Rich-List Case Study: Constellation #1

Rich-List Case Study: Constellation #1

Given the response to the first rich-list case study series that I published late last year on Stratis, I figured that it would be helpful to publish a new series to reiterate some of the key takeaways and see how results differ across different cryptocurrencies. For this series, I will be focusing my efforts on Constellation.

If, however, you are unfamiliar with rich-list analysis and the approach that I use, I suggest reading through the first series, as the entire process is outlined in the first instalment, which can be found here.

Still with me? Great. Let’s crack on with the first stage of rich-list analysis for Constellation:

As this is a new analysis, we must first have an overview of the top 20 richest addresses, printed below.

Top 20 Overview 25th Jan 2020

As readers of the first series will recall, the explorer used for Stratis was Chainz, which has a more comprehensive overview (and is generally more comprehensive as an explorer; as Constellation is an ERC-20 token, I have used Etherscan.

The first thing to notice is the concentration of supply, with over 50% of total supply owned by the top 2 addresses. Moreover, we can work out that the top 10 own 82.56% and the top 20 own 87.01% of the total supply. There are some caveats here regarding concentration but we shall come to those later. There are also 3 exchange-owned addresses, as can be observed by the Kucoin and Hotbit labels; as such, these will be excluded from our evaluations for the time being.

Secondly, unlike with Chainz, we do not see which addresses are inactive from the overview, so, having manually looked at each address, I found that there were 7 inactive addresses over the past 30 days; that is, 7 addresses with no transactions in the past month. This gives us 10 active addresses, as we have excluded the 3 exchange addresses for now.

Now, we must take a look at these individual active addresses to determine their transactional patterns. As I stated in the first rich-list case study series, we must keep meticulous notes (including screenshots), covering “the current date, address rank, the address balance on the date preceding the first transaction of the 30-day period, the current address balance and, finally, the net change in balance across the period”.

Given the above, here are the results for Constellation as of January 25th, 2020:

  • #1: Inactive
  • #2: Inactive
  • #3: N/A (Kucoin)
  • #4: Inactive
  • #5: -6,944,444 DAG
  • #6: Inactive
  • #7: N/A (Kucoin)
  • #8: -4,575.000 DAG
  • #9: Inactive
  • #10: +1 DAG
  • #11: -72,761,621 DAG
  • #12: Inactive
  • #13: +10,416,666 DAG
  • #14: +1,000,000 DAG
  • #15: N/A (Hotbit)
  • #16: -88,056 DAG
  • #17: Inactive
  • #18: -10,000 DAG
  • #19: +1,000,000 DAG
  • #20: -501,000 DAG

As we can see from the above results, we can see that the majority of the top 20 holders are either inactive or seemingly distributing at current prices. In fact, of the 10 addresses with meaningful balance changes, we can see that 6 have experienced net outflows and 4 have experienced net inflows over the given period. Further, the cumulative net change in balance of these addresses is -72,463,454 DAG over the past 30 days.

Now, on the surface, this appears quite bearish, as clearly the largest holders are reducing their positions in Constellation, right? Wrong. There are a couple of things that we have not yet accounted for, the most significant of which being that Constellation is currently in the process of an imminent token swap, with Kucoin accommodating this swap; hence, it is highly likely that many holders, large and small, may have transferred to Kucoin to avail themselves of a manual swap. Thus, we must look to the nature of the transactions in these individual addresses to determine whether they have indeed been transferring to Kucoin. We can ignore address #10, given that the net change was only +1 DAG. We must also look at the Kucoin addresses to corroborate our findings.

So, beginning with address #5, if we click on the transaction hash, we come to the page printed below. I won’t provide screenshots for every transaction I look at, but this will help clarify what we are looking for:

Outflow for #5

This provides us with a lot of information regarding the individual transaction; most importantly, we can clearly see where the DAG was sent. If you click through to the address that received the DAG, you’ll come to its address page:

Inflow from #5

Now, what we can see here is that the transaction away from address #5 was certainly not to a Kucoin address, as the balance remains within the receiving address and has not been transferred away. As such, it is highly probably that this was a genuine form of distribution. That said, the prior transaction away from this address was from 205 days ago for almost exactly the same amount; perhaps this is a private transfer? The lack of clarity here is common when deeply analysing a rich-list, but, for our purposes, this will count as distribution away from the top 20 addresses. One thing I did notice is that transfers into addresses held by Kucoin are then sent out to their primary cold wallet, labelled Kucoin 2, thus confirming that this was not a transaction into Kucoin.

Having done the above for all of the distributing addresses (#5, #8, #11, #16, #18 and #20), I found that all but addresses #16 and #20 appear to be genuine distribution, as opposed to transfers into Kucoin. Address #11 was the most interesting, as it had an inflow of 114mn DAG 224 days ago, and has since been periodically distributing, reducing its position to 28mn DAG as of today, with the bulk of reduction occurring 18 days ago, with 72mn DAG distributed via 10 transactions, mostly to differing addresses.

As such, we can recalculate our net cumulative balances changes within the top 20 to exclude these two addresses, giving us a figure of -71,874,398 DAG.

Finally, I also found that, over the past 30 days, ~270mn DAG had been transferred into Kucoin; over 25% of its circulating supply.

Given that we are conducting this rich-list case study in the midst of a token swap, I am loathe to draw any conclusions just yet, although the downtrend in price does appear to be corroborated by net distribution from larger holders over the past 30 days, as depicted in the price chart below:

DAG/BTC

DAGBTC

I will be publishing the second instalment to this series in a fortnight, after which I will make firmer assertions. For now, I hope this first instalment has been an enjoyable read.

As ever, if you have any questions, feel free to leave them below.

 


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