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Daily Active Address Ratio

Overview

The Daily Active Address Ratio measures the proportion of addresses that conducted transactions with a token on a given day relative to all addresses holding that token. This metric provides insights into holder engagement and token velocity.

Definition

The Daily Active Address Ratio is calculated using the following formula:

Daily Active Address Ratio = Number of Active Addresses / Total Addresses with Balance

Where:

  • Active Addresses: Addresses that have conducted at least one transaction (send or receive) involving the token within the 24-hour period
  • Total Addresses with Balance: All addresses holding a non-zero balance of the token (with balance_usd > 0) at the end of the 24-hour period

Interpretation

  • Higher Ratio (closer to 1): Indicates high daily token movement with a significant percentage of token holders actively transacting
  • Lower Ratio (closer to 0): Suggests lower trading activity with most holders maintaining their positions

Typical Ranges

  • 0.001 - 0.01: Common for established tokens with large holder bases
  • 0.01 - 0.05: Moderate activity level
  • > 0.05: High activity level, often seen in newer tokens or during significant market events

Applications

Market Analysis

  • Holder Behavior: Distinguish between "holding" and "trading" periods
  • Token Velocity: Gauge how frequently the token changes hands
  • Investment Patterns: Identify accumulation vs. distribution phases

Signal Generation

  • Sudden Increases: May indicate distribution events or profit-taking
  • Consistent Decline: Could signal stronger holding sentiment or reduced interest
  • Divergence from Price: Activity ratio decreasing while price increases may indicate accumulation by fewer, larger entities

Considerations

  • Excludes addresses with zero balances (dust addresses)
  • Exchange hot wallets count as single addresses despite representing multiple users
  • Activity ratio should be analyzed alongside trading volume for fuller context
  • The USD threshold for balance calculation (balance_usd > 0) filters out insignificant holdings

Parameters

This indicator uses the base parameters for time range and resolution settings.