Smart Money
Main information for our smart money features.
Smart Money Dashboard -> https://blokiments.com/smartMoney
What is Smart Money?
In decentralized finance (DeFi) and cryptocurrency trading, "smart money" refers to wallets or investors with insider knowledge or advanced strategies for making profitable decisions. They have a history of making profitable trades and continue to do so.
How do we Identify Smart Money?
We have developed a system to identify smart money. We have datasets of transactions on decentralized exchanges for each wallet and track its profits. We are also developing and improving a process that excludes wallets that have made money through irregular dex trading activities.
We are considering two major points for determining smart money:
Historical profitability: The primary indicator of smart money is a history of profitable trades. Wallets consistently bought low and sold high are flagged as smart money. Besides that, they need to have a certain absolute profit amount (in USD) and relative profit (%).
Exclusion of false smart money: We exclude wallets that have sold tokens without any prior buying activity. This often indicates that the wallet received the tokens through a transfer rather than a dex trade. We also want to exclude wallets that trade scam tokens and tokens with very low liquidity.
Types of Smart Money
Smart money can be categorized based on the strategies or methods for generating profits. Two common types are:
Smart Money by Swapping: This type of smart money involves buying tokens low and selling them high. Traders are often highly active and take advantage of short-term market movements to turn a profit.
Smart Money by Presales: These investors participate in token presales, buying tokens before they are publicly available. By getting in early, they can purchase tokens at a lower price and then sell them at a profit once the token is listed on a DEX and gains traction.
Our first version of smart money is built on top of the 1st option: getting smart money by swapping. In later versions, we will add other types of smart money.
Smart Money Dashboard Filtering
Our filtering dashboard allows you to find smart money with some simple filters:
Realized Profit (USD) - The realized profit earned by the wallet in USD during the selected time range. Realized profit means that open trades will count as a loss until the wallet sells tokens.
Volume (USD) - The total sum of actual trades (sells and buys) in the selected interval for the specific maker address.
Realized ROI [%] - The wallet's overall return on investment (ROI) within the selected time range. Realized profit means that open trades will count as a loss until the wallet sells tokens.
Number of Trades - The total number of trades the wallet executes in the selected time range.
Number of Unique Tokens - The total count of distinct tokens purchased by the wallet during the selected time range.
Profitable Tokens Ratio [%] - The percentage of unique tokens the wallet profited on within the selected time range.
For the upper filters, is it possible to use the following time intervals (7d, 30d, 90d, 190d, 360d)
Average Hold Time (minutes) - The average duration, in minutes, between the first buy and first sell of a token.
Days Since Last Active - The number of days since the wallet last conducted a trade.
Unhealthy tokens: Just-created tokens or tokens without enough trading activity and liquidity are considered unhealthy.
Healthy Tokens Ratio [%] - The percentage of the address's total traded tokens over the past 360 days that are classified as healthy tokens.
Healthy Tokens Count - The total number of unique tokens actively traded by the selected address within the past 360 days that are considered healthy.
Invalid Tokens - The number of tokens in the last 360 days where the wallet sold tokens before purchasing them or sold more than it initially bought. This could suggest the wallet received tokens from other sources, such as direct transfers, mints, or airdrops.
Let's look at a filter example for finding smart money wallets:
We sort the data by the realized profits (USD) in the last 30 days.
Realized ROI [%] > 100%: We want the wallet to make at least 2x on all traded tokens in the last 30 days.
The number of Unique Tokens > 10: There should be some tokens. Otherwise, the statistics don't represent the success correctly (it's much easier to do 2x on three tokens than 20). The more tokens, the better.
Profitable Tokens Ratio [%] > 50: At least half of the trades should be profitable. Otherwise, a wallet could profit greatly with just one trade (pure luck).
Average Hold Time (minutes) > 100: The hold time is longer than 100 minutes to avoid wallets that end with MEV bots and other sniper strategies.
Last Active less than 10 days: We want to include wallets that are still active (most smart users constantly change their wallets).
Healthy Tokens Ratio [%] more than 70%: At least 70% of the traded tokens should be considered healthy.
Invalid Tokens under 4: We don't want to include airdropped and minted tokens. We allow a very small number of such trades.
And the filter results:
Each time range column allows you to select a specific time range.
Wallet Analyzer
By clicking on the wallet (or searching it in the search bar), you can open a wallet analyzer to check the details about this wallet.
We automatically tag unhealthy tokens and hide them. You can check them by clicking on the Include Unhealthy Tokens Button.
Some tokens with very high profits are often scammers:
Challenges in Identifying Smart Money
People that are smart money can easily stay hidden and undetected if they want to. They can change wallets after each trade or after a few trades. They can also buy a token with one wallet, transfer it to another, and then sell the token for profit using that new wallet.
So, if your algorithm only tracks smart money by swaps, you could potentially miss out on a group of wallets owned by one entity that together makes smart money.
As we develop a smart money system, we commonly encounter a specific type of false smart money: “Wallet selling more tokens than buying.”
Here is an example of a token, $PAPE, detected as a token with one smart money invested into it. It turns out that this token was a scam token, as it was created to be rug-pulled. An unknown wallet had first sold a lot of tokens and then bought them. As it turns out, the maker of the transaction called a contract address that has hundreds of thousands of transactions: https://bscscan.com/address/0x52F209C6aE7F43E50b0F6f70Bc9Fa119a5701798.
Here are all the trades triggered by this maker. It looks like this is done by a bot.
It seems like he earned 3.6 million USD in the first three trades. And he then made some buys. But these first three trades were sandwich attacks, so he did not make that much money. A different maker performed the same sandwich attack. Luckily, we found a way to remove these types of false smart money.
Stay tuned for more smart money updates :)
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