Chainalysis Storyline to Offer “Transparency” and “Clarity” for Web3

The blowup of FTX and resulting market tumult has many in cryptocurrency citing the importance of “a core, original tenet of blockchain technology: transparency,” according to an update from Chainalysis.

Chainalysis claims that “no other sector of the crypto ecosystem “embodies transparency more than DeFi, where all transactions are visible and the code behind protocols is in the open for all to see.”

Chainalysis has “developed Storyline to make that inherent transparency more accessible to web3 businesses, financial institutions, and government agencies, and promote the safety and security of the ecosystem.”

With Storyline, organizations are able “to understand, investigate and communicate the complex stories that are web3 transactions.”

As noted in a blog post, the web3 transformation is “well underway.” DeFi transaction volume grew “over 10x from 2020 to 2021, reaching $5.8 trillion.”

While total transaction volume “appears set to fall this year given the bear market, DeFi has driven nearly $3.7 trillion in transaction volume in 2022 — more than half of all on-chain volume.” DeFi’s growth is also “reflected in the composition of total transaction volume by currency type.”

Bitcoin, which once dominated the cryptocurrency markets, “is now only just over 10% of all crypto transactions.”

The decline of bitcoin transaction volume domination “is because of the rise of blockchains designed for decentralized computation.” As DeFi grew, it changed “how business and customers interacted with crypto.”

Bitcoin tends “to be used as a currency and savings instrument, whereas Ethereum and other DeFi protocols—smart contract systems—are used in a variety of ways, including dapps which provide services such as borrowing, lending, trading, gaming, and collectibles (NFTs).”

Some businesses “have already embraced this revolution and others are still looking for ways to unlock the revenue potential.” But, both have ‘the same need to manage risk, protect their customers, and investigate DeFi transactions.”

Over the course of 2021, DeFi protocols “became the go-to target for hackers looking to steal cryptocurrency as criminals began to use the complexity of smart contracts to disguise their activities.”

2022 is on track “to become the biggest year ever for hacking activity, with most funds being stolen from DeFi protocols.” In October 2022 alone, hackers “stole over $700 million across 11 separate DeFi hacks.”

As DeFi has exploded, so too has “the need for solutions to manage its risk, prevent illicit activity, and investigate complex transactions.”

Chainalysis added:

“We heard from our customers that they don’t have the right tools to review, analyze, and investigate complex smart contract transactions, making it difficult to participate in DeFi while also protecting their business and customers. It’s clear that new solutions are needed to safely participate in the web3 revolution.”

Enter Storyline, the first blockchain analysis solution “to specifically target this fast growing segment of cryptocurrency.”

Customers can “address the complex nature of DeFi and create clarity and transparency by using Storyline to trace and review all types of smart contract interactions, from simple NFT transfers and DEX swaps to cross-chain bridge transactions and much more. Visualizations are simplified.”

Instead of traditional cluster graphs, where DeFi transactions “can be complicated to parse, Storyline uses a novel timeline view that shows the movement of funds between addresses where users can look forwards, backwards and across chains to discover what is happening with one or several transactions.”

Chainalysis added that they “identified and built new, unique functions that unpack the complexity of DeFi.”

With Storyline, users can:

  • Create clear temporal visualization to help tell the story and analyze the flow of funds easily—for NFTs, native tokens, ERC-20 tokens and across chains
  • Receive automated interpretation of transactions, making common transactions easy to understand and highlighting risky behavior
    Add paired transactions for cross-chain swap and bridges in one simple action
  • Generate simplified views of transaction outcomes, making it easier to understand smart contracts by examining balance changes
  • Hone in on what’s important using powerful filters that sort through cross-chain data to identify unusual or unexpected behaviors

For more details, click here.

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