We’re excited to share some significant updates to our Smart Money Fund label.
Smart Money Fund is a powerful tool used to identify and track entities in the blockchain space that have a substantial edge or "alpha" in the market. These entities typically include venture capital groups, funds, and other notable investors known for their history of making profitable and strategic investments in early-stage projects and tokens.
Why We Revisted Smart Money Funds
When Smart Money was initially launched by Nansen in early 2021, it aimed to surface addresses of interest—addresses believed to possess significant alpha. Among these were funds and venture capital groups, which often had access to private funding rounds and opportunities to secure prices lower than the ICO. This advantage allowed them to influence project launches, advise on product development, and shape go-to-market strategies. By tracking these entities on-chain, users could anticipate market movements and investment opportunities before they became widely known, providing a competitive edge.
Back then, exchange listings were a different game; many individuals traded on privileged information during the wild west of 2021. For instance, certain funds were able to buy tokens at pre-sale prices before they were listed on major exchanges, enabling them to sell at significant profits as soon as the tokens became publicly available. These actions yielded substantial returns and highlighted the advantages these funds held over regular investors.
As such, we hypothesized that these funds had an edge in the market and were considered smart. Furthermore, we concluded that if such entities had the confidence to raise money from LPs, they would likely offer solid returns backed by reputable backgrounds. We assumed these investors knew what they were doing and trusted that the suits would win consistently. This hypothesis seemed to hold throughout 2021, with funds like Alameda Research and Polychain Capital making significant profits through strategic investments and early access.
However, a lot has changed since then. High-profile funds such as FTX and 3 Arrows Capital have faced significant challenges or even collapsed. For instance, FTX's collapse sent shockwaves through the market, highlighting the volatility and risks involved even with supposedly smart money.
After launching Nansen 2 and adding support for new chains, we wanted to re-evaluate our approach to see how this hypothesis held up. We concluded that it’s no longer true.
Not Every Fund or VC is Smart...
Recognizing this, we realized that Smart Money Fund needed to be updated. After brainstorming several approaches, we settled on a data-driven methodology considering multiple variables, such as and not limited to:
- How active the venture capital is
- The size of the venture capital
- The profitability of the fund
We assessed all venture capital firms in our database, including Jane Street, Sparta Group, Delphi Digital, and more. All of them were evaluated based on our variables and ranked accordingly.
As a result, we arrived at two groups of funds - Smart Funds and Not Smart Funds
Why Tracking Smart Funds Gives You an Edge
By tracking Smart Funds, you gain insights into the most reliable and profitable funds. For example, Pantera Capital has been identified as a smart fund due to its consistent performance and strategic investments in early-stage projects. By following the activity of such funds, you can anticipate market movements, uncover high-potential investment opportunities, and make informed decisions that align with the actions of the most successful investors in the space.
You can find all the Smart Money Funds in Nansen and monitor their activities through our dashboards. This powerful tool allows you to stay ahead of market trends, identify profitable ventures early, and enhance your investment strategy with data-backed insights.
Do you want to be the first to know when a Smart Money Fund, like DWF Labs, is selling, buying, or receiving a token or do you want to dive into what they currently hold in their portfolio?
You can do this and much more within Nansen. When you search for DWF Labs in Nansen, you’ll see all their addresses that we have labeled bundled together to give you a quick overview of their current holdings and recent interactions. If you decide that you want to stay updated on their entire portfolio or a specific token, you can create Smart Alerts by pressing on “Set Alert” to be notified, in real-time, when they make moves in the market and leverage that information to gain an edge in the market.
With over 300m+ labels on the platform - tracking DWF is the tip of the iceberg.
Smart Money is Now Smarter
Thank you for your continued trust and support as we refine Smart Money to better meet your needs. This change represents one of many improvements we have planned this year to continue making Smart Money smarter across the chains that we support.
If there is a Smart Money Label that you want to see within Nansen, or if you have any questions about Smart Money, we’d love to hear from you, either through our social media channels - discord, twitter or support@nansen.ai.
Together we win onchain.
