Introduction
BetygFi is an Information Utility that democratises access to information available on public blockchains.
To borrow from BetygFi’s approach paper, Blockchain as a technology is unique; it makes information available real-time. Notwithstanding the notoriety of platforms using blockchain that have engaged in malicious conduct, real-time access to financial data without a gatekeeper is unprecedented.
Despite the blockchain providing real time on-chain data, there exist significant challenges to accessing and understanding and turning on-chain data into actionable intelligence. Bad actors have exploited information asymmetry to mislead and commit fraud; they consequently destroyed trust and legitimacy in the ‘trust-less’ system.
Challenges in Real-time On-chain Data
BetygFi provides real time and comprehensive data and intelligence on firms/entities that inhabit the 15 major public blockchains. It has further architected solutions that will solve for those problems posed by bad actors that tend to hide among the crowd, thus damaging what could potentially become a significant tool to the financial community, society and regulators (regulators have a vested interest in protecting their financial community and society).
BetygFi actively tracks and scores Decentralised Financial Institutions (DeFis), Coins and Wallets. Wallets drive investment into DeFis and Coins.
BetygFi's Solutions and Architecture
BetygFi’s scoring methodology has developed technology that pulls data real time from the chain. It then analyses the data in real time using metrics that are relevant to the safety of these DeFis, Coins and Wallets to provide a score that is indicative of the safety of these entities. A score enables the community to have a quick snapshot; those who want to further investigate a DeFi, Coin or Wallet can use the various analytical features including the BetygFi Studio and our dashboards.
Recent global events have brought focus back to crypto, especially with Bitcoin (also colloquially referred to as crypto gold) seeing a significant increase in price.
Evaluating DeFi Entities: Coins and Wallets Tracking
BetygFi actively tracks 9,000 Coins and a significant number of these Coins have seen their scores improve since the positive price movement of Bitcoin.
Generally, the noticeable change is in the price & volume of Coins or the transactional data of Coins; its positive trajectory can perhaps be attributed to this change. [1]
Concerns around price and volume data of Coins or the transactional data of Coins generated by Centralised Exchanges are well known and documented, especially from the last boom-bust cycle. Depending upon the credibility of the exchange (we suspect regulators globally are closely examining the need to audit Centralised Exchanges that deal with public funds, because it has huge implications for investor and consumer protection), transactional data produced by Centralised Exchanges can be ‘gamed’.
Centralised Exchange Data Challenges in Public Blockchains
The BetygFi score has tracked a few Coins that have recently exhibited significant movements. Their score on BetygFi improved significantly basis transaction data that was entirely generated by Centralised Exchanges.
A common pattern in such Coins: their transaction data on public blockchains (Decentralised Exchanges) paints a very different picture from the transaction data of the same Coins on certain Centralised Exchanges.
Centralised Exchanges wield significant heft within the crypto ecosystem and play a critical role in generating off-chain transaction data. Unfortunately, none of the data produced by Centralised Exchanges is publicly available or auditable, thus weakening the central premise behind ‘public blockchains’ and availability of real-time auditable data. The only actors who perhaps have access to the transaction data on Centralised Exchanges are the ones permitted by them. This further defeats the central premise behind ‘public blockchains’ and decentralised finance as a whole.
Case Study: Tellor Token Movement Analysis
Tellor positions itself as a decentralised oracle protocol – an alternative to Chainlink. It seeks to make price data of other decentralised assets accessible. It has its own token/coin, which has had some interesting movements in its price and volume and has been the talk of the week within crypto communities.
The BetygFi model initially rated the Tellor token with a safety score of around 80 in its initial run – from November 18th to December 22nd, 2023. But in the following days, it saw a significant degradation in the BetygFi score, dropping to 40. In this timeframe, the price of the token was still showing a positive trend.
On closer analysis of the score, the trend and the financials involved, the BetygFi model was able to spot irregular volumes across centralised exchanges, while the verifiable on-chain volume was still muted.
On 31st December 2023, the token witnessed a standard pump and dump pattern across exchanges, wildly rising in price from 159 USD to about 600 USD. It peaked at about 2:00 a.m. on 1st January 2024, and rapidly fell in price to 200 USD by 5:30 a.m. on the same day.
The BetygFi model was able to identify the pre-pump movement in the volumes 10 days before the event and flagged the coin as extremely risky.
Conclusion
The recent past reminds us of the urgent need to pause and consider how the community and regulators are going to ensure dependable and verifiable transaction data from Centralised Exchanges.
BetygFi is excited to announce that its model continues to improve its predictive capabilities to enable an Early Warning System for crypto.
References
- [1] BetygFi uses a complex scoring algorithm that constantly tracks and analyses various metrics and uses a learning mechanism to revisit its thesis. These metrics are correlated; price and volume would have an effect on other metrics.