According to Bloomberg, the increase in crypto adoption globally in the past 12 months reached 881%, all of which can be traced back to the dawn of a new world of finance — DeFi, born in 2020. It’s fundamentally different from the traditional financial world, which is under intense regulation to guarantee the fidelity and authenticity of the data and the underlying assets. However, failing to do so by the incumbent institutions became the midwife of Bitcoin and, eventually, DeFi. And people are embracing it as the alternative to the disappointing conventional system.
Since its birth, openness and accessibility have been the hallmark of DeFi to keep the conventional rigged mechanisms at arm’s length. As a result, assets and products have been issued arbitrarily, resulting in the exponential growth of the data. CNBC reported that, in 2021, the total crypto trade volume is $15.8 trillion, and DeFi transaction volume grew 912%.
With hope comes chaos. Being lack of regulation on the ever-increasing data gives rise to fraud and forgery. Also, in 2021, crypto scammers took a record of $14 billion, among which Cryptocurrency theft managed $3.2 billion, which rose 516% from 2020, scams climbed 82% to reach $7.8 billion, and rug-pull fraud scored $2.8 billion.
Besides security concerns, when prepping for the trading, investors frequently need to answer questions like:
- Where are the alpha opportunities?
- What is the expected ROI?
- Which suspicious assets, vaults, and contracts do I have to avoid?
During the trading, investors are interested in:
- When is the best time to begin?
- How to implement a successful strategy?
- How much is the reasonable cost to trade without spending too much?
- How to avoid being the victim of front-running?
- When to stop?
All these questions need accurate information with precision extracted from the colossal volume of data.
2 Biggest Concerns That Haven’t Been Properly Addressed
Facing the problems caused by data and information overloading, DeFi’s new world urgently needs new methodologies to dynamically parse the market message, warning, and alert in real-time. At the current phase, two aspects are the biggest concern.
1. to discern the veritable liquidity data;
2. to identify the malicious intention;
both of which require active and brisk actions, which is an ongoing process.
The existing products exhibit shortcomings that impede a cohesive solution, including:
- Being short of consistency on statistics.
- Lacking bona fide liquidity data.
- Missing network analysis, which is essential to unveil the connections among multiple transaction structures.
- Missing holistic risk evaluation, which is required to dissect the cross-protocol liquidity.
In EigenPhi’s view, the reason these products fail to deliver is a lack of an in-depth understanding of DeFi’s transaction structures, which should be the foundation of all DeFi data processing.
3 Pillars of DeFi: Structure, Behavior, and Network
As we mentioned in the last post, structures, behaviors, and networks are the invisible pillars of the DeFi that you have to figure out if you want to be a conqueror of the new world.
As the pioneer of the new generation of DeFi data analysis platforms, EigenPhi adopts methodologies focusing on starting from a thorough inspection of transaction structures formed by Smart Contracts.
First, we meticulously dissect and present the asset transfer mechanisms among liquidity pools, EOAs, and protocols in an easy-to-understand manner. Then, based on this solid premise, EigenPhi proceeds with behavior and network analysis to enable you to price the liquidity and recognize the risks, eventually taking in not only the story behind the curtain but also profits and gains from their assets.
It’s a challenging path to take, but an essential one that EigenPhi has been working on since the beginning. And we are the only team in the market capable of managing to get it done.
The EigenPhi Way
To be more specific, EigenPhi provides innovative approaches to accomplish:
- In-transaction and between-transactions structure analysis, simplifying and unveiling the complicated transaction details like cost and profit for investors to understand.
- Behavior analysis, uncovering hidden information entropy by using automatic and productive computing methods.
- Network analysis, unmasking the concealed connections and intentions among entities appearing as patterns.
- Complete data analysis, including on-chain, cross-chain, addresses, tokens, and transaction behaviors.
- All the above can be mathematically and statistically verified.
EigenPhi’s talented engineering team has in-depth industry backgrounds both in cryptocurrency and TradFi. We provide data products in a productive, responsive, and reliable way.
Why MEV & Arbitrage?
To tackle it head-on with MEV, the gravest crisis of DeFi is facing at the moment; EigenPhi chose MEV-related data, which encompasses the most accurate and authentic data regarding DeFi liquidity.
MEV transactions are the most complicated and most concerning transactions of DeFi. Unfortunately, few handy tools on the market can examine the massive capital invested into MEV closely. Based on our data, there are five asset transfers in one MEV transaction on average.
By targeting MEV, EigenPhi looks to enhance the efficiency of the market and build a healthier and more robust DeFi ecosystem.
Presently, EigenPhi provides Arbitrage Scan to help dissect the structure of transactions.
- It helps users to understand how arbitrage strategy works in terms of asset transfer.
- It illustrates opportunities for searchers to take advantage of arbitrages that benefit market productivity, such as Spatial, Triangular, Combination, and Liquidation.
- It exposes nasty arbitrages like Sandwich to raise awareness in the community.
Ultimately, EigenPhi empowers users with information apparatus to explore the new DeFi world.
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