OKX Web3 team and Coingecko team jointly focus on the theme of "quick entry into the world of blockchain," involving entry-level basics, noise filtering, and screening for quality opportunities.

In the cryptocurrency market, data has always been an important factor for people to make trading decisions. How can we dispel the fog of data and discover effective data to optimize trading decisions? This is a topic that the market has been paying continuous attention to.

This time, OKX has specially planned the "Insight into Data" column, and has joined hands with mainstream data platforms such as Coingecko, CoinGlass, AICoin, etc., to start from common user needs, hoping to explore a more systematic data methodology for the market to refer to and learn from.

The following is the content of the fourth issue, jointly focused on the theme of "quick entry into the world of blockchain" by the OKX Web3 team and the Coingecko team, involving entry-level basics, noise filtering, and screening for quality opportunities, hoping to be helpful to you.

About Coingecko: Established in 2014, as a leading independent cryptocurrency data aggregator globally, its mission is to provide a comprehensive, 360-degree market overview for the cryptocurrency community. CoinGecko provides comprehensive information from thousands of data points, such as price, trading volume, market capitalization, developer strength, community statistics, etc. Currently, it tracks over 14,000 types of cryptocurrencies from more than 1,100 exchanges worldwide.

About OKX Web3: The team has gathered top talents with deep technical backgrounds and rich industry experience, continuously innovating and practicing in the crypto field over the years, and continuously focusing on user experience and security. Currently, OKX Web3 wallet is one of the most comprehensive decentralized multi-chain wallets on the market, supporting 90+ public chains, with built-in wallet, trading, NFT market, DeFi, and Dapp discovery in five major sections. Users can view multi-chain tokens, NFTs, and DeFi assets through the app, plug-in, and web.

1. How can newcomers quickly understand the world of blockchain?

Coingecko: Based on our experience, we recommend beginners to start connecting to the crypto world through mainstream browsers such as Etherscan.io, Mempool.space, etc., which are like search engines for blockchain transactions with a huge amount of information. For example:

• Trading volume: How many transactions occur daily? Is this number increasing or decreasing?
• Active addresses: How many unique addresses are transacting daily?
• Network fees: Are they high or low? This may indicate network congestion.
• Block time: How fast are new blocks added to the chain?

Specifically, trading volume and network fees provide insights into network usage and congestion levels, with higher fees usually associated with increased demand for block space as users compete to process their transactions quickly. For proof-of-work (PoW) chains like Bitcoin and proof-of-stake (PoS) chains like Ethereum, these metrics provide insights into network usage, adoption, and market sentiment. Additionally, tracking wallet addresses belonging to whales, popular traders, exchanges, and projects—observing large inflows and outflows, and even holding behavior—can provide insights into potential price trends. If you can't find these browsers, you can easily find them on CoinGecko.

OKX Web3: For entry-level users, mastering basic concepts is very important. Going further, it is important to understand common mainstream public chains such as the Bitcoin network, Ethereum network, and their basic operating mechanisms. For example, PoW mechanism and PoS mechanism.

PoW, or Proof of Work, mainly verifies transactions by solving complex mathematical problems, consuming a large amount of computing resources and electricity. Bitcoin and Ethereum 1.0 are typical examples using PoW. Its characteristics: high security, but high energy consumption and slow transaction confirmation speed.

PoS, or Proof of Stake, mainly verifies transactions by holding tokens, and holders have the opportunity to be selected as block validators. Ethereum 2.0, Cosmos, Tron, and other public chains mainly use this mechanism. Its characteristic is the need to stake a certain amount of tokens, with faster transaction speed.

In general, users can quickly understand the world of blockchain by understanding the basic operating logic of popular public chains and using on-chain wallets (such as OKX Web3 wallet, Metamask, etc.) to participate in actual transactions on the network. In addition, you can also engage in systematic learning by reading project whitepapers and taking online courses (such as Coursera, Udemy, etc.).

2. How to intuitively and quickly perceive changes in on-chain liquidity?

Coingecko: For novice users, to perceive changes in a timely manner, it is necessary to pay attention to dimensions such as the number of participants, 24-hour trading volume, total value locked (TVL), and bid-ask spread.

Among them, the 24-hour trading volume represents the total transaction value processed by the network in 24 hours, reflecting daily usage and liquidity. A surge in trading volume usually indicates increased interest in cryptocurrencies, possibly triggered by major news or events. A decrease in trading volume may indicate reduced market interest, a weakening trend, or a consolidation period before a new trend emerges.

Total value locked (TVL) represents the total asset value locked in blockchain smart contracts, reflecting the overall activity level of the network. A higher TVL means more assets are locked in the protocol, and more capital is available for trading and borrowing, indicating higher liquidity and user trust in the network. This also implies that the protocol is relatively reliable and secure. By monitoring changes in TVL, one can better understand changes in liquidity.

The bid-ask spread refers to the difference between the highest bid price and the lowest ask price in the order book. A smaller spread usually indicates high liquidity, as both buyers and sellers are highly interested. Conversely, a larger spread indicates low liquidity. Although these indicators are important, they should be considered comprehensively for a comprehensive analysis.

OKX Web3: Generally, we often perceive changes in on-chain liquidity through several indicators.

First are the indicators directly related to trading: such as the daily total trading volume of DEX, which can reflect the market's trading activity; the number of unique trading addresses per day, which can reflect the trading activity and liquidity of market users; and the size of liquidity provided by tokens in various DEX pools, i.e., the size of the liquidity pool.

Second are the indicators related to the token supply: such as the circulating market cap and total market cap; the available supply and maximum supply of tokens; and the locked asset value in DeFi protocols, team lockups, and burn amounts. Monitoring these data dimensions can to some extent provide a comprehensive understanding of changes in on-chain liquidity, thereby making wiser trading decisions.

3. How to filter out noise and capture quality opportunities?

Coingecko: There is a lot of noise in the market, which requires us to establish systematic industry knowledge. The aforementioned content can help novice players lay a solid foundation, and it is recommended to practice more to gradually enhance their ability to filter out noise.

As for capturing opportunities, the basic premise is the same, requiring a comprehensive understanding of all aspects of the industry, while paying attention to commonly used basic data indicators. For example, active addresses, trading volume, and whale activity. These indicators can reveal network usage, market sentiment, and the concentration of different investors' holdings. By tracking these indicators, traders can assess the overall health of the network and identify potential trends before price fluctuations appear.

Next, it is crucial to learn to use authoritative data analysis tools and platforms. For example, platforms like Glassnode, Dune Analytics, and The Graph provide detailed on-chain analysis, which can help users make informed decisions to a certain extent. Additionally, real-time decentralized trading aggregators and tracking tools like GeckoTerminal provide detailed analysis of decentralized exchanges, helping users monitor liquidity, trading volume, and price fluctuations in real-time. All of these tools can help beginners identify market trends and potential profit opportunities early on. However, it is important to note that it is necessary to cross-verify data from multiple sources to gain a more comprehensive perspective.

Furthermore, monitoring whale behavior is also crucial, such as large asset holders participating in staking or DeFi. For example, publicly disclosed large funds from institutional investors such as MicroStrategy. In addition, monitoring the flow of funds from large wallets associated with exchanges and major liquidity providers in DeFi, as well as significant participants in major DeFi protocols, can have a profound impact on the market.

Of course, community activity is also important. Many successful on-chain projects have active communities that play a crucial role in the project's development. It is recommended for new players to join communities such as Discord, Telegram, and Twitter for in-depth observation. Finally, we recommend that beginners cultivate the habit of cross-verifying data to better observe the overall market.

OKX Web3: Here, we mainly provide some commonly used approaches:

First, in filtering information sources, it is advisable to focus on reliable media and directly follow the official websites, official Twitter accounts, Telegram channels, and Discord communities of projects to obtain first-hand information.

Second, evaluating the background of the project is crucial. Assessing the background and past experience of the project team can help determine its credibility and execution capability. Reviewing the project's technical whitepaper, evaluating the innovation and feasibility of its technical solutions, monitoring its codebase and development progress to assess the project's technical strength and growth potential. Additionally, paying attention to the project's partners and investors, as well as collaborations with well-known institutions and companies, is also important.

Of course, data analysis is also essential. Using tools such as Nansen, Glassnode, Dune, and Defilama to analyze the on-chain data of projects, such as the number of active addresses, trading volume, and contract calls. Active on-chain data often indicates real users and usage scenarios for the project. Reviewing the project's financial situation and token economic model, assessing its sustainability, and monitoring indicators such as total value locked (TVL), liquidity, and token distribution plans. Finally, to avoid noise, it is important to remain calm and rational, not to be influenced by short-term market fluctuations and media hype. Independent thinking and the establishment of one's own judgment criteria and investment strategy are essential to make wiser choices.

4. What indicators should be focused on to identify systemic risks in a timely manner?

Coingecko: To identify and avoid systemic risks in cryptocurrencies, players can monitor large collateral positions, especially those held by influential individuals or projects, and be cautious about protocols or tokens, especially situations where a single entity holds too many assets or debts. Finally, understanding the liquidation thresholds of major DeFi protocols is also crucial—tracking these thresholds across popular lending platforms can help predict potential liquidation chain reactions.

OKX Web3: In general, common types of risks include:

In general, cryptocurrency trading faces the following common risks: first is liquidation risk, where collateral assets' value drops below the loan value, resulting in loss. Second is liquidity risk, where insufficient market liquidity may lead to difficult trade executions or significant price fluctuations. Additionally, there is smart contract risk, where contract vulnerabilities may lead to fund theft or contract execution anomalies. Lastly, there is market risk, where price fluctuations may lead to significant changes in asset value.

To address these risks, we recommend focusing on four key data indicators and adopting corresponding strategies. First is the collateral ratio and liquidation threshold. DeFi platforms like Aave and Compound provide real-time collateral ratios and liquidation information. Second is monitoring market price fluctuations, platforms like CoinGecko and CoinMarketCap provide price volatility data. Third, monitoring trading volume and liquidity, platforms like Dune Analytics and DeFi Pulse provide locked amounts and trading volume data. Fourth, paying attention to market sentiment and macroeconomic events is also important, which can be obtained through cryptocurrency news websites and social media sentiment analysis tools.

However, in order to identify systemic risks in a timely manner, it is still advisable to use real-time monitoring tools and set up automatic alerts, such as setting up automatic alerts based on price fluctuations, collateral ratio changes, etc., to take timely action when risks are imminent. Through these methods, individuals can more effectively identify and mitigate systemic risks, protecting their investments from the impact of market volatility and potential liquidation crises.

5. How to protect assets in the dark forest?

Coingecko: The foremost priority is to remain vigilant at all times, especially against unsolicited messages, emails, and websites. Before clicking on links or sharing sensitive information, it is essential to verify the sender's identity and the authenticity of the URL to avoid falling victim to phishing attacks. Avoid being lured into hasty actions by urgent messages, which is a common strategy used by phishers. When using platforms such as Twitter, Discord, or Telegram, do not interact with suspicious links. If in doubt, visit CoinGecko to access official websites and social media links curated by expert teams.

Additionally, to enhance wallet security, it is advisable to use different wallets for transactions, participating in airdrops, and long-term fund storage. This practice can effectively reduce risks and protect the overall investment portfolio. For large funds and long-term holdings, it is recommended to choose high-security hardware wallets and regularly back up private keys to secure offline storage. Furthermore, regularly updating wallet applications, browsers, and security tools, understanding common phishing techniques, and remaining vigilant can effectively reduce the risk of falling victim to phishing attacks.

OKX Web3: The first priority is to choose a reliable wallet, which is crucial. In terms of software wallets, such as OKX Web3 wallet and MetaMask, they are very convenient to use, but it is essential to download them from the official website or official app store to avoid potential security risks from unknown sources. Additionally, hardware wallets such as Ledger, Trezor, and OneKey, which store private keys offline, can effectively prevent hacker attacks and isolate the risk of private keys, providing a higher level of security.

Secondly, it is important to avoid phishing websites and applications. When visiting cryptocurrency websites, carefully check the correctness of the URL and avoid clicking on links from unknown sources. It is recommended to add frequently used websites to bookmarks and access them through bookmarks. Always insist on downloading wallets and exchange applications from official websites or app stores and confirm the credibility of the application's developers and publishers.

Furthermore, managing private keys and mnemonic phrases is crucial. It is important to write down private keys and mnemonic phrases on paper and store them in a secure location, avoiding storing them on connected devices. Although this may be somewhat inconvenient, never share private keys or mnemonic phrases over the internet to prevent information leakage and asset theft. To prevent the loss of a wallet due to a single point of failure, it is advisable to store backups in different secure locations.

In addition, when using decentralized applications (dApps), certain security measures must be taken. Regularly check and revoke unnecessary dApp authorizations, use tools such as Token Approval Checker and revoke.cash to revoke authorizations in a timely manner. In daily authorization transactions, only authorize necessary permissions and specified authorization quantities. Prioritize using audited smart contracts and avoid using dApps from unknown sources. Although this may be inconvenient when trying new dApps, it is recommended to test with small assets first, confirm their safety, and then proceed with large operations.

Of course, when surfing the blockchain, the most important thing is to raise awareness of security and be cautious about social traps. Never trust emails, messages, or private messages from strangers. When it comes to fund transfers or sensitive operations, always double-check to ensure the identity and intentions of the other party are genuine.

Conclusion

The above is the fourth issue of the "Insight into Data" column launched by OKX, focusing on how new players can navigate the world of blockchain, with the hope of providing reference for beginners. In future articles in the series, we will continue to explore more practical data usage/analysis methods, providing reference for traders and new players to learn about trading and understand the industry.

Risk Warning and Disclaimer

This article is for reference only. The views expressed in this article are those of the author and do not represent the position of OKX. This article is not intended to provide (i) investment advice or recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. We do not guarantee the accuracy, completeness, or usefulness of such information. Holding digital assets (including stablecoins and NFTs) involves high risks and may experience significant fluctuations. You should carefully consider whether trading or holding digital assets is suitable for your financial situation. For your specific situation, please consult your legal/tax/investment professionals. Please be responsible for understanding and complying with applicable local laws and regulations.

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