Business

The new Chainalysis tool tracks stolen cryptos across multiple chains

blank

Blockchain analytics firm Chainalysis has released a new tool for tracking transactions across decentralized finance protocols and multiple blockchains.

Chainalysis has launched a beta version of its storyline Software on May 18th. Touted as a “Web3-native blockchain analysis tool,” Storyline aims to track and visualize smart contract transactions with a focus on non-fungible tokens (NFTs) and DeFi platforms. This is consistent with the growing popularity and adoption of NFTs and DeFi in the cryptocurrency space over the past year.

Chainalysis provides blockchain analysis and annual reports on cryptocurrency crime trends and other analysis. The ever-changing landscape has seen DeFi and NFTs become important cogs in the ecosystem, with Chainalysis estimating that the two sectors account for more than half of global cryptocurrency transactions.

An unfortunate downside to this development is the increasing number of cryptocurrency-based crimes that take advantage of the industry-changing protocols. In 2021, the DeFi protocols processed an increasing amount of value from illicit addresses, while hackers also started targeting these platforms to exploit and steal funds.

The amount should not be underestimated either, as Chainalysis estimates that DeFi protocols account for 97% of the $1.68 billion cryptocurrency stolen in 2022. The company also noted that a majority of DeFi hacks over the past year have been carried out by North Korean hacking groups.

Related: Chainalysis Announces $170M Funding Round, $8.6B Platform

The challenge for cryptocurrency exchanges, DeFi protocols and investigators is to trace illegal transactions through DeFi protocols. The nature of these platforms is complex, as automated smart contracts create complex transactions, often across multiple blockchains.

A key feature of DeFi protocols is the ability to “chain hop”, which allows users to exchange or move cryptocurrencies in a single transaction. The process of buying an NFT also involves a number of moving parts, including various smart contracts in various marketplaces.

Storyline allows users to build their own “story” of a transaction path, starting with a transaction hash. From there, a timeline of notable token transactions and interactions can be constructed.

An automated feature allows the software to interpret smart contracts and flag common transaction types such as NFT acquisitions or token swaps. Users can add related transactions and relevant addresses across blockchains, which can help monitor specific addresses, tokens, and transactions.