a lot of people have belief in it. And some people call it as an alternative, uh, store of value.

• 23:55Speaker 02

  And I think the more people wake up to the, to the idea of maybe inflation is going to happen with fiat markets. Maybe, you know, maybe fiat markets are not as stable as people lead us to believe. Uh, I think when that happens, there's going to be a very much increased demand for Bitcoin and other crypto assets. So I think 2022 will be an interesting year. And so far, it has been, it, it has been quite good because I think right now crypto has stabilized itself as it is a market. And if you, if you doubt the $2 trillion market, you know, you should, you should, you should really rethink that.

• 24:34Anthony Pompliano?

  Artem, let's finish with you. Last question. Do you think that every single financial institution, uh, in the world is going to eventually have to use on-chain metrics? Like, is this going to become pervasive throughout the entire financial system?

• 24:44Speaker 03

  Uh, well, that's a good question. I don't know the 100% answer to that. I can definitely speculate. And, you know, the analogy you can make is, you know, you had market data originally. Uh, and that's what a lot of people use. And for example, you have, uh, indicators like RSI or MACD or, you know, moving average. And that's, uh, basically, you know, it's, uh, free and it's, uh, you know, mainstream, you could say. And since it just, uh, you know, on-chain just gives you so much more actionable data, much more actionable than RSI. Uh, I mean, I think people will go towards, uh, value in the future, which is on-chain analytics.

• 25:25Anthony Pompliano?

  Awesome. Joe, John, you guys got any other questions?

• 25:27Speaker 02

  No, thanks for coming on, guys. Appreciate it. Thank you very much.

• 25:30Anthony Pompliano?

  All right, fellas. Thank you guys so much. Good luck.

• 25:32Speaker 02

  Thank you. Bye-bye.