Key Points
- On chain metrics in crypto are public blockchain data points that help you test whether an altcoin is being used, and how resilient the network is.
- Activity metrics track adoption signals like active addresses, transactions, fees, and stablecoin supply.
- TVL meaning in crypto matters because it helps measure how much capital is committed to a chain or protocol, but it is not the same as volume.
- Security metrics focus on validator set quality, decentralisation signals, bridges, upgrade controls, and past incidents.
- The goal is not to collect numbers, it is to confirm whether the narrative matches real behaviour.
- For Bitcoin specific on chain indicators, use the Bitcoin on chain hub for beginners instead.
- If any terms feel unfamiliar, keep the Crypto Glossary open while you read.
Quick Answer
On chain metrics are blockchain based measurements you can use to evaluate an altcoin project. Start with activity signals (active addresses, transactions, fees, stablecoin supply, DEX volume), then check security signals (validator set, decentralisation, bridge risk, upgrade controls, audits). Strong projects leave clear on chain footprints. Weak projects rely on headlines and vibes.
Where This Lesson Fits
Lesson 6 taught you how to verify partnerships and backers. Lesson 7 adds a different kind of verification, public blockchain data that helps you judge activity and security with evidence.
This lesson is part of the Fundamental Analysis for Beginners series. For the full lesson map and all supporting guides, visit the Fundamental Analysis hub.
What Are On Chain Metrics In Crypto?
On chain metrics are measurements built from blockchain data. Because blockchains are public ledgers, you can observe activity directly instead of relying only on narratives.
In altcoin research, on chain metrics help answer questions like:
- Are people actually using the chain or app?
- Is usage growing, flat, or purely speculative?
- Is capital sticking around or just passing through?
- Does the network have security and decentralisation properties that match the marketing?
Two Categories That Matter Most
Activity Metrics
These help you measure adoption and demand signals, even when price is noisy.
Common activity metrics include:
- Active addresses
- Transactions
- Fees paid
- Stablecoin supply on the chain
- DEX volume and perps volume
- Bridge inflows and outflows
- TVL for DeFi heavy ecosystems
Security Metrics
These help you judge how resilient the network and its critical components are.
Common security metrics include:
- Validator count and stake concentration
- Governance and upgrade controls
- Bridge design and past incidents
- Audit coverage and bug bounty posture
- For Layer 2s, sequencer and upgrade key risks
Activity Metrics That Actually Help
Active Addresses And Transactions
These are useful, but they need context. A chain can show high transaction counts for reasons that do not translate into meaningful adoption.
Use these as directional signals, then cross check with fees, stablecoin supply, and volume.
Fees Paid
Fees are one of the cleanest reality checks because they represent paid usage. If activity is real, someone is usually paying for blockspace.
Low fees can be good for user experience, but if fees are near zero, you should ask whether usage is sticky or just noise.
Stablecoin Supply On A Chain
Stablecoin supply can act like a liquidity and activity proxy. If stablecoins are rising on a chain that also shows growing transactions and DEX volume, it often aligns with genuine usage.
TVL Meaning In Crypto
TVL means total value locked. It measures the value of assets deposited into DeFi protocols or locked in smart contracts. It can indicate how much capital is committed to an ecosystem.
TVL is most useful when you pair it with other metrics:
- TVL plus rising fees can suggest growing economic activity
- TVL plus falling active addresses can suggest capital concentration
- TVL plus surging volume can suggest high velocity trading
TVL Vs Volume In Crypto
TVL and volume measure different things:
- TVL is capital committed
- Volume is trading activity over a period
High volume with low TVL can happen during speculative bursts. High TVL with low volume can happen when capital is parked in lending, staking, or liquidity positions with low turnover.
Worked Example: Solana Versus Arbitrum, Same Market, Different Footprints
Here is a simple way to make on chain metrics feel real.
As of 8 January 2026, DefiLlama shows:
Solana (24h snapshot)
- Active addresses: about 2.22 million
- Transactions: about 67.35 million
- Chain fees: about $816,836
- DEX volume (24h): about $5.77 billion
Arbitrum (24h snapshot)
- Active addresses: about 179,752
- Transactions: about 3.05 million
- Chain fees: about $15,905
- DEX volume (24h): about $646.69 million
What this teaches:
- Different chains can have very different activity profiles and still be relevant
- Raw transaction count does not automatically mean higher quality adoption
- Fees and stablecoin supply help you judge whether activity has economic weight
- Comparing chains works best when you compare multiple metrics together, not one number
You do not need to pick a winner from one snapshot. You use the snapshot to build the habit of multi metric thinking.
Security Metrics That Matter In Altcoin Research
Validator Set And Stake Concentration
A validator set that is small or concentrated can be easier to influence, censor, or compromise.
Example: BNB Smart Chain describes an elected validator model where a limited active set produces blocks, with a subset referred to as “Cabinets”. As of 8 January 2026, public validator snapshots also show a 21 validator set view on BscScan. This is not automatically “bad”, but it changes the risk model versus a widely distributed validator ecosystem.
What to do with this:
- Check whether the validator set is broad and diverse
- Check whether voting power is heavily concentrated
- Treat smaller sets as higher governance and operational risk unless mitigations are clear
Bridge Risk And Security Lessons From A Real Incident
On chain security is not only about the base chain. Bridges are frequent failure points.
Example: Ronin’s 2022 bridge hack is widely documented as an incident where an attacker gained control of enough validator keys to approve withdrawals, because only five of nine validator signatures were needed. The lesson is not “never use bridges”, it is that small validator sets and weak key management can become catastrophic.
What to learn:
- Ask how many parties must sign to move funds
- Ask who controls those keys
- Ask what happens if one party is compromised
Layer 2 Specific Checks
If the project lives on an Ethereum Layer 2, “security” often means understanding:
- Sequencer risk, who orders transactions today
- Upgrade controls, who can change critical contracts
- Exit guarantees and delays
For example, Arbitrum’s own documentation discusses the current sequencer model and the long term aim of moving toward more decentralised sequencing. That tells you that centralisation trade offs exist today, even if the roadmap aims to reduce them.
A Simple Checklist You Can Reuse Every Time
When evaluating an altcoin ecosystem, check:
Activity
- Active addresses trend
- Transactions trend
- Fees trend
- Stablecoin supply trend
- DEX volume or app volume where relevant
- TVL where relevant
- Bridge inflows and outflows if the chain depends on bridged liquidity
Security
- Validator set size and voting power concentration
- Governance and upgrade controls
- Bridge design and signer requirements
- Audit coverage for major components
- History of outages, exploits, or emergency interventions
The main habit is consistency. Use the same checklist on every project so you are not swayed by branding.
Mini FAQs
What are on chain metrics?
On chain metrics are measurements built from public blockchain data, used to evaluate activity, adoption, and security signals.
What are on chain metrics in crypto used for?
They help confirm whether an altcoin is being used, whether liquidity is real, and whether the network has risks that marketing ignores.
What does TVL mean in crypto?
TVL means total value locked, it estimates the value of assets deposited into DeFi protocols or locked in smart contracts.
What is the difference between TVL and volume?
TVL measures capital committed. Volume measures trading activity over time. They often move differently, and neither replaces the other.
How do you measure adoption for a crypto project?
Use multiple signals together, active addresses, transactions, fees, stablecoin supply, and app level usage, then compare against hype claims.
Next Lesson
In this lesson you learned:
- What on chain metrics are, and how to use activity and security signals to evaluate altcoins with evidence.
- How to avoid one metric thinking by cross checking adoption, liquidity, and risk indicators.
In Lesson 8 you will learn:
- How to evaluate adoption and real world use cases without falling for vague promises.
- How to test whether a project solves a real problem and can scale beyond crypto native users.
This lesson is part of the Fundamental Analysis for Beginners series. For the full lesson map and all supporting guides, visit the Fundamental Analysis hub.
If this lesson helped you stop trusting narratives and start using on chain evidence to judge altcoins, Alpha Insider is where the full research workflow gets applied consistently, with real examples and weekly filters.
Alpha Insider members get:
➡️ Kairos timing windows to plan entries before the crowd moves
➡️ A full DCA Targets page with levels mapped for this cycle
➡️ Exclusive member videos breaking down charts in plain English
➡️ A private Telegram community where conviction is shared daily
Evidence first… then confidence.
Legal And Risk Notice
This content is for education and information only and should not be considered financial advice. Crypto assets are volatile and high risk. You are responsible for your own research and decisions, and you should consider seeking independent financial advice where appropriate.
Discussion