Whale Analysis Report – NFT Perspective

We aim to analyze and draw some existing patterns based on the behavior of whales in six different NFT collections

The following document belongs to a new series of reports that intend to analyze on-chain metrics, in this case, Whale Patterns. The report analyzes some of the most important NFT collections and intends to draw some patterns in the behaviors incurred by their whale wallets.

N.B. A cryptocurrency whale is a term that refers to individuals or entities that hold large amounts of crypto. Whale movement is a simple signal that can have a huge effect on the price of a cryptocurrency depending on the size, magnitude, source, and destination of the transaction.

The blockchain industry is ever-evolving. Last summer we saw the DeFi mania reaching thousands of users with billions in TVL being locked in different dapps across several protocols. This year we have seen the rise of NFTs in different contexts and protocols generating volumes that were unthinkable a few months ago. 

Due to the increased importance of NFTs in the industry, we decided to dive deep into one of the most important on-chain indicators for this space, the whale concentration index, or in simple terms, how diluted or concentrated a given collection is. 

In this report, we aim to analyze and draw some existing patterns based on the behavior of whales in six collections: CryptoPunks, Bored Ape Yacht Club (BAYC), Art Blocks, Axie Infinity, Cool Cats NFT, and PudgyPenguins. First, we briefly discuss what exactly whales are and how they may affect the NFT market. Then we look up at a couple of tools that come in handy when performing whale analysis. Afterward, we introduce the Whales Concentration Index, an on-chain metric to evaluate a project’s distribution, and finally, we analyze the whale’s behavior for the aforementioned projects.

Table of Contents

Key Findings

• Whale analysis is a key on-chain metric to understanding potential market manipulations.
• Pudgy Penguins and BAYC are among the best-distributed collections in the NFT space, their Whale Concentration Index is around 6.24% and 6.70% respectively. 
• CryptoPunks have a high Whale Concentration Index with 1,410 Punks owned by 10 wallets (14.10%), yet due to the collection’s massive market cap ($3.1 billion), it is less prone to be manipulated.
• BAYC looks like the healthiest collection in terms of market manipulation, thanks to a low Whale Concentration Index (6.70%) and an impressive market cap ($1.1 billion).
• Art Blocks whales have important holdings in CryptoPunks and Meebits collectively owning 211 and 414 pieces respectively; Pudgy Penguins appear to be liked by these whales as 202 Penguins are also owned by Art Block whales.
• Axie whales are mostly focused on gaming NFTs, only two whales have diversified NFT collectibles portfolios.
• BAYC whales and Cool Cats whales tend to have diversified NFT strategies; BAYC whales own 418 Art Blocks collectively whilst Cool Cats whales have at least three pieces of the collections in scope including 81 CryptoPunks.
• CryptoPunks are heavily focused on Larva Labs collections as the whales do not own anything else besides Art Blocks (427)  Punks (1,410)  and Meebits (1,329).
• CryptoPunk whales have the most valuable portfolios on average ($53.6 million) followed by BAYC and Art Blocks in a second-tier (around $11.5 million).

Whale Analysis 101

When analyzing the blockchain industry, there is no shortage of options that can help us get a better grasp on the current state of the industry. A comprehensive technical analysis is key to understanding the market for cryptocurrencies. Whereas to thrive on NFTs and DeFi, it is of uttermost importance to complement it with on-chain analysis. 

One of the most helpful on-chain patterns is looking at the behavior incurred by whales. Whales in the blockchain industry can refer to whale transactions or whale wallets. Whale transactions are those operations that entail a significant monetary value (any amount that may shift the entire market sentiment for a given token) and are often used as cryptocurrencies indicators. Whale wallets on the other hand refer to those addresses that own the largest piece shares of a certain collection. For the scope of this report, we refer to collection whales as the top 10 holders for any collection.

Analyzing the token holder distribution is important to understand whether the supply of a given token is equally distributed or most of its supply is in the hands of a few wallets. Heavy concentrations in a few wallets are not healthy for any token or dapp.  Big concentration in a few wallets may lead towards a potential sell-off that would detriment the value of any asset. On the other hand, a more diluted supply into more wallets entail a lower risk of sell pressure. In this case, it is less probable that different owners agree on the exact time to sell an asset in standard conditions. 

Another method that can be applied to blockchain analysis is social trading. In traditional markets, social trading is an investment strategy that allows individuals to mimic the trading behaviors of their peers.  In crypto, mimicking a whale may lead to under-the-radar coins with a huge upside. That same mindset can be applied to NFTs. it is interesting to observe which collections are garnering the most interest from whales in other collections. 

In public blockchains like Ethereum, successfully recorded transactions can be easily accessed through a block explorer. This means that all the data in each block that has been mined can be publicly accessed with the help of some tools. For instance, Etherscan, the de facto block explorer to monitor and analyze transactions happening on the Ethereum blockchain. Etherscan comes very much in handy to perform whale analysis. The tool shows a default option to see the holder distribution for most ERC 20 AND ERC721 tokens. 

To add another intelligence layer to the current analysis, we used our own DappRadar’s Portfolio tracking tool. This product allows users to identify the NFT (and DeFi) holdings associated with a certain wallet, and thus, become a benchmark unit to some extent.

The DappRadar portfolio tool allows visibility in numerous collections. As previously mentioned, mimicking certain whale holdings can be recognized as another investment strategy.  For instance, dingaling.eth, one of BAYC whales, has a very diversified portfolio. This person owns at least two pieces in the most recognized Ethereum NFT collections and is particularly well-positioned in Art Blocks and Cool Cats besides BAYC and Bored Ape Kennel Club (BAKC). Moreover, it is also interesting to see the significant holdings in metaverses like The Sandbox and Voxo Dexus. 

With the aid of tools like Etherscan and DappRadar’s Portfolio Tracker, it is relatively easy to perform an enhanced on-chain and benchmark analysis on the wallets that are relevant for certain scenarios.

Whale Concentration Index

The Whale Concentration Index (WCI) and the (unique) holders ratio are two important metrics associated with the overall distribution of an NFT project. These two metrics have a strong negative correlation and are especially important to evaluate limited edition collections. 

The WCI indicates the number of pieces that are owned by the top 10 wallets for a given collection. On the other hand, the holder’s ratio measures the reach of an NFT project. It is calculated by dividing the number of unique holders by the collection size. A high holders ratio and a low WCI signal a well-distributed project that is less prone to market manipulation, thus it is more resistant to selling pressure.    

For instance, CryptoPunks, a collection of 10,000 unique pieces. At the time of this writing, 2,931 unique Punk owners represented a 29.31% holders ratio. When analyzing Punk whales, the top 10 Punk holders collectively own 1,410 pieces, or a 14.1% WCI. In the case of established collections like CryptoPunks, distribution loses relevance as their market cap is massive (over $3 billion at the time of this writing).

In comparison, BAYC is one of the best-distributed projects in the whole NFT space. BAYC currently has a whale concentration of 6.7%; i.e. the whales only control 670 pieces out of the 10,000 apes. When factoring in BAYC’s market cap (around $1.1 billion), the collection seems to be one of the most stable projects from the market manipulation perspective. No coincidence that BAYC’s floor price is already 25 Ξ. 

In perspective, the WCI is an important metric to analyze NFT collections, especially when the project’s market cap is not high. Considering a collection size of 10,000 with a 0.08 E mint price, the collection’s market cap is $2.4 million approximately at the time of its launch and is more susceptible to big market movements which are strongly correlated to whales. 

Comparing NFT Collections – Whale Perspective

As previously mentioned, another advantage when analyzing whale wallets is finding out patterns and behaviors that are common for certain whale collectors. Using DappRadar’s portfolio tracking tool, we analyze the whales for the collections in scope with interesting results. 

Looking into Art Blocks whales, we observe an evident interest in the Larva Labs collections: CryptoPunks and Meebits. Collectively, Art Blocks whales own 211 CryptoPunks and 414 Meebits. On average, Art Blocks whales portfolios are worth $11.7 million making them one of the wealthiest whale groups in the space. It is also worth noting that Art Blocks owners appear to be also interested in the Pudgy Penguins as 202 Penguins are collectively owned by these whales.

CryptoPunks whales are the less diversified group. These wallets do not own anything that does not belong to Larva Labs. Whilst it may be considered a risky strategy, it certainly pays off when investing in the right projects. CryptoPunk whales are worth $53.66 million on average. A massive gap from the rest.

In contrast to Larva Labs whales, BAYC whales appear to have a very diversified NFT investment strategy. A clear signal is the low Whale Concentration Index of 6.7%. Besides BAYC and Bored Apes Kennel Club, Bored Ape whales have significant holdings in Art Blocks and Meebits respectively. Also, 40% of BAYC whales have at least one CryptoPunk in their collection. BAYC whales portfolio is worth $11.4 million on average positioning them as one of the wealthiest whale groups as well.

A project that appears to have a similar strategy but to a lesser extent is Cool Cats. This collection has quietly been established amongst the most important NFT collections and their distribution metrics point in the right direction. A 0.425 holders ratio implies a well-distributed collection supported by a WCI of 12.74%. 

Cool Cat whales are also engaged with Art Blocks. 252 Art Block pieces are owned by these whales with 185 coming from a single wallet. This wallet also owns 79 Punks and 60 Meebits driving the whales’ worth upwards to reach $3.15 million on average. We also find out that Cool Cats whales are also well positioned in other collections like CyberKongz, SupDucks, and Wicked Craniums. 

Finally, we look out at the Axie Infinity collection. Identifying whales for this collection is not an easy task. Axie Infinity currently has more than one million active players, which takes the Axie population to 3 million Axies. To this number, we need to add around 240,000 Axies that are being sold in Axie’s marketplace. Nonetheless, we identified significant Axie holders that hold 27,200 Axies collectively. Due to its play-to-earn nature, Axie Infinity is well distributed and whales do not follow a diversification strategy. Axie’s whale’s worth is estimated to be over $1 million. 

Whale Trading Behavior Patterns

A deep dive into the whale wallets allows users to draw certain patterns that can be a starting point to build a social trading strategy applied to NFTs. For this section, we perform an analysis based on the trading behaviors during the last 30 days. Same as with the previous analyses, the whale social trading was performed using the aforementioned tools. 

Analyzing the BAYC whales, we can assume that they have taken advantage of the collection’s rising floor price as they have sold some of their pieces recently. A total of 23 BAYC and 18 BAKC were sold collectively by this group in the last 30 days.  Although the WCI didn’t suffer an important change, it helps the BAYC collection become even more distributed. Complementing this behavior, we also observe that some of the BAYC whales keep on their diversification strategy. It stands out that 309 PunksComic’s DAO tokens were acquired, as well as a good amount of pieces from other collections like FLUF, StonerCats, SupDucks, and Cool Cats as well. One of the whales also decided to strengthen its BAYC position by purchasing an additional 101 BAYC pieces. 

In contrast, CryptoPunks owners were relatively quiet. No CryptoPunks or Art Blocks were sold or acquired by these whales, whilst only selling around 40 Meebits. Nonetheless, CryptoPunks whales add several pieces from different collections with Art Blocks, Audioglyphs, CyberKongz, and Generative Masks standing out.

Finally, it is also interesting to observe that Art Blocks whales appear to have increased their numbers in this collection. The collection’s WCI increased by almost 2%. Collectively, Art Blocks owners bought 2,700 Art Blocks pieces whilst selling 1,100 of them. 

It is clear that some collections are now perceived as safe assets for storing and gaining value, as is the case of Art Blocks and CryptoPunks where their whales did not reduce their current holdings, but they increased them (in the case of Art Blocks). And as the space gets more crowded by the day, it is worth monitoring those collections that are being recently sought out by whales. Such is the case for dapps like PunksComics, CyberKongz VX, and World of Women among others. 

In Summary

Whale analysis is an on-chain technique used to thoroughly examine the supply distribution for NFT projects. It can be enhanced by diving deep into further details by using the proper tools like Etherscan and DappRadar’s Portfolio page. Furthermore, learning about applicable metrics like the Whale Concentration Index and the unique holder ratio helps strengthen the analytical context. Investing in NFTs is certainly a challenge, so learning about proper assessment tools and techniques will probably come in handy at some point.

In regards to the six collections analyzed, there is no concern about market manipulation. Those collections that may lean towards a more concentrated supply like the Larva Labs projects are already established as premier NFT collections hence the risk is significantly reduced. 

On the other hand, a newer collection like the Pudgy Penguins may be at a higher manipulation risk, although their concentration metrics show a very well distributed project despite their recent launch. Going forward, Collections like Pudgy Penguins can be used as a benchmark for the newest NFT projects in terms of demand and concentration. 

In respect to the diversification strategy, we note that BAYC and Cool Cats whales have a diversified portfolio strategy whereas Larva Lab’s whales are quite loyal to the brand. The diversified portfolios include all of the collections reviewed within this report as well as other newer collections like CyberKongz VX and SupDucks. 

Finally, by analyzing the trading behavior for these whales during the last 30 days, we could identify certain patterns. First, collections like the BAYC and Art Blocks whose average price increased significantly as of late, are being used as a way to obtain profits. Whilst Art Block whales prefer to re-invest in their preferred collection, BAYC whales are looking to discover the new NFT gem by diversifying their holdings. 

Also, it is encouraging for the whole NFT space, that some of these whales are still seeking out the next big project. We saw new collections like FLUF, CyberKongz, Animetas, and World of Women to name a few, amongst projects that have already become significant enough to appear on the whale’s radar as potential opportunities. 

Whether by knowing the collection’s high-level metrics like the WCI, or preferably, by doing a more thorough analysis, it is recommended to gain as much understanding as possible when investing in an NFT collection.

About DappRadar 

We want to make exploring, tracking & managing dapps, insightful, convenient, and rewarding for all. We started in 2018, bringing high-quality, accurate insights on decentralized applications to a global audience and rapidly became the go-to, trusted industry source. Today, we’re the starting point for dapp discovery – hosting more than 6000 dapps from over 20 protocols – offer comprehensive NFT valuation & portfolio management and lead the way in data-led, actionable industry reporting.

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The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in ETH, BTC, ADA, MATIC, SOL, AVAX, DOT, KSM, XTZ, LUNA, UNI, SUSHI, xSUSHI, ORN, AKRO, KNCL, EGLD, BAT, CRO, SHIB, LINK, BAND, BNB, CAKE, OOE, DNXC, DPET, TVK, POLS, POLK, RAMP, XED, AXS, SPS and owns collections like NBA Top Shot, CyberKongz VX, Ghxsts, Cool Cats, RSoP, SupDucks, Legendz, Punks Comic, Pixel Vault DAO, Avastars, Dogs Unchained, VeVe NFTs, and 1/1 art pieces.