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On-Chain Concepts

This section provides a brief overview of the core concepts that underpin many of the metrics you'll find on the Blocklens platform.

Long-Term vs. Short-Term Holders (LTH vs. STH)​

One of the most powerful heuristics in on-chain analysis is to segment the market into two dominant cohorts: Long-Term Holders (LTH) and Short-Term Holders (STH). This distinction is based on the lifespan of a coin, but instead of a sharp cutoff, we use a more nuanced approach to accurately reflect market dynamics.

To achieve a smoother and more realistic transition between these two cohorts, we apply an averaging technique. The amount of supply held by each cohort is weighted based on the age (calculated in days) of the coins, using a logistic function (S-curve). This method avoids sudden shifts in cohort size that can be caused by a single, arbitrary age threshold.

The Weighting Formula​

The weight assigned to the Long-Term Holder (LTH) cohort for a coin of a certain age is calculated using the following logistic function:

WLTH(age)=11+e−0.1×(age−155)W_{LTH}(age) = \frac{1}{1 + e^{-0.1 \times (age - 155)}}

Where:

  • age is the age of the coin in days.
  • 155 is the midpoint of the transition, where a coin is equally likely to be considered LTH or STH (with a weight of 0.5 for each).
  • -0.1 is the steepness parameter, which controls the width of the transition window.

Note: For practical application, weight values are mathematically rounded to four decimal places. For coins with an age below 100 days, the LTH weight is set to 0. For coins with an age above 210 days, the LTH weight is set to 1.

Based on this, we can define our cohorts:

  • Short-Term Holders (STH): These are coins that have been moved on-chain more recently. Their contribution to the STH supply is weighted based on their age. The STH weight is calculated as 1 - LTH Weight. This cohort is more likely to be price-sensitive and represents the more speculative, "hot" money in the market.
  • Long-Term Holders (LTH): These are coins that have not been moved on-chain for a longer period. Their contribution to the LTH supply is weighted according to the formula above. This cohort is generally considered to be the "smart money" or HODLers, who are less likely to sell based on short-term price volatility.

By tracking the flow of coins between these two groups, we can gain powerful insights into market sentiment, accumulation/distribution patterns, and the formation of market tops and bottoms.

Realized Capitalization (Realized Cap)​

While Market Capitalization (Market Cap) is calculated by Price * Circulating Supply, Realized Capitalization provides a different, often more fundamental, view of a network's value.

Realized Cap values each coin in the supply at the price it was last moved on-chain. This effectively represents the cost basis of all holders in the network. It filters out the impact of lost coins and provides a more stable and fundamental measure of the network's stored value.