Using language models for on-chain analysis: a practical, sceptical guide
LLMs are excellent at labelling and summarising wallet behaviour, and unreliable at anything requiring arithmetic. Here is the division of labour.
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The useful pattern is narrow: let deterministic queries do the counting, and let the model do the describing. Reverse that order and you get confident, wrong numbers.
A workable pipeline
Index the addresses you care about, compute balances and flows in SQL, then ask the model to cluster behaviour and draft the explanation a human analyst checks.
Glossary
Entity clustering — grouping addresses likely controlled by one actor. Flow labelling — tagging a transfer's economic purpose. Agentic execution — a model permitted to place orders under hard risk limits.
explainerllmon-chain