A mock investment memo for Dune Analytics created on 8/9/2020.
Note: BitQuery has reached out to me prior to publishing this post. Their product is similar, but unique enough to differentiate themselves from Dune Analytics. I believe both companies have high ceilings and my original thesis for Dune Analytics has not changed at the moment.
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Dune Analytics is an early stage startup which allows users to explore the Ethereum blockchain with SQL queries. Queries can be transformed into shareable dashboards with live visualizations.
Founded in 2018, the team consists of 2 co-founders, Fredirk Haga and Mats Julian Olsen. Located in Norway, the company was initially a part of the Binance Labs incubator, reported to raise $300,000 in investment . Total Gitcoin grants to date are under $5,000 . The team announced on August 6, 2020 that they will be looking to hire the first non-founding team members.
Market & Competitors
The digital asset market data, on-chain data, and infrastructure landscape includes over 50 companies to date, half of which were founded in 2017/2018. As of 2019, the estimated addressable market according to TheBlock was $50mm. In the same report, firms have reportedly told TheBlock the serviceable market for on-chain data providers is in the low to mid tens of millions. 
On-chain data providers account for 31% of the crypto data infrastructure landscape. The ability to target retail consumers, institutional firms, research teams, and engineers put on-chain data providers at a distinct advantage when compared to crypto infrastructure and market data companies. Dune Analytics is one of the 5 companies out of 19 on-chain data providers which targets both retail and enterprise customers. 
Leading Ethereum on-chain data SaaS companies include Coinmetrics, Etherscan, BitQuery, and Digital Asset Data, Amber Data and Token Analyst. The majority of SaaS on-chain data providers support 5 to 50 blockchains. Dune Analytics currently supports one blockchain, Ethereum.
Subscription models, web advertising, and consulting services are current business models for on-chain data providers. Subscription models range from $29 to $5000 a month. Dune Analytics has two subscription tiers, free and premium. The premium tier subscription is offered at $390 per month . This premium tier monthly subscription cost is lower than Token Analyst ($799), Amberdata ($2799), and BitQuery ($5000) . Dune Analytics currently does not have web advertisements nor consulting services. It is estimated that Dune Analytics has a current annual revenue of < $750,000 USD.
Scaling an on-chain data provider comes with short term immediate costs to expand infrastructure, primarily related to running and maintaining full nodes. An increase in software developer and data analysis personnel is also required to manage network operations, verify data accuracy, and continue to add additional product features.
Long term macro challenges include overall growth in digital asset adoption. A rise in adoption will have an inherent impact on retail and enterprise demand for the product. Demand for on-chain data will continue grow as networks and complex applications are built on publicly auditable blockchains. The demand for Dune Analytics will be driven by market data aggregators, hedge funds, venture capital firms, developer teams, researchers and analysts.
Early stage investment. Small team, nimble. Growing, organic community around the product.
Dune Analytics supports only one blockchain, but the perfect chain for initial company growth. Ethereum is not only 10x larger than the next smart contract blockchain by liquid market capitalization, its network activity ranks second only to Bitcoin in transaction volume, fees generated, and active addresses . Stablecoins, DeFi, and distributed applications are the major participants in the ecosystem. There is over $8 billion USD issued on Ethereum via stablecoins as of August 2020, more than a 2x growth YTD . DeFi tokens by market capitalization have grown 19% and 69% in June and July, respectively. In July, DEX volumes grew 217%. DEX accounted for 4% of the total crypto monthly trading volume during this period. 
Dune Analytics is primed to be the go-to resource in DeFi. Auditing lending protocols, tracking DEX growth metrics, analyzing stablecoins supply and blacklists are examples of Dune Analytics dashboards which became reference points in the industry. The popular DEX metrics dashboard is consistently referenced by TheBlock, CoinDesk, and notable participants in the community. 
Leading smart contract protocol development teams are using Dune Analytics to create dashboards for their own platforms.    
Unique product feature set. The only other on-chain data provider that offers a similar feature set is Bitquery.
Opportunity & Business Strategy
Dune Analytics is the only company that allows users to analyze data through SQL queries, CSV downloads, and live visual dashboards. It is also one of two companies that do not provide a Rest API  This unique strategy allows (1) Dune Analytics to focus on its core web platform and (2) enhances its ability to build a growing, social community of users on its web. Public dashboards not only increase community engagement but build brand recognition and drive traffic to the website.
With investment, the company should plan to solidify its position in the DeFi data space.
- Upgrade infrastructure, the current server capacity is not adequate for scaling. Expand the team with a software developer and a data analyst.
- Prioritize the addition of a second blockchain. Existing Blockchain.com infrastructure may be leveraged to add Bitcoin. Put upcoming DeFi chains, Solana and Cosmos, on the roadmap.
- Revamp the web platform with a user-friendly UI. Create landing pages with DeFi and popular protocol metrics. Aim to takeover DeFiPulse.com.
- Focus on creating dashboards and code fork templates for all major DeFi protocols and stablecoins. This will keep community, brand, and media engagement high.
- Add long requested features such as marketplaces to monetize dashboards, an introduction wiki page, and template repositories.
With investment, focus, and current trajectory, Dune Analytics can become the landing page for DeFi in the next twelve months. Dune Analytics has an opportunity to become analogous with DeFi, but long term, it must focus its core killer application and mission, the only platform that allows the creation of shareable, on-chain data driven visual dashboards to explore and audit blockchains.
 “Dune Analytics,” 2020. [Online]. Available: https://www.duneanalytics.com.
 “Gitcoin Grants For Dune Analytics,” 2020. [Online]. Available: https://gitcoin.co/grants/363/dune-analytics.
 “The State of the Digital Asset Data Infrastructure Landscape,” Blockset, April 2020. [Online]. Available: https://www.tbstat.com/wp/uploads/2020/05/The-State-of-the-Digital-Asset-Data-and-Infrastructure-Landscape-1.pdf.
 “Messari,” 2020. [Online]. Available: https://messari.io/.
 “CoinMetrics,” 2020. [Online]. Available: https://coinmetrics.io.
 “July 2020 CoinGecko Monthly Crypto Report,” CoinGecko, July 2020. [Online]. Available: https://www.coingecko.com/buzz/coingecko-monthly-crypto-report-july-2020/.
 “DEX Metrics,” Dune Analytics, 2020. [Online]. Available: https://explore.duneanalytics.com/dashboard/dex-metrics.
8] “Tornado Cash,” Dune Analytics, 2020. [Online]. Available: https://explore.duneanalytics.com/dashboard/tornadocash.
 “1inch Exchange,” Dune Analytics, 2020. [Online]. Available: https://explore.duneanalytics.com/dashboard/1inch-exchange.
 “Loopring,” Dune Analytics, 2020. [Online]. Available: https://explore.duneanalytics.com/dashboard/loopring.
 “Matcha,” Dune Analytics, 2020. [Online]. Available: https://explore.duneanalytics.com/dashboard/matcha.