I understand. Makes sense
I’m just curious on how they’re able to remove consolidations from their stats. Is it because they know the addresses of the exchanges? So whatever is sent to a non exchange address is counted as consolidation?
Discussion
This is from an ai answer so ymmv ... What I heard before is they know linked addresses so they can cluster owners. But here's the ai
Entity-Adjusted Filtering
Glassnode uses proprietary clustering heuristics to consolidate activity across addresses controlled by the same entity, such as exchanges or ETFs6. This process helps filter out internal transfers and provides a clearer picture of actual economic activity occurring on-chain.
Identifying Non-Economic Transactions
Relay Address Adjustment
Glassnode identifies and removes "relay addresses" from their volume calculations1. These are addresses that simply forward funds to another address, often resulting in double-counting of volume. They define relay addresses as those with:
A mean spent output lifespan of less than 1 hour
A current balance of zero (excluding UTXOs created within the last hour)
Change Volume Filtering
The company recognizes the issue of change volume in UTXO-based blockchains like Bitcoin3. They have implemented change-adjusted volume metrics to avoid overestimating true market behavior. This involves:
Identifying UTXOs controlled by the same entity
Calculating "virtual quantities" for the complete set of UTXOs belonging to one entity
Analyzing balance changes per account on the block level
Conservative Approach
Glassnode opts for a conservative approach in their data cleaning process4:
They aim to limit the reporting of false positives
Individual data points, such as large inflows or outflows, are considered preliminary until verified
Data points become increasingly reliable over time as exchange wallets transact and interact, allowing their heuristics and clustering algorithms to enhance labeling accuracy
This is interesting. I wonder how much of this glassnode analysis is actually valid
I wouldn't trade off it but I think it's accurate enough to show major trends. It's also delayed and harder now with ETFs .. so I don't know how usefuI... wouldn't be surprised if some of this shrimp selling is little accounts
-buying shitcoins to try to grow their position
- just selling a big round number
- moving to etf
This is interesting. I would really be curious to see how they figure it out. Probably proprietary stuff
Yeah, agreed. I do believe there is enough data from this many years of transactions to get some good metrics but I've never spent enough time to figure out what is signal and noise
I was curious about where Glassnode’s funding comes from. All I’m finding is that they’re backed by the accelerator WATTx. Since it’s a private entity, information about ownership is private. Makes sense. Just curious about the incentives
They charge a pretty penny for real time data so they're probably doing ok without a ton of outside funding now but now sure how they started
Now that’s expensive! Probably lots of work to analyze real time data.