What Is Entity-Adjusted Metrics?
Entity-adjusted metrics use clustering algorithms to identify groups of addresses that belong to the same entity (person, company, or exchange). This prevents double-counting when coins move between wallets owned by the same party. For example, a company moving coins between its own wallets would inflate raw transaction volume but should not be counted as economic activity.
How Entity-Adjusted Metrics Works
Clustering works through common-input-ownership heuristics (addresses that appear as inputs in the same transaction are likely owned by the same entity), known address tagging (exchange hot/cold wallets), and behavioral analysis (transaction patterns characteristic of automated treasury management). The result is a more accurate picture of genuine economic activity on the network.
Why It Matters for Traders
Entity-adjusted metrics are essential for accurate on-chain analysis. Raw on-chain data is inflated by internal transfers, change outputs, and consolidation transactions. Entity adjustment strips away this noise, revealing true economic activity: genuine transfers between different participants, real accumulation or distribution patterns, and accurate active user counts. Always prefer entity-adjusted versions when available.
