Background
Mint Season 6 episode 3 welcomes Alex Svanevik, CEO of Nasen.ai, the leading blockchain analytics tool for crypto traders.
Time Stamps
- 00:12 – Intro
- 02:58 – Labeling a Wallet
- 11:55 – Are You Bullish or Bearish on Artists Tokenizing Music?
- 18:36 – What is the Current State of AI in Web3?
- 25:36 – Overall Thoughts on the Cross Between NFTs and Defi
- 30:45 – Predicting Trends in Web3
- 35:04 – The Acquisition of Ape Board?
- 42:16 – The Vision For the Nansen Chat Application
- 48:56 – Other Strategies for Creators to Take Advantage of On Chain Data
- 54:47 – If You Were to Build Nansen From the Beginning, What’s One Thing You Wish You Knew?
- 57:14 – Outro
I hope you enjoy our conversation.
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Intro
Alex, welcome to Mint. Thank you for being on. What’s going on, man?
Alex Svanevik: It’s going great. I’m here in Singapore. It’s a nice sunny morning. Nice to be on the podcast.
Nice to have you on a part of season six, all about on chain data. I think it’s, there’s no one more applicable than you that could be on the season, considering everything that you’re doing at Nansen. So, I think a good place to start Alex is, who the hell are you? What does the world need to know about you? Give a quick intro, we can start there and then work our way forward.
Alex Svanevik: Yeah, so I’m Alex. I’m CEO, and one of the three co-founders have Nansen, which is a blockchain analytics platform. And increasingly, the inflammation Super App of web three. My background is originally in AI. I worked as a data scientist for several years. And then in 2017, I discovered Ethereum, fell down the rabbit hole very quickly, I left my job in Barcelona at the time and moved to Hong Kong to build up a data team at a crypto startup, which was an ICO, it failed miserably like most ICOs in 2018. And after about 10 months, I was laid off along with the rest of the team because they ran out of money. So, myself and one of the guys in my team and Danny spent, maybe nine months trying to figure out what to do next. And in the meantime, I was working with projects like 0x, for example, trying to help them to get a better understanding of the whole tech space and slippage across different markets and taxes. And late 2019, again, myself and our third co-founder, Lars started working on Nansen, I was at the time, I was in Japan actually, moving back from Hong Kong, to Barcelona, and in a couple of different countries in Asia. And so, we had just been to Detecon in Osaka in 2019. And so maybe there was a bit of like inspiration from having been there to kind of create something. And of course, we’ve been working on this open-source project that Danny created, which we can talk about later. But effectively, it’s the best way to get blockchain data out of a Ethereum into a relational database. We’ve been thinking about how to build like a commercial or sustainable business on top of that project. And so, kind of things, the pieces fell into place around that time. And we came up with the idea of Nansen, which has labeled wallets on top of the on-chain data, and then package that into an analytics user interface, which allows people to understand what’s happening on the blockchain in real time. So that’s kind of yeah, who I am and building Nansen.
Labeling a Wallet
Solid intro. Can you talk more about what a labeled wallet is just for the users who aren’t familiar? And how do you go about labeling a wallet and that scale too.
Alex Svanevik: Yeah, so when I joined crypto, there were, you had a lot of these sensationalist tweets, which were like, oh, $200 million of tether moved from address
Right. The Whale Watcher address?
Alex Svanevik: Yes. Yes. Yes. People would always, they would always go viral. And it was also, it’s very intriguing, right to all these entities and what are they doing with this amount of money, right. And so, the reason I mentioned that is it kind of points to a very basic problem with Blockchain data, which is that you don’t know who the adults are. And so that, to me, seemed like kind of an interesting problem to try to solve, like, how can you give people more transparency into who are behind these different wallets? It’s a very different thing to see. This is Binance moving $200 million from one account to another other accounts, than it is to see this as Alameda, you know, putting $200 million into a defi staking pool or something like that, right? Those are two very different things. But if you don’t have labeling, there’s no way to know the difference. See, you see transfer funds from A to B. And so, when we say labeled wallets, what we mean is we need to give kind of a context on top of the transactional data that you see, so that people can understand what is this transaction really, or what are these flows that are going across multiple transactions, right? And so, a few examples, I mean, and then a few but obviously, exchange wallets are a big part of the universe here. And maybe something like 25% to 30% of all Eth is sitting in exchange wallets. Right. So, so that’s a very, that’s a big part of the universe. And we’re talking about 10s of millions of addresses that you have labeled as exchange wallets. But there are other types of wallets too. There are funds like Alameda, three arrows capital, other sci fi platforms like Celsius block phi, Nexo.
TBT.
Alex Svanevik: And then you have, of course, a lot of smart contract-based entities like uniswap and so on. But you don’t get the, you don’t get those labels for free in the blockchain data, that’s something that you have to impose and sort of put-on top of the blockchain data. So, you can think of what we do as kind of creating a real-world context that you can connect or lie on top of the transactional data. And yeah, it just makes the unchained data 10 to 100 times more useful, because you can actually reason about it and think about like, what’s actually going on here, at the individual level, like the whale watcher, whale alert example, but also at the more macro level. So how much ether is flowing into exchanges or out of exchanges as a result of the merch, for example? You can’t answer that question unless you have labeled wallets. And there’s a bunch of other questions like that, that you really need to have really good labeling to understand.
And then your second, the second part of the question is like, how do you do it? The short answer is, there is no silver bullet, you have to kind of make use of both man and machine. And so, the largest team, we have at Nansen is called the attribution team. And their job is literally to just tag as many wallets as they can. But most of it is algorithmic, right? Most of it is engineers, creating heuristics algorithms, machine learning, that try to tag others at scale with high precision. But you do also have quite a big, quite a large kind of small, an army of people who are labeling things manually, too, because the machines can do everything, you need to have some human intelligence in the loop as well. And then you have to make sure that these two things can come together. And you can use machine learning or algorithmic approaches to help prioritize which addresses that you want to spend time on. Like, what is an interesting wallet that is worth research analysts time to dig into right.
Got it?
Alex Svanevik: So, it’s a combination of man and machine, that’s how it works.
Got it. But you know, the craziest part of all this is that you have a guitar behind you. And I feel like you’re pretty creative. And I’m trying to think to myself, like how did you become so analytical and where does this AI side come from? And you know, what’s even funnier? A lot of like, crypto people have music background, like the first person that comes to mind is Kim Warwick from synthetics. She used to work at Guitar Center. If you look at his LinkedIn.
Alex Svanevik: I also used to work at the Guitar Center.
Really, okay. I feel like I grew up in a Guitar Center. Wait, so what’s your music background?
Alex Svanevik: That’s fine. Yeah. I mean, I knew Kim play in the band. I didn’t know he worked at the first center. That’s very funny. So, I initially started playing guitar when I was six. And I hated it for like six years, but I kept playing. And then when I was 12, 13, I got my first electric guitar. And I discovered Jimi Hendrix. And so that’s when I got really interested in, that’s when I started playing out of my own will, instead of just having a guitar teacher. And then I started playing in a band shortly after, and I discovered like, it’s way more fun playing in a band and playing just by yourself. And I do think that there are some helpful learnings from playing in a band like being a startup, it’s not that different from being in a band.
Absolutely. Especially when it comes to writing songs, too.
Alex Svanevik: Oh, yeah. And then thinking about kind of people have different roles, right. And then you are trying to find, carve out some kind of niche or something that is kind of compelling and interesting. There’s an audience there that you have to engage with, and, you know, in many ways, is quite similar to being a startup in a garage or something. And literally, that’s often in garages as well. So, yeah, that and then I, for high school, I went to performing arts high school. And so, I started like, music, which was my specialization, also dancing like.
Wait, you’re your dancer?
Alex Svanevik: No, no, no, no, I would not say I’m a dancer, but that was one of the courses that I, I did do ballroom dancing for a couple years.
Wow.
Alex Svanevik: And then and then drama or like acting. So, that was my high school. It was not a typical kind of science high school or anything. But to your point about being analytical, I guess music is also quite analytical and to some extent, mathematical, depending on how you look at it, so I guess there’s like, you know, I have an inclination towards kind of figuring systems out and trying to crack the code in different ways. And there’s a lot like music theory when you get into that jazz and things like that which kind of appeals to the intellect in some ways. And because I was studying music, I didn’t have much mathematics. So, I did the mathematics course on my own for high school without a teacher, and just took the exams for it. And then later on I, when I went to university, I started in a cognitive science degree and then went to AI later on. So, it’s kind of a weird path. But I do think that there are some ways that these things come together, maybe one book that comes to mind, which I recommend to everyone is called Godel, Escher, Bach. It’s by a guy called Douglas Hofstadter. And it actually, when you read that book, my background starts to make a lot more sense, because music and art and mathematics and logic and computer science, there are a lot of common elements to them. And that book kind of nicely pulls some of these things together. So, it might look strange on the outside, but to me, it makes perfect sense.
So, from my point of view, the reason why I ended up in crypto, I feel like I’m not pursuing music because I’ve been playing drums since five years old, similar to when you started playing guitars, but now they just collect dust because I also live in a place because it’s just like wall to wall and I can’t set up an acoustic kit. But my dad told me there’s no money in music, you’re going into big tech, or you’re going into finance or you’re going into consulting.
Alex Svanevik: My dad said that as well.
There it is.
Alex Svanevik: Which I did, which I did for three years. Yeah.
Are You Bullish or Bearish on Artists Tokenizing Music?
Okay, so on that note, are you a big fan of the whole music NFT trend that’s happening and all the noise around music artists getting into crypto, tokenizing their songs like are you bullish or are you bearish on that?
Alex Svanevik: You know, there are some things that I’m kind of bullish long term and then bearish short term. And so, music NFTs, I’m definitely bullish long term, it seems obvious, it seems really stupid that you’re not able to bet on artists and like support them and have a financial upside on discovering artists early. That seems kind of stupid. Like we have all the technology to do it. It’s just like regulation or like existing industrial forces or music industry forces that are preventing this. So, I think long term, I’m very bullish and the short term, there’s definitely some degree of height. And I haven’t seen any products that have really cracked the code when it comes to music NFTs. I feel somewhat similarly about gaming NFTs, which I’m very bullish on long term. I do feel like gaming and NFTs are maybe closer than music NFTs to kind of succeed in a big way.
But what do you think they’re missing?
Alex Svanevik: Music NFTs or gaming NFTs?
Yeah, the music NFTs because you believing that a platform hasn’t cracked it yet. So there has to be more than just tokenizing music and collecting music. Right? From that point because that’s sort of like the stage that we’re at right now.
Alex Svanevik: Yeah, so I think one thing, which is a broader point about what you can and can’t do from a regulatory perspective and tokens, is just that if I could own a piece of a music piece, or the whole music piece, and then get royalties like revenues from it, that seems like an obvious thing that we should do. And then you could trade the ownership, right? But you can’t do that, because it’s a security. And, you know, that doesn’t really work in today’s world, which sucks. So, then you have to come up with other ways that music NFTs can have value, right? And so, what are these other ways? Like, are they just kind of fan tokens, and they’re scarce? And you know, there’s somehow limited but that’s why I think there’s so much work to be done around like the whole royalties’ area and also secure these laws and regulations, that it doesn’t feel like it’s going to happen anytime soon. When I say soon, I mean like next 12 to 24. But it does seem like hey, it would be a much better world if you could be an artist and like issue some kind of tokenized assets to your fans, and they could like invest in them. And then if this artist takes off, those pieces will be worth way more. And so not only did you help them get started to finance, but also, you’re getting a piece of their success with financial returns. Like that’s kind of what the music NFTs or like record labels have done for decades right? Why shouldn’t that be more democratized in a way? So that’s why I think like, it makes total sense. We have all the technology to do it. But there are so many kinds of market forces and music industry forces that prevent. And also, frankly, like SCC and securities laws and stuff preventing it from happening. But it makes way more sense. And if you start from scratch, you probably design the system that way rather than how it works today.
Right. So that tends to be like the argument. And also, you sort of touched upon a sensitive topic, like there’s this whole debate. And people also criticize me for structuring it like this. It’s either like it’s a patronage-based music NFT or a royalty based, royalty backed music NFT. And it’s interesting to hear you take like the default version of the definition of what you imagine this space looking like from a royalty point of view. I also think it’s interesting how it ties into your background, like looking at the defi space, understanding traditional finance, AI and all the additional processes because someone, a new artist who’s trying to make something of themselves and new music artist, it’s probably not going to have let’s say all the streaming data to sort of back the value of who they are in web two, and may rely on all the forces and all the degenerate kind of like gambling speculative nature of web three, to sort of kickstart their career from a collectible patronage point of view. You know.
Alex Svanevik: yeah, no, that’s an excellent point. And I do think that maybe there’s something in between, which is like subscription type offering, where you’re not getting royalties, but you’re getting exclusive access to certain things. And owning tokens gives you that access. Maybe that’s similar to the patronage model. Although, to me, patronage feels a bit like it’s also mostly a donation of sorts where you don’t get returns, you just want to fund their work. And I have to admit, both from a personal perspective, and also seeing how the world has evolved, and it seems like people are more comfortable being patrons for artists and creators these days than they might have been 20 years ago, it seems much more common now to just give someone $20, $50, $100 a month or whatever it is, because you like what they do. I think that was kind of unheard of 15, 20 years ago. People just didn’t really do that. But now it’s getting quite common. And that’s a really cool trend. Like I can see myself doing that more and more. I’ve done it a couple of times. And I would like to do more in crypto, just give people money that you want to see creating more stuff. Right. So yeah, I mean, I think there’s definitely something there. The other day I was I was trying to figure out like how I could buy some LPS for some really obscure music genre, Japanese city hall, which I’m a big fan of. And I felt like if there was a way, I could just buy a piece or whatever. But probably I want to get the album or something as well. I probably pay a lot of money for that as like a collectible.
Interesting.
Alex Svanevik: It is an interesting space. But there’s still a lot of experimentation and like hurdles to overcome before it becomes really big.
I think at some point, all the crypto music, people that have given up on their music dreams need to come together and form some type of bear market album of some sort, a crypto album.
Alex Svanevik: I mean, most of the crypto songs you’ve seen are not good, right? Yeah.
What is the Current State of AI in Web3?
Heartache, heartache. Okay, I want to pivot back into to Nansen. One of the things that’s super like unique about Nansen is its AI component. I’m curious to hear your point of view, like what is the current state of AI in web three? How are you seeing that today?
Alex Svanevik: So, first of all, I think if you mentioned AI and blockchain in the same sentence, there’s a very high chance that you’re either a scammer, or just.
Right, exactly.
Alex Svanevik: Talking nonsense, right. So just to be very clear about that upfront. So where is there a productive intersection between the two technologies. I think, first of all, the nice thing about blockchain and web three is that you have really clean data, you have extremely because it’s very tabular, It’s ledger based, that’s different from what you might consider like typical web two data, which is often things like social media texts and very unstructured. And one nice thing about that is that you can apply a lot of machine learning methods to that data and to do interesting things with it. But very little has been done in a period of so far. So, I can talk about some examples of what we do in the AI and blockchain data. So, one example which is quite easy to understand for people Is how do you price an NFT? And this is different from how do you price tokens because tokens are fungible. And they are kind of order book driven, liquidity pool driven, market driven. And if you have one Bitcoin you just look at, you know, what is it trading at? NFTs are different, because by definition, if you’re selling non fungible token, there is no other token currently on the market. That’s been so or that being sold, that you can match it with, you can look at like similar NFTs, right, for example, NFTs in the same collection, you can also look backwards in time and see how much was this NFT price last time it was transacted, et cetera. And so, one thing we do at Nansen, is we have a machine learning model that basically learns the patterns of how individual NFTs are trading. And then it calculates what’s the premium of the different traits and attributes of that NFT within its collection.
So, think about it like this, you have, say, 10,000 board Ape NFTs, and they have a floor price. But the different, individual pieces have a premium against the floor price, because they might have rare traits, and they might have certain aesthetic qualities. And so, we use machine learning to basically train like across hundreds, I think this point, maybe 1000 plus different NFT collections, and give people estimates on like, how much is this NFT worth right now, if you want to sell it. And so, you know, this, obviously, it’s kind of like, on the one hand, you can say humans might do a better job of this. But it’s not scalable to have a human set and in real time, appraise each individual variety across all across, right. So that’s one example of using AI and machine learning for web three purposes, leveraging the data that you get from the blockchain. Another thing we do on the back end is to basically try to predict or classify different wallets into labels. So, is this an exchange wallet? Is this an individual? Is it a bot? You know that kind of stuff, where you can use machine learning methods to try to infer that. And then another example is to try to predict which tokens are stamps, right? So, this is a very, you can almost think of it it’s like, analogous to email spam, which is one of the first things that people did with in web one or web two, when it comes to classifying emails, right. So how can you tell us early as possible that this token is a scam? Or it’s like, somehow not a token that you’d want to see in your portfolio over you have your own wallet? Right, that’s another problem that we use machine learning to solve.
And so yeah, I guess you could tell that when we talk about AI to me, I kind of equate it with machine learning. Right? That’s like my background is in machine. And so, at the end of the day, these are very, very similar things. I don’t think of it as like, a physical robot, necessarily doing anything with blockchains. So, and then there are some more like cutting edge, research areas around blockchain and AI, for example, the area of like federated learning, are there ways that you could, for example, distributes data across lots of different entities, and then those entities can make predictions and aggregate it again, in a privacy preserving way. But that’s, it’s very fringe. And it’s not a mainstream kind of area of AI and blockchain yet. So, I think the more tangible thing is using AI and machine learning on web three data and blockchain data to solve like actual problems. That’s kind of the main focus that we have. And so, like labeling wallets, pricing NFTs classifying tokens, like those are some examples.
I think it’s super interesting the types of products that Nansen offers, because you guys are very much building for the trader, the collector, right? Whether it be on an amateur level, or whether it be on a professional level. And I also see a world emerging where now that the crater economy sort of getting bigger and bigger and bigger, a lot more creators are either tokenizing their music, tokenizing their art, etc. There’s also like an entrance from the other point of view. So, what should we actually like, what should be like a price for buying a piece versus actually how should I sell a piece, right? And like helping creators’ kind of understand what should I be listing my pieces at, so that I can further like, double down on my creativity and find that financial freedom that other creators are sort of exploring and discovering in web three. And yeah, I think, go ahead, if you want to say something on that.
Alex Svannevik: No, absolutely. I mean, it’s trickier with, say one of one’s compared to say, like profile picture collections because you don’t, by definition, you don’t have data on the, you’d have to related one on ones or like pieces from the same creator or things like that. So, it is a bit trickier from a data perspective and machine learning perspective to job artists. But I totally agree with you that the more information you have, and the more data that you can base these decisions on like, the more likely is that you will get able to sell it and also sell it at a fair price. Right. So yeah.
Overall Thoughts on the Cross Between NFTs and Defi
Super, super helpful. I think another thing that’s interesting about, I guess, you as an individual, Alex, and also the product that you’re working on, that you’re sort of leading is one, you’re an NFT degenerate, you have the pudgy penguin as your PFP on Twitter, and I know you’re actually quite into the whole defi side of things. And you were interviewed on coin desk quoted saying defi brought the capital and NFTs bring the people, it’s a phrase that you sort of repeat it, I would say you’re sort of like known for this phrase, okay. And recently, for the longest time actually defi and NFTs used to be very, like independent things, a lot of people that came in through NFTs, they didn’t really experience a defi side of things. But now we’re seeing the two sort of sectors converge, right. So, in your terms, like capital is now intersecting with people, okay, how are you understanding this, like recent shift? What are you looking at sort of where NFTs meet defi, whether it be on a project basis, trends that you’re seeing or just overall thoughts?
Alex Svanevik: Yeah, I think you can look at it from two perspectives. One is from the user perspective, and the other one is from the product perspective. So, from the user perspective, it is true that initially, these two user bases were quite segregated. So, you had people who were really into defi, and they were like, NFT is just a scam, or, you know, this is completely silly and whatnot. And on the flip side, you had NFT people who had no interest in like yields or, you know, liquidity, pool provisioning, liquidity provisioning, and so on. And then over time, especially, I would say the defi folks started engaging with NFTs. I am not sure it’s as true the other way around. Like I think many NFT people are still like only interested in NFTs. But they are at least exposed to some of the crypto infrastructure, just almost by force from interacting with NFT. So, you know, you have to have some ether, right? And then like, how do you get that ether? You have to use, you know, maybe uniswap, rightly, and then it almost like force, you’re pulled into some of these more basic crypto and or defi applications and protocols. So that’s from like, the user perspective, initially, I think there were quite segregated, now they’re getting blended a bit more. And then from the product perspective, there’s also a bit of a blend that’s happening where you can get yields on a NFTs, for example, or you can, there are lending markets and lending pools. For NFTs, you can now provide liquidity for different NFTs like NFT X, I think it’s an interesting project that allows you to fractionalize or provide liquidity and fractionalize your NFTs and then by effectively like tokens of that pool. It’s actually been around for a long time, but maybe it will have a bit of a revival now that people are seeing this intersection. And then I do think that one place where they really come together is in gaming. But it’s still early on that front.
So, games like XC infinity naturally have to also have some defi infrastructure, right? Do you need to have like Katana, which is kind of the units for on Ronin, right to have that in order to provide people with trading opportunities and swapping between tokens and things like that. And you get this very kind of like financialized gaming economies, where you actually need some of the primitives from defi like obviously, you need taxes, you probably need some kind of lending markets. And then naturally, many of these gaming economies also have NFTs that represent items, they represent avatars or different things in these games. So, I feel like gaming, the web three gaming sector is where definitely NFTs and defi come together at least as the games mature. So yeah, I think there are many different ways that the intersection of NFTs and defi come together and it is pretty interesting though, that they were able to cater to such different user segments initially. And it’s a very healthy thing. Right? I don’t think people realize how big NTFs would become. They’ve been around for a long time. And it’s kind of curious that crypto punks and even open sea had been around for years before they really started. Right? It’s really strange. The I think the pessimist take on it is that people got so rich and deep by summer that they had nowhere to put their money and buying these JPEGs. And that cost the spike. I think there’s a bit more to it. I mean, there’s some truth to that. But I think there’s a bit more to it than that. So yeah.
Predicting Trends in Web3
I think we’ve just sort of skimmed the surface of what defi is, and what NFTs are. I’m curious from someone who like looks at the data, who’s building a data product? Like what are some interesting trends or like interesting insights you’ve sort of picked up on either like future forecasts of something that might pop off or trends that have yet to come, but you’re seeing them sort of like develop, if anything in that nature sort of comes about, I guess I’m trying to like to understand, like, what are you seeing as the future of these primitives? And has Nansen sort of helped shape that for you?
Alex Svanevik: Yeah, so again, we talked about a lot about gaming. Right?
Right.
Alex Svanevik: It’s a good example. So, if you go to Nansen NFT Index section, we have, you know, just kind of spell out the URL, it’s like pro.com/ai/NFT-trends, you can see, and this is free for anyone to use, you don’t have to have an Amazon account. You can go to the NFT indexes tab. And we have kind of decomposed the NFT market into different indexes. And so, I’ll kind of just give a couple of examples. There’s a blue-chip index, which tracks things like board apes, crypto punks, and so on. And then there’s a game index, game 50, which has 50 different gaming collections. And if you look at games, they have been slammed like year today, they are down. Let’s see here. They’re down 76% against Eth. And Eth is also down, so they’ve gotten really slammed. And I think this goes back to what I was saying earlier that I’m kind of short term bearish on NFT games or web three gaming. But I am long term bullish. And I think what’s happening here is basically that it’s so easy to announce an NFT game, and to create the NFTs. But it’s so hard to build the game.
To build the game. Yeah, 100%.
Alex Savnevik: And it takes a long time to build again, and crypto investors are impatient. So, they buy the NFT. They’re like, man, I want this game. And then it takes like one month and like why is the game here yet. And then it’s like, well, it takes a while to build the game. Right? So, and also, it’s hard to build again. So, it’s gonna take a long time, and most of them will suck, right, even if it takes a long time. So, I think that one, I mean, let’s see how this plays out. I think one interesting opportunity actually to dig into the whole gaming sector because there are so many projects now. And very few will succeed. And so, there’s, there are some investors that are going to do, I think really well in this area, maybe it’s almost analogous to like defi in 2019 2020, where everything was like everyone is pessimistic. I think especially end or 2018 and 2019 was maybe kind of a pivotal year for people like Arthur from defiance, right, who did super well, investing in SMX, CMS and Ave, I think he invested in Khyber because he understood that these are actually high-quality projects in a sea of garbage projects. Right. And he did the due diligence, he did the research, I think there’s going to be a similar way in here with games where someone’s just going to spend a ton of time digging into this stuff. And they’re going to discard, you know, 95% of the projects, but they’re going to bet on the right projects, and those will become super successful. So, I think this is, obviously this is a lot of speculation and sort of my own thoughts, right, I can prove that this is going to happen, right. But I do think that there might be an analogy kind of going back to the defi space and those who are willing to do the research now might be a good time, because there’s a lot of pessimism as that index shows around games, which means that you might be able to find some really good investments and you know, maybe a handful of them will succeed. I don’t think a lot will succeed. But I do think there’s going to be some really big projects.
The Acquisition of Ape Board
So okay, so we just sort of like touched upon the product Nansen.ai/NFT-trends. Okay, but another product you guys recently released is Nansen Portfolio, right, which is through the acquisition of Ape Board. Can you talk more about that? Why did you guys acquire Ape Board versus building out your own product? And what is the future of like, Nansen portfolio sort of look like?
Alex Svanevik: Yeah. So, at some point, we realized that we don’t want to only be kind of a vertical specialist that on chain analytics, we saw that there’s an opportunity to step up and become the information Super App of web three, to span more of the information diet that a crypto native investor has. And when we had that realization, the natural instinct is to figure out like, what are the different things that you need, from an information perspective as an industry, and one of the, say, 10 to 12 modules that we listed was a portfolio tracker, like you need to, you need to have a good way to stay on top of your holdings. And it’s getting increasingly difficult to do that with a multi chain world, or multi layered world. And also, you know, 1000s, or hundreds of and 1000s of protocols that people use, like defi protocols. And not to mention NFTs right, which is its own, highly challenging area to do portfolio tracking. And so, we figured that this is an area where we want to play. We think this makes a lot of sense, from a synergy perspective, whether analytics product, it adds a lot of stickiness, so that users keep coming back every day to check their portfolio. But it’s also a nice way for them to kind of grow their portfolio by using analytics products to make better decisions. Right.
So, there is synergistic products like the Nansen analytics product and the now not so portfolio product. And so that was the first time we decision like we want to play in this area, we think it makes sense. And then you have to think about how do you win? How do you succeed? And how can you do this in an efficient and effective manner? And so you have a few different options here, right? That maybe to boil it down to two simple choices, do you build, or do you buy? And we kind of quickly concluded that, if you build then the other players that are already a portfolio attracting are going to, you know, pull ahead and continue to improve their products. While we’re almost like playing catch up, and it’s also really, really hard to find really good engineers, especially a year ago, it was extremely difficult, like the market looked very different. And people were starved for engineers, and like, recruiting was very, very difficult. Now, it’s a bit different. And so, we were fortunate enough to be introduced to a port because we share a common investor SCB 10x. And so, Ty, who leads SCP 10x, the venture arm of CM commercial bank in Thailand, they have incubated it works. So, it’s kind of weird, they’re actually not just an investment from SCB 10X, they were actually incubated. So, the team used to be as SCB 10X employees, and then they created a board in that environment. And they spun it up as its own project.
And so we were, you know, I met with Ty a few times, and we discussed this, like, you know, is there a possibility here to do something together? And so, it makes sense for us and then you have to look at it from their perspective, does it make sense for them? And I think the relaxation they had was that they are actually better positioned to succeed at their vision, which is to become a number one, portfolio tracker for web three, as part of the Nansen, because you can power this portfolio tracker with the best on chain data in the world. That’s, you know, in itself a huge advantage. You have better distribution and a more recognized brand, which is advantageous. And then I think, from a builder perspective, if you think about Mike and Jackie, the two co-founders of ape board, they could now offload a lot of the stuff that they don’t like doing, right. So, think about everything that’s like HR related or like accounting, finance operations. There’s a bunch of stuff that as a builder, engineer, or product person, that’s not so fun, and we already have all that stuff set up right. So, I think It was quite compelling for them to join us because they realize, hey, our chances of success at becoming the number one here is much higher if we do it together with them. And also, you know, it’d be nice to be able to just focus on the product, instead of having to do all this other stuff, that takes a lot of time.
So, I really strongly believe that if you want an acquisition to be successful, it has to be win, win, it just can’t be kind of predatory, like, we’re going to display you out kind of hostile way or that just doesn’t work right, like long term. And so, the, we also structured the deal in a way that was very incentive aligned. And so, at this point, they’re kind of members of the Nansen family, and they operate as their own product squad. And so anyway, that’s a lot of talking about, like the team and organizational stuff. But at the end of the day, from a product perspective, I do think that, although there are portfolio trackers out there, we haven’t, like reached the end, instead of that, there’s still a lot of work to do. And I think this is an area where Nansen can play, and Nansen also win. So, the synergies that you get between portfolio and many of our other products like Kinect, which is our messaging product as well is very interesting, and analytics and all these different things. So, I think for us is it’s a great thing, because it’s also free to use. So let me let me plug the URL here as well.
Yeah, go for it.
Alex Svanevik: So, you can go to that strip tracking your web three assets across more than 40 different blockchains and almost 500 different defi protocols. And it’s totally free to use from a business perspective, why is it free to use? Well, we think that if you use that product, there’s a chance that you would want to upgrade to the analytics product at some point. So, you know, if that’s 1%, 2%, 5% of the users, it’s still great for us. You know, we can offer this product for free because we have a larger kind of a business model that makes sense beyond this portfolio alone because we have this information super ambitious.
The Vision For the Nansen Chat Application
So, on that okay, you just introduced the next sort of product that I want to talk about, this new web three net of discord that Nansen is building. I think the term web three native of discord has been one of the hottest keywords in venture funding of all these new entrepreneurs trying to build their version of web three native discord. What is Nansen web three native of discord? Is it focused on a specific audience like the trading crowd? Because I remember also parallel announced something, but it focused more on the gaming crowd, right? Like a chat room for gaming crowd. Is Kinect for the trading crowd? Does it expand beyond that? What’s the vision around this new chat application that you guys built, or you guys are building?
Alex Svanevik: Yeah, so first of all, it’s called Nansen Connect. You can try it out. If you go to connect.nansen.AI, it’s already in limited data. And so, when you start using it, you basically sign in with your meta mask wallet. So, your wallet is effectively your identity. So that’s the first point of departure from the discord version, where you kind of create discord account, here at your wallet is your identity. And this is something that we’ve been wanting to do for years, actually, almost since the beginning of Nansen. And there’s different ways you can think about the impetus for this, like why we created it. I think one user story that kept coming back to us was we had smaller crypto funds and people who were doing quite active OTC deals like on smaller tokens and things like that. And they were telling us that very often, they would look into a specific token, right? Let’s think of something that’s very long term. I don’t know if it’s like Exxon, or muse or any tail token. You look at that. And you say, hey, there’s this wallet, that selling tokens on uniswap. And they still have a bunch left. But I want to buy this, like, why don’t I just buy them out? Right, OTC, but there’s no way to find out like, who is that wallet? How do you reach them? And so, the initial thought was, why don’t we build a way that allows our users to contact another wallet, and then do an OTC trade directly in a chat.
So that was a user story that came back to us frequently. And we thought that’s pretty interesting. Like if we could do that it would create a very strong network effect. And then the other thing, so that was the first things like, just being able to DM you know, and do peer to peer communication with another wallet. And then we started working on this and a few months in block scan or ether scan launched their own blocks can chat with just it kind of does this like it’s a peer-to-peer messaging, but it was very clear that it doesn’t have network effects. So, most of the messages are sent and then no one sees them, and then they don’t respond. And then you have an unsuccessful or unsatisfactory interaction with it. So, the second thing, it was like, how do you, how can you create network effects. And what we realized was that the whole web three community area, and like NFT collections are already communities that you might be able to piggyback off. And so, think about how Facebook launched, when Facebook, you can’t just put Facebook on the web and expect people to start creating profiles. So, you need to be smart about how you build networks. And what they did was they went to college campuses around the US. And they launched in existing networks like to say harbor, and you try to get as many students onto the platform such that there is a network effect. And people have connections from day one with other people that they already know. And then if you do that a couple of times, then maybe those cliques and sub networks will start connecting with each other. And then you grow, right? What we’re doing is very analogous to that except instead of college campuses, we’re going to NFT collections. And we’re saying if you can get a project penguins channel, that’s different from peer to peer, right? It’s not just one person messaging another, if you have one channel where people can communicate, there’s going to be more stuff happening in that channel, which stimulates activity, and you get the snowball effect over time. And then you can in addition to give them the peer-to-peer communication, but the channels were kind of a key insight that we want to replicate. And then you realize, well, this is very similar to discord. Right, and so then you back to kind of comparing it to discord. And so, at the end of the day, the reason we’re doing it is to basically cater to some of those user needs that have been surfaced. And I think frankly, a lot of people have been quite disillusioned by discord, their inability to handle
Absolutely.
Alex Svanevik: It’s not really web three natives. So, it’s kind of clunky to do token gating and things like that. So, because you have your wallet as your identity with Nansen Connect, you can naturally gate access through tokens. So, we now have NFT channels that you can only join if you have the NFT. So, there’s a natural gating, we are also now rolling out token gating. So, if you have one Wi Fi token, you can join the Wi Fi Channel, if you have one lighter token, you can join the lighter channel, if you have a pleaser Dao token, you can join the pleaser Dao channel. And so that also opens up a lot of interesting new communities. But I think, so I think like there are two abstract concepts there. The first one is that your wallet is your identity, that is a very, I think something that more and more people are leaning into. But it’s very different from the web two mentality. And the second concept is that these online communities are very strong networks, and we want to support them and help nurture them. And if you could create web three native ways that people can communicate with each other, even anonymously, or pseudonymously, through their wallet, that’s a super interesting area for us to explore. And once again, just to be upfront about like the business aspect, it’s similar to portfolio, if we give this product away for free, we get stickiness and network effects. But if 1% to 5% of those end up becoming paying users and Nansen analytics, then it pays for itself, right? So, it’s one of those things where you are kind of trying to create something that’s useful for the whole community, and it’s free. But at the end of the day, hopefully it also drives value for us as a company.
Other Strategies for Creators to Take Advantage of On Chain Data
The last few minutes that we have here, I want to specifically pivot the conversation to building communities in web three, okay. Specifically, from the creator point of view, a lot of listeners on mint, they’re either independent creator, they’re creator base communities, they’re platforms building for creators, collectors themselves. And I think in the Creator crowd on chain data is, I don’t want to say a relatively newer topic. But there’s the element of sort of like seeing the financialization of on chain data, seeing primary sales, secondary sales trends accordingly, how it compares to the industry at large. But there’s also the ability to understand like, we are in a bear market, a lot of these communities will likely die off but how can some of them or the ones, the smartest ones use on chain data as a way to further strategically grow and monetize their on-chain audience, on chain collectors, community, whatever keyword they want to use. You are creator Alex, you’re a musician, right? You have the creative sensitivity to you. I’m curious from your point of view with such an analytical background, but also a creative background. What are some other metrics, strategies, ways you think creator communities can sort of use on chain data as a way to further build and further monetize their audience in web three? What does that look like to you?
Alex Svanevik: Yeah, it’s a tough question. I think the first thing that comes to mind is on chain data is probably good to think. You can think of kind of health metrics. So almost like early warnings, right? What people do on chain is, in many ways, the first source of information on activity and behavior. So, if you just imagine that you have an NFT collection, or you have some token or something like that, being able to know are people still holding on to these tokens, like, are they selling them and so on. That’s something that’s, I think, very important to stay on top of. So, if you use something like token god mode, or NFT god Mode at Nansen, and you can see not just if people are selling them, but you can see who is selling them, and you can see who is buying them. And I think this, from almost like health metrics slash early warning perspective, especially in a bear market, I think that’s maybe one very actionable way to use this, right? That you’re staying on top of this. You could even set up smart alerts, which is another feature we have, and get notifications in real time if someone is selling or transferring NFTs or tokens, right. So that you can know hey, you know, I mean, maybe it can be creepy if you approach it this way.
Hey, I noticed you sell, you sold your assets.
Alex Svanevik: So, it could be a creepy, but people should be aware that’s how the blockchain works, right?
But also, if you lose, but also if you lose a customer and web two like, you’ll hit them up, you’ll be like, yeah, why did why did you leave? Yeah.
Alex Svanevik: And it’s not to like to shame them. It’s to learn from like, what made you leave this community or like, you know, what would you like to see us change, right? So, I think staying on top of that is quiet, not too dissimilar from something like Google Analytics and a website or other things like that. So, kind of health metrics and so on, you know, and that’s looking at it from that kind of pessimistic bear market lens. But the other way to think about it is, you know, if you’re growing, like, who are those people coming into your community, how do you ensure that they are on boarded to your community in a good way? If you see, I don’t know, an influencer, or some dot Eth account or something that’s buying your token, maybe you want to DM them and say, like, hey, you know, really cool that you join that you bought this token like, you know, how can I help you kind of get more engaged with our community, whatever. So, there’s different ways you can be smart about that. And I think there are non-creepy, non-invasive ways to do this and be just transparent and open about it with people and if people don’t understand that’s how the blockchain works, maybe it’s a chance to educate them a bit. That’s probably the most action way I would think about it. I would also say, though, that, you know, you can’t create communities based on analytics alone, right? Analytics is more like a supporting function. And learning from other successful communities is a good idea. Depending on what kind of project you have.
I do think x infinity is an incredible example of a community that was built during the last bear market. And of course, people have different opinions about the project. I’m a seed investor, so I’m always bullish. I think the team is great. The community is great, genuinely, which is why I invested, I think synthetics is another example of a very strong community that had very interesting takes and approaches to governance that were at the time may be seen as kind of controversial, a lot of their governance process was kind of off chain in discord and vote, and stuff like that, which time was kind of ready to hold almost. But it made the whole governance process much smoother and more engaging to people. So, there’s a ton that people can learn from synthetics and just looking at how they did things. And then there’s a bunch of other communities you can learn from, and also you should learn from failed communities, like what did they do wrong? So, I think analytics can support you. But I do think there’s a lot more to it, obviously. And you have to figure out, you know, where you want to play and how you will win where you will play, and you can learn from both successful and unsuccessful communities around you on how to do that.
If You Were to Build Nansen From the Beginning, What’s One Thing You Wish You Knew?
So, I think the last two questions really fast ones that I have for you is if you were to sort of like build Nansen from the beginning, what’s one thing you wish you knew when you started that You know now?
Alex Svanevik: Yeah, so that’s an interesting one. I kept saying that when we started building Nansen and no idea that we would support NFTs at all, then I think it turned out pretty well. So I’m not sure we would need to do anything differently. Maybe one thing I would consider doing differently is to kind of lean in more on the sort of native web three identity. So, it’s not necessarily a mistake, like we kind of were, we had email-based accounts from the beginning, which has been, which has worked okay for us. Now, we’ve added web three accounts so that you can literally log in with your meta mask and use that as an account. There’s something interesting there. I don’t know if this is about doing things differently. But one challenge we had, which I think someone should try to solve, and are projects that are trying to solve, it’s just how to do subscription payment in web three and crypto. That’s like a difficult problem. Yeah, I mean, there’s obviously like, a lot of learnings and things, mistakes we’ve made and so on. But yeah, those are probably some of the things that come to mind, maybe leaning more into like a web three native identity from the beginning, and then somehow that solving the magical problem of subscription payments.
Okay, and the last question I have for you is, do you use Apple Music or Spotify?
Alex Svanevik: Spotify?
What’s the most recent saved songs on your Spotify favorites?
Alex Svanevik: Oh, yeah, let me check. I make a new playlist every month. Because it’s kind of a good way to take me back to that month.
Interesting.
Alex Svanevik: Oh, yeah, this is what temporary. So, in August, the first song on my list is, let’s celebrate by the Jones girls.
Outro
I love it, Alex, this was great, man. Thank you so much for being on. Before I let you go. Where can we find you? Where can we learn more about Nansen?
Alex Svanevik: You can go to nonsan.ai, to check out the product. You can also follow Nansen on Twitter, Nansen_AI or you can follow me on Twitter at a Svanevik.
Nice. Thank you so much. We’ll have to do this again soon. Until next time.
Alex Svanevik: Thanks for having me.
