Authors: Horry Ko, Noah Ho
In the field of blockchain, a thorough exploration and analysis of projects is crucial. Before initiating such an analysis, a substantial amount of data collection is necessary. Fortunately, with technological advancements, we now have a powerful assistive tool known as AIGC, which stands for Artificial Intelligence Generated Content. AIGC stands out for its efficiency and automation. As natural language generation (NLG) technology and advanced AI models like ChatGPT, Bing, Claude, and Semantic Querying have matured, AIGC has gained widespread attention. So, how does AIGC empower our project analysis? First, we need to establish a research framework that covers key aspects such as the sector, community, funding status, smart contracts/open-source code, and token economics. Then, we will explore how to effectively gather and organize the necessary information using AIGC tools to provide robust support for project analysis.
When it comes to web3/blockchain projects, the first step is to position them within their sector. Sector positioning not only helps us understand the product's market placement but also provides a framework for evaluating its potential market opportunities and challenges. For a specific sector, core considerations include market size, technological innovation, ecosystem development, profit models, and regulatory compliance.
Public blockchains, as the foundation of blockchain technology, have significant market potential. They need to continuously innovate technologically to ensure security, scalability, and decentralization. The success of public blockchains largely depends on their ecosystem, including developer communities and the number of DApps. Profit typically comes from token appreciation and network fees, but they also face complex regulatory challenges as they form the basis of the entire ecosystem.
Layer2 solutions, as extensions of public blockchains, aim to address the scalability issues of public blockchains. With the scalability problems of public blockchains becoming more pronounced, Layer2 has significant growth potential. They need to have good compatibility with mainstream public blockchains and achieve profitability through network fees and related services. Similar to public blockchains, Layer2 solutions also face regulatory challenges, albeit possibly more centralized ones.
DeFi and DEX, as core components of decentralized finance, are rapidly reshaping the face of traditional finance. Their market size is expanding rapidly, requiring continuous technological innovation to provide better user experiences and security. The ecosystems of DeFi and DEX are closely intertwined with various assets, services, and platforms, and their profit models vary, including transaction fees, lending interest, and token appreciation. At the same time, due to financial transactions, they are subject to strict regulatory oversight.
The underlying infrastructure provides critical support services for web3, such as storage, computation, and communication. The market size of these infrastructures is enormous as they underpin various web3 applications and services. Technological innovation is key in this sector, requiring faster, more secure, and cheaper services. Profit models typically include service fees and related product sales, while regulatory compliance depends on specific services and functionalities.
In the analysis of blockchain projects, the community plays an indispensable role as it directly reflects the project's market acceptance, genuine user engagement, and ecosystem vitality. A healthy community often boasts a large following or membership, with members actively interacting on social platforms like Twitter, Telegram, Discord, Reddit, and others. However, merely assessing the size of the community is insufficient; its activity level and engagement are equally important. By observing the daily interactions of community members, such as discussion topics, feedback frequency, and the project's communication with the community, we can gain deep insights into the real vitality of the community.
Furthermore, the quality of the community is also a key metric; a high-quality community focuses on core topics such as the project's technology and development strategies, rather than just price speculation. Globalization and diversity are also crucial aspects when assessing community health; a globalized community indicates that the project is popular in different countries and regions. Finally, whether the project provides education, training resources to the community, and whether there is a community governance mechanism are also important considerations when evaluating its relationship with the community. In summary, the community is not only a supporter of the project but also one of its key success factors.
When analyzing the funding status of a blockchain project, the first thing to focus on is the project's funding history. Understanding the funding rounds the project has completed, such as seed rounds, angel rounds, or private rounds, and the amount raised in each round, can help us assess the market and investor confidence in the project. Additionally, the identity of the investors is an important consideration. The participation of well-known investment institutions or individuals often indicates that the project has potential and credibility.
Secondly, growth data for the project, such as user growth rate, transaction volume, or other key business metrics, provides clues about the project's health and market acceptance. These metrics typically reflect the project's actual performance in the market and the stability of its user base.
Finally, the transparency of the project is another key factor in assessing its funding health. A project that publicly discloses its financial status, fund usage, and business progress is often more likely to gain trust in the market. This information can help us understand the project's financial management capabilities and long-term sustainability.
Smart Contracts/Open Source Code
When analyzing web3 or blockchain projects, smart contracts and open-source code are critical evaluation dimensions. They not only reveal the technical architecture and implementation details of the project but also reflect the technical competence of the development team and their attitude toward project maintenance. We can obtain and analyze this information more systematically through APIs.
Firstly, security audits are an important consideration. While audit reports may not directly provide APIs, many projects publish audit results through their official channels. In addition, some audit companies may offer query interfaces that allow the audit status to be automatically tracked and displayed. Code activity and transparency are another key metric. Through APIs from platforms like GitHub or other code hosting platforms, we can access data such as the frequency of project commits, the number of open issues, and community interactions, providing real-time snapshots of project development and maintenance.
For specific information related to smart contracts, such as contract code and transaction counts, it can be obtained through blockchain explorer APIs like Etherscan. Furthermore, some smart contract analysis tools offer APIs that help automate the analysis of contract security.
When analyzing web3 and blockchain projects, token economics has become an indispensable dimension. It reveals the project's value proposition, incentive structure, and risk factors. Firstly, we need to focus on the core uses and functions of the token, such as its role in value transfer, governance, and incentives. Then, token distribution, circulation, and their relationship with the total supply provide clues about the economic health of the project. In addition, market depth, liquidity, and performance on major exchanges are key indicators for assessing market acceptance. Finally, incentives and adversarial mechanisms show how the project ensures that participants' interests align with the project's long-term goals and how it addresses potential malicious behavior. In fact, many of these data points can be obtained through public blockchain explorers, exchange APIs, and project documentation, making the analysis of token economics both in-depth and practically feasible.
Introduction to ChatGPT-4
As natural language generation (NLG) technology and AI models continue to evolve, AIGC has gradually garnered the attention of many. Prominent AIGC platforms in the current market include ChatGPT, Semantic Querying, Claude, and more. We have chosen ChatGPT-4 as our analysis tool, which not only understands and generates natural language but also possesses robust information processing and knowledge retrieval capabilities. With advancements in technology, ChatGPT now supports various plugins, enabling it to efficiently gather, organize, and analyze data. Whether it's searching for information online or extracting key details from specific data sources, ChatGPT can swiftly achieve it through its plugins. Leveraging its innate language processing advantages, ChatGPT assists users in constructing and refining analysis frameworks, providing powerful support for various research and decision-making tasks. However, effective utilization of this tool is key. In the following example, we will demonstrate how to use ChatGPT to assist in project analysis. Additionally, we've listed some commonly used ChatGPT plugins:
Access Link: Used to access specific websites.
MixerBox WebSearchG: Conducts online news or article searches.
Webpilot: Retrieves online information based on keywords.
Diagram show me: Integrates information into tabular forms.
Aaron Chat PDF: Extracts information from PDFs.
DeFillama: Provides DeFi data.
PortfoliosLab: Offers cryptocurrency market data.
To gain an in-depth understanding of last year's highly anticipated Layer 2 project Arbitrum, we will use the above-mentioned tools for a detailed analysis. Below, we will demonstrate step by step how to utilize ChatGPT in information retrieval and organization.
Finding Project Overview
Firstly, we seek introductory information about the project. We simulate ChatGPT as a cryptocurrency analyst and instruct it as follows: "Imagine you are a cryptocurrency analyst tasked with writing a research report for a crypto project." Since ChatGPT's training data only extends up to January 2022, to ensure it has the latest information, we tell it, "You can search online to get the most recent information about the project you are analyzing." Next, we instruct it: "Please write an executive summary, introduction, and project overview for Arbitrum." It will conduct an online search for relevant information and provide a summarized response. Finally, we send the following prompt: "If you are a crypto analyst, you are going to write a research report for a crypto project. You can search necessary information so that you have the updated knowledge of the project you are analyzing. Please write an executive summary, introduction, project overview for Arbitrum." Plugins used: Access Link, MixerBox WebSearchG. ChatGPT will present its response in Markdown format. We can copy and paste it into software or online tools that support Markdown formatting, such as Notion. Here is the response:
Arbitrum is a Layer 2 scaling solution designed to enhance the capabilities of Ethereum smart contracts by boosting their speed, scalability, and incorporating additional privacy features. Developed by New York-based firm Offchain Labs, Arbitrum aims to address the inefficiencies and high costs associated with Ethereum-based smart contracts. The platform uses optimistic rollups, where transactions are executed off-chain and then bundled in large batches to be submitted on the Ethereum mainnet. This process significantly reduces transaction costs and enhances the user experience. Arbitrum has witnessed rapid growth, with nearly 4 million unique addresses and over 400 decentralized applications (DApps) built on its platform.
Ethereum, a leading platform for decentralized applications (DApps), has faced challenges related to high transaction fees and network congestion due to its increasing adoption. While some believe on-chain upgrades are the solution, others are exploring second layer solutions. Among these, Arbitrum stands out due to its innovative approach to scaling Ethereum.
Background: Arbitrum, developed by Offchain Labs, is a Layer 2 solution built on Ethereum. It offers developers the ability to run unmodified Ethereum Virtual Machine (EVM) contracts on a second layer while still leveraging Ethereum's Layer 1 security.
Technical Aspects: Arbitrum employs optimistic rollups, where transactions are executed off-chain and then grouped into large batches for submission on the Ethereum mainnet. This method reduces the computational and storage burden on Ethereum, leading to lower transaction costs for users.
Growth: The platform has experienced significant growth, with close to 4 million unique Arbitrum addresses and over 400 DApps, many of which are in the DeFi sector. Some of its popular DApps have over $100 million in Total Value Locked (TVL).
Token Utility: The ARB token, associated with Arbitrum, is used for governance within the Arbitrum DAO. Token holders can participate in decentralized governance decisions, which are executed on-chain once approved.
Ecosystem: Arbitrum supports a wide range of Ethereum DApps and infrastructure projects, including prominent names like Uniswap, DODO, and Sushi. In August 2022, Arbitrum introduced Nova, a new chain designed to further scale the Ethereum blockchain, especially for high-throughput DApps.
Team: The initiative is led by Offchain Labs co-founders Ed Felten, Steven Goldfeder, and Harry Kalodner, all of whom have strong academic and blockchain backgrounds.
In conclusion, Arbitrum presents a promising solution to Ethereum's scaling challenges, offering a platform that is both efficient and developer-friendly. Its rapid growth and adoption in the crypto community underscore its potential to play a pivotal role in the future of decentralized applications.
Now that we have a rough understanding of Arbitrum, the next step is to gradually gather information based on the framework mentioned above. Considering the text length, we will continue to teach you how to use ChatGPT to collect the necessary project information in the next article.
We are delighted to collaborate with Alibaba Cloud Academy to provide an in-depth exploration of the application of ChatGPT in blockchain analysis for technology enthusiasts and students on September 20, 2023, from 14:30 to 16:00 (GMT+8). Whether you are a beginner or an experienced developer, this workshop will provide you with valuable knowledge and experience. It's important to note that this workshop will be conducted entirely in English. We sincerely invite you to join us in exploring, learning, and innovating together. Through this workshop, we hope to nurture more leaders and innovators in the blockchain and Web3 field. Please remember to click here to register. If you would like to learn more about the workshop details, please visit our course details page.