Blockchain analytics has become a core part of how investors, institutions and crypto companies understand activity onchain. Nansen was one of the platforms that helped push that category into the mainstream, combining wallet labeling, transaction analysis and behavioral data to make blockchain activity easier to interpret. Today, the company says its platform tracks more than 500 million labeled wallets and has expanded from analytics into AI-assisted research and onchain execution.
The conversation below took place during TOKEN2049 Singapore on September 13-14, 2023, at a very different point in the market cycle. Nansen CEO and co-founder Alex Svanevik sat down with Presence to discuss the aftermath of the crypto bear market, Asia’s growing role in the industry, the evolution of blockchain analytics and the increasingly important place of artificial intelligence in crypto products.
One idea came up repeatedly around the conference.
“Bear markets have historically been good for innovation.”
Svanevik and his co-founders began building Nansen in 2019, near the end of the previous crypto downturn. The company raised a $1.2 million seed round in 2020, followed by a $12 million Series A led by Andreessen Horowitz in June 2021 and a $75 million Series B later that year. That brings Nansen’s publicly announced funding across those rounds to at least $88.2 million.
By the time of TOKEN2049 Singapore in September 2023, the industry had already endured one of its most severe contractions. Terra collapsed in May 2022, FTX failed later that year, and more than $2 trillion in crypto market value had disappeared from the cycle’s peak.
That period also demonstrated why onchain analytics could matter beyond simply finding trades. Nansen’s wallet-labeling infrastructure made it possible to follow flows from exchanges and major entities in real time, including activity surrounding FTX. The company later worked with exchanges to improve visibility into their publicly identifiable reserves.
At TOKEN2049, Nansen was introducing Nansen 2, a major upgrade focused on making onchain data easier to navigate and bringing AI more directly into the product experience. Presence spoke with Svanevik about that shift, the economics of building through a bear market, institutional adoption and the role Asia could play in the next stage of crypto growth.
This interview has been edited for clarity and length.
Presence: Nansen 2 puts much more emphasis on artificial intelligence. Where does AI actually fit into the product?
Alex Svanevik: AI has been part of what we do from the beginning, especially behind the scenes. We use it when ingesting data, parsing it and organizing it into something useful. My own academic background is in AI, so this was never a completely new direction for us. Even the first version of Nansen included things like AI-driven NFT price estimates.
What changes with Nansen 2 is that AI becomes much more visible in the user experience. Instead of forcing people to learn where every feature sits in the interface, we can let them express what they want in natural language. Someone might type, “Who are the largest holders of Lido?” or “Why is Ethereum gas so expensive right now?” The system can understand the request and direct the user toward the relevant data or part of the product.
Alerts are another good example. Traditionally, setting them up can require several steps and a lot of configuration. The goal is to let a user simply say, “Tell me whenever someone sells Pudgy Penguins,” or “Alert me when a wallet buys a large amount of this token.” We can translate that request into the underlying rules and deliver the alert through services such as Telegram, Discord or Slack. AI is moving closer to the front of the product rather than remaining purely in the infrastructure underneath it.
Presence: Global venture funding fell 49% year-on-year in the second quarter of 2023, while AI remained one of the few areas attracting substantial investor attention and blockchain funding was hit particularly hard. Does a crypto company now need an AI angle to keep attracting capital?
Svanevik: We’re fortunate that we don’t need to raise capital in the near term, so we’re definitely not adding AI simply because we want to raise a Series C at a higher valuation.
For us, the important thing is how much the technology itself has improved. A lot of what we can now do with natural-language processing was either extremely difficult or simply not practical a few years ago. Generative pretrained transformers and large language models have changed that quite dramatically.
Features that previously might have required a large group of engineers, data scientists and machine-learning specialists can now be built much faster. That is one reason so many companies are investing heavily in AI. There is obviously hype around the sector as well, especially from venture investors, but underneath that hype there has been a genuine increase in what these systems can actually do.
Presence: Nansen reduced its workforce by around 30% in May 2023, and you described the market environment at the time as brutal. What changed inside the company after that?
Svanevik: The basic assessment was still correct. We had hired too aggressively. We expected a bear market, but we didn’t anticipate something as severe as the combination of Terra collapsing, FTX collapsing and everything that followed.
We needed to resize the company and become more disciplined about where we were spending time and resources. On the product side, we had been pursuing quite a few different ideas. One example was Nansen Connect, which was designed to let users message other wallets. We decided to put that on hold and concentrate on a smaller number of priorities.
The result is a much more focused company. We still have to see how the market develops, but operationally we put ourselves in a stronger position than we were in before.
Presence: If the bear market had continued for much longer, how damaging could that have been for crypto as an industry?
Svanevik: Historically, some of the best periods for building in crypto have happened during bear markets. I think 2019 is a good example. Projects such as Uniswap, MakerDAO and Aave gained real traction during that period.
We were seeing similar signs again. Account abstraction was creating new ways to improve crypto user experience, while products like Friend.tech were attracting a lot of attention and experimenting with completely different social and economic models. Those kinds of products can help bring energy back into the market.
There was also a lot happening institutionally around real-world assets, including tokenized Treasury bills. That looked very promising. The other major requirement for institutions is regulation. Many large financial players simply won’t participate at scale until they have enough legal and regulatory clarity to do so.
The industry has to keep solving these problems one by one. If you combine better products with clearer regulation, the foundations for another period of growth become much stronger.
Presence: At the time, regulatory pressure in the U.S. was feeding a narrative that more of the crypto industry could shift toward Asia. As a founder operating from Singapore, did that feel real to you?
Svanevik: Yes, I think there was something real behind that. I had spoken with leaders at major U.S.-based exchanges who were at least considering how to diversify their operations across more countries.
Asia is one of the most promising regions in the world for crypto, possibly the most promising. Part of that is simply the size of the population, but there is also a very high level of interest in digital assets. That is particularly visible in Southeast Asia, although the opportunity is much broader than that.
Singapore, Dubai and Hong Kong were the three jurisdictions people discussed most often. Each has taken a different approach to attracting and regulating the industry. Korea and Japan are also potentially enormous markets and were already extremely important for many exchanges. For a crypto company thinking globally, it made sense to pay close attention to Asia.
Presence: FTX severely damaged trust in centralized crypto companies. What can Nansen and other blockchain analytics platforms realistically do to reduce the chances of something similar happening again?
Svanevik: Regulation isn’t normally the center of what we do. Our core product is designed to help investors identify opportunities, understand tokens and NFTs, and perform better due diligence.
But FTX showed us that the same infrastructure can also be useful for transparency. After the collapse, we worked with many of the world’s largest exchanges to make their reserves more visible. We were already monitoring exchanges as part of our own research, but we began establishing more direct relationships with them so they could identify the wallets where a large portion of their assets were held.
That lets us give the public a clearer picture of exchange reserves. It is not a complete solvency assessment because we don’t necessarily have visibility into the liability side of the balance sheet, and that distinction is extremely important. Still, onchain analytics can make the industry meaningfully more transparent.
That is one of blockchain’s major advantages compared with traditional finance. A lot of financial activity can be observed directly because the infrastructure is public by design. Helping exchanges expose more of that information can improve trust and give users more data when deciding where they are comfortable holding assets.
For us, this was not primarily a commercial product. We weren’t charging exchanges for the transparency work. It benefited Nansen by increasing awareness of what the platform could do, it benefited exchanges by giving them another way to demonstrate reserves, and it benefited users by giving them more information before making decisions.
Presence: Transparency is one of blockchain’s strongest features, but privacy has also been an ideological priority for parts of the crypto community. How do you think about the trade-off between the two?
Svanevik: I don’t think there is a perfect answer. You can’t have complete transparency and complete privacy at the same time, so ultimately you have to make trade-offs.
One thing I’ve observed is that fully private chains and protocols have often achieved less adoption than people might expect. Monero and Tornado Cash, for example, have historically had much less overall usage than networks such as Bitcoin or Ethereum. That raises a broader question about product-market fit for systems built around maximum privacy.
At the same time, privacy is obviously important. If blockchains are ever going to become foundational financial infrastructure and compete seriously with banks and other traditional systems, individuals will need ways to transact without exposing every detail of their financial activity publicly.
The likely answer is some form of balance that regulators can also accept. You could imagine layer-2 systems, separate protocols or payment channels that preserve privacy while introducing limits or other controls depending on the use case.
Regulators are naturally going to be more concerned about completely private transfers worth hundreds of millions of dollars than about ordinary day-to-day payments made by individuals. There is a spectrum between those two situations, and deciding where the boundaries should sit becomes both an ideological and a political question.
Transparency has enormous benefits, but meaningful privacy requires giving up some of that transparency. I don’t think one universal model will work equally well for individuals, businesses and regulators. Different use cases will probably require different solutions.