Dune Analytics serves as a blockchain data visualization platform that transforms raw on-chain data into comprehensible metrics and charts. Unlike traditional financial analysis that relies on company-reported data, Dune provides direct access to blockchain transactions, smart contract interactions, and token movements. This transparency eliminates information asymmetry and provides real-time insights into project performance.

The platform's strength lies in its ability to track multiple data points simultaneously, from basic metrics like token supply and holder counts to complex behavioral patterns such as whale activity and ecosystem interactions. For token due diligence, this means investigators can build a complete picture of a project's health, adoption, and sustainability.

Token holder analysis

The foundation of token due diligence begins with understanding the holder base. Examine the total number of unique wallets holding the token and track this metric over time. A healthy project typically shows steady growth in holder count, indicating increasing adoption and interest. However, sudden spikes or drops warrant closer investigation, as they may indicate market manipulation or significant events affecting the project.

Consider a DeFi token that shows holder count growth from 1,000 to 15,000 over six months—this suggests organic growth. However, if 5,000 new holders appeared in a single week without corresponding marketing activities or product launches, this could indicate artificial inflation through airdrop farming or bot activity.

Wallet distribution analysis reveals concentration risk. Examine the percentage of tokens held by the top 10, 50, and 100 wallets. High concentration in few wallets creates vulnerability to market manipulation and sudden price movements. A well-distributed token might have the top 10 holders controlling less than 20% of supply, while concerning projects might show 50% or more concentration.

Transaction volume and activity patterns

Monitor daily and weekly transaction volumes to gauge genuine usage versus speculative trading. Consistent transaction activity suggests real utility, while sporadic volume spikes followed by periods of dormancy may indicate pump-and-dump schemes or limited actual use cases.

Analyze transaction types to understand how the token is being used. For a governance token, you should see voting transactions alongside transfers. For utility tokens, look for interactions with the project's smart contracts that demonstrate actual platform usage rather than mere speculation.

Liquidity pool analysis

For tokens traded on decentralized exchanges, examine liquidity pool metrics. Track the amount of tokens locked in liquidity pools, the ratio between the token and paired assets, and changes in liquidity over time. Declining liquidity often precedes price volatility and may indicate reduced confidence from liquidity providers.

When a token's main liquidity pool shows steady outflows over several weeks, this pattern might suggest that liquidity providers are losing confidence or finding better opportunities elsewhere, potentially leading to increased price slippage and reduced trading efficiency.

Smart contract interaction monitoring

Examine how users interact with the project's smart contracts. For DeFi protocols, track deposits, withdrawals, and yield farming activities. For NFT projects, monitor minting, trading, and staking behaviors. These interactions provide insights into genuine platform adoption beyond simple token trading.

Review contract interaction frequency and patterns. A healthy DeFi protocol should show regular deposit and withdrawal activity, while concerning patterns might include large numbers of deposits followed by immediate withdrawals, suggesting users are extracting value without long-term commitment.

Cross-platform activity analysis

Many tokens exist across multiple blockchains or integrate with various protocols. Use Dune to track cross-chain bridge activity, multi-protocol interactions, and ecosystem participation. This broader view reveals the token's role in the larger DeFi landscape and its interconnectedness with other projects.

Whale activity tracking

Monitor large wallet movements and their impact on token distribution and market dynamics. Identify wallets holding significant percentages of the token supply and track their activity patterns. Sudden movements by whale wallets often precede significant price changes and may indicate insider knowledge or strategic positioning.

Create alerts for unusual activity by top holders, such as large transfers to exchanges (potentially indicating selling pressure) or accumulation patterns that might suggest confidence in the project's future.

Identifying warning signs

Several patterns in Dune data should raise immediate concerns during due diligence. Rapid increases in holder count without corresponding increases in transaction volume may indicate sybil attacks or artificial inflation of user metrics. Similarly, high transaction volumes concentrated in short time periods, especially if originating from a small number of wallets, suggest coordinated manipulation.

Be particularly cautious of tokens showing declining activity across multiple metrics simultaneously. If holder count, transaction volume, and smart contract interactions are all decreasing, the project may be losing genuine user interest and heading toward obsolescence.

Projects with extremely high token concentration in a few wallets present significant risks. Even if the project appears legitimate, concentrated ownership creates vulnerability to sudden market manipulation and reduces the token's decentralization benefits.

Comparative analysis framework

Effective due diligence requires comparing target tokens against similar projects and industry benchmarks. Use Dune to analyze comparable tokens in the same sector, examining relative performance across key metrics like adoption rates, transaction volumes, and holder growth.

When evaluating a new DeFi lending protocol, compare its metrics against established platforms like Aave or Compound. Look at metrics such as total value locked growth rates, user acquisition costs implied by transaction patterns, and retention rates based on repeat user activity.

Long-term monitoring approach

Token due diligence is not a one-time activity but an ongoing process. Establish regular monitoring schedules using Dune's dashboard capabilities to track key metrics over time. Pay particular attention to seasonal patterns, correlation with broader market movements, and the project's ability to maintain growth during market downturns.

Create custom dashboards that combine multiple relevant metrics for quick health checks. Include both absolute numbers and relative performance indicators to maintain perspective on the token's position within its sector and the broader cryptocurrency market.

Integration with fundamental analysis

While Dune provides excellent on-chain data, combine this analysis with traditional fundamental research. Cross-reference on-chain metrics with project roadmaps, team activities, partnership announcements, and development progress. Discrepancies between promised developments and actual on-chain activity often reveal important insights about project execution capabilities.

Use Dune data to verify claims made in whitepapers or marketing materials. If a project claims rapid user growth, the on-chain data should support these assertions through increased holder counts, transaction volumes, and smart contract interactions.

Conducting thorough token due diligence with Dune Analytics requires systematic analysis of multiple data points combined with critical thinking about market dynamics and project fundamentals. The platform's transparency provides unprecedented access to real-time, verifiable information that forms the foundation of informed investment decisions.

Success in token due diligence comes from developing expertise in interpreting on-chain data patterns, understanding the implications of various metrics, and maintaining awareness of both opportunities and risks revealed through comprehensive analysis. Regular monitoring and comparative analysis ensure that investment decisions remain based on current, accurate information rather than outdated assumptions or marketing claims.

Frequently asked questions

What proportion of the token supply do whales control?

When analyzing whale control, examine the percentage of tokens held by the top 10, 50, and 100 wallets to identify concentration risk. A healthy token distribution typically shows the top 10 holders controlling less than 20% of the total supply, while concerning projects might show 50% or more concentration in few wallets. High whale concentration creates vulnerability to market manipulation and sudden price movements, as these large holders can significantly impact the market with their trading decisions. Monitor whale wallet movements and create alerts for unusual activity, such as large transfers to exchanges which may indicate selling pressure.

How to do good due diligence for crypto coins?

Effective crypto due diligence requires analyzing multiple on-chain metrics systematically. Start with token holder analysis by examining the total number of unique wallets and tracking growth patterns over time. Monitor transaction volume and activity patterns to distinguish between genuine usage and speculative trading. Analyze liquidity pool metrics for DEX-traded tokens, tracking locked amounts and liquidity changes. Examine smart contract interactions to gauge real platform adoption, and monitor cross-platform activity to understand the token's role in the broader DeFi ecosystem. Look for red flags like artificial holder inflation, declining activity across metrics, or extreme token concentration. Always combine on-chain analysis with fundamental research about the project's team, roadmap, and development progress.

How to use Dune for crypto?

Dune Analytics transforms raw blockchain data into comprehensible metrics and charts for crypto analysis. Use the platform to track token holder counts, wallet distribution, transaction volumes, and smart contract interactions in real-time. Create custom dashboards combining multiple relevant metrics for quick health checks of projects you're monitoring. Set up alerts for unusual whale activity or significant changes in key metrics. Compare target tokens against similar projects using Dune's data to establish industry benchmarks. The platform's strength lies in tracking multiple data points simultaneously, from basic metrics like token supply to complex behavioral patterns, providing a complete picture of a project's health and adoption.

Does Dune have a token?

Yes, Dune Analytics has its own token called DUNE. The token was launched as part of the platform's decentralization efforts and serves various utility functions within the Dune ecosystem. DUNE tokens can be used for governance participation, allowing holders to vote on platform proposals and development directions. The token also provides access to premium features and may be used for incentivizing data analysts and dashboard creators who contribute valuable insights to the platform.

Does Dune Analytics use SQL?

Yes, Dune Analytics uses SQL (Structured Query Language) as its primary interface for querying blockchain data. Users can write SQL queries to extract and analyze on-chain data from various blockchains. The platform provides a SQL editor where analysts can create custom queries to investigate specific metrics, transaction patterns, or smart contract interactions. This SQL-based approach makes Dune particularly powerful for users with database querying experience, as they can create sophisticated analyses beyond the standard dashboard offerings. The platform also features a library of community-created SQL queries that users can fork and modify for their own analysis needs.

What is the token's price, circulating supply, and market capitalization?

These fundamental metrics provide essential baseline information for any token analysis. Price represents the current market value per token, while circulating supply indicates how many tokens are actively available for trading (excluding locked, burned, or reserved tokens). Market capitalization is calculated by multiplying price by circulating supply, giving you the total market value of all tradeable tokens. When conducting due diligence, track how these metrics change over time and compare them to similar projects. Be aware that circulating supply can change due to token burns, new emissions, or unlocking of previously locked tokens. Always verify these numbers across multiple sources and understand the token's emission schedule to anticipate future supply changes.