What chain analysis does
Chain analysis is the practice of interpreting on-chain data. Public blockchains record every transaction permanently and openly, but raw chain data is just addresses and amounts. Chain analysis adds attribution (which addresses belong to known exchanges, mixers, sanctioned entities), clustering (which addresses likely belong to the same beneficial owner), and risk scoring (how exposed is this wallet to high-risk counterparties).
Leading vendors include Chainalysis, Elliptic, TRM Labs, Crystal Blockchain (Bitfury), and CipherTrace. Each maintains a proprietary attribution database covering millions of labelled addresses across Bitcoin, Ethereum, Solana, Tron, and dozens of other chains.
How operators use chain analysis
Four main use cases. First, KYT screening of every deposit and withdrawal in real time against the vendor’s risk database. Second, source-of-funds investigation for Enhanced Due Diligence on higher-risk customers (the operator can trace a deposit back through the chain and document its origin). Third, fraud and bonus-abuse investigation (chain analysis can cluster wallets that appear independent on the surface but share funding sources). Fourth, regulatory reporting (suspicious-activity reports to the relevant FIU often include chain analysis output as supporting evidence).
For operators that hold gambling licences in MGA, UKGC, or similar regimes, chain analytics output is normally a required component of the AML programme documentation.
Why chain analysis matters in B2B
For compliance teams, chain analysis is the foundational tool that makes crypto AML possible. Without it, operators are blind to where customer deposits originated. For investigators, it is the equivalent of bank-statement analysis for the on-chain world. For regulators, vendor-provided chain analysis is the language used for reporting and supervision. The category overlaps heavily with KYT but is broader: KYT is the real-time screening use case, where chain analysis as a whole covers investigation, attribution, and intelligence. Gamblers Connect references chain-analytics tooling across operators in the iHub directory.
Frequently asked questions about What Is Chain Analysis (Blockchain Analytics)?
KYT is a specific real-time screening use case within the broader chain analysis discipline. Chain analysis also covers investigation, attribution, source-of-funds tracing, and intelligence reporting. KYT is to chain analysis what transaction monitoring is to AML more broadly.
High for major exchanges, mixers, and sanctioned entities (where the addresses are well-documented). Lower for individual self-custody wallets, where attribution is heuristic. Operators set risk policy based on attribution confidence levels published by the vendor.
Partially. Mixers obscure the link between input and output addresses, but chain analysis vendors have published techniques for de-mixing certain mixer transactions through behavioural and timing analysis. Tornado Cash, the largest Ethereum mixer until it was sanctioned, has been partly de-mixed in published research.
Coverage depth (Chainalysis tends to lead on attribution breadth; Elliptic on regulatory tooling), chain coverage, API ergonomics, and price. Many large operators run both in parallel for redundancy and second-opinion checks on high-risk transactions.