Blockchain data analysis follows a data-driven approach to interpret behavior, intentions, and ultimately trading psychology. This analysis can focus on:
- Trader behavior: Identifying patterns in individual or institutional activity
- Contract behavior: Analyzing smart contract interactions (since code doesn't lie)
- Market behavior: Detecting macro trends across decentralized ecosystems
At its core, chain analysis revolves around transaction data. This guide explores Ethereum transaction mechanics through three knowledge tiers:
| Knowledge Tier | Key Concepts | |
|---|---|---|
| Fundamental | Regular transactions vs. contract transactions | |
| Intermediate | External accounts vs. internal accounts | |
| Advanced | Transfers vs. Transactions | Events & Logs |
Part 1: Ethereum Transaction Types
Ethereum recognizes two primary transaction categories:
1. External Account Transactions
Characteristics:
- Involve only native ETH transfers
- No smart contract interactions
Contain four key data segments:
- Transaction hash (unique identifier)
- Value transferred (ETH amount)
- Counterparties (sender/receiver addresses)
- Gas costs (network fees)
👉 See real-time Ethereum transactions
2. Contract Transactions
Additional components:
- Internal processes (call hierarchies between contracts)
- Token transfer results (ERC-20/721/etc. movements)
- Input data (function calls with parameters)
Contract transactions feature two specialized tabs in explorers:
- Internal Transactions: Records intermediate contract calls
- Event Logs: Stores emitted events from contract execution
Part 2: Account Architecture
Ethereum's address system comprises:
| Account Type | Characteristics | Example |
|---|---|---|
| External Owned Accounts (EOA) | Controlled by private keys | User wallets |
| Contract Accounts (CA) | Code-determined behavior | DeFi protocols |
Key differentiators:
- EOAs initiate state changes
- CAs execute programmed logic
- Internal transactions emerge when contracts trigger subsequent contract calls
Part 3: Transactions vs. Events
Transfers (Transfer)
- Represent asset ownership changes
- Include both native ETH and token movements
- Recorded as blockchain state changes
Transactions (Transaction)
Contain the complete execution package:
- Recipient address (
to) - Value transferred (
value) Call data (
input)- Empty
tofields indicate contract deployments
- Empty
- Recipient address (
Contract Method Identification:
- First 8 hex digits of call data = function selector
- Example:
0x5f575529maps toswap()in many DeFi routers
Part 4: Event Logging Mechanics
Smart contracts emit events for:
- Off-chain notifications (e.g., wallet alerts)
- Cost-efficient storage (~8 gas/byte vs 625 gas/byte for contract storage)
Log Structure:
- Indexed topics (searchable parameters)
- Raw data (unindexed details)
- Permanently stored in transaction receipts
Most common events (2021-2022 data):
Transfer(token movements)Approval(token allowances)Sync(liquidity pool updates)
👉 Explore live contract events
FAQ: Ethereum Transaction Analysis
Q: Why don't regular ETH transfers show internal transactions?
A: Internal transactions only occur when contracts trigger subsequent contract calls - simple ETH transfers between EOAs lack this complexity.
Q: How can I decode obscure function calls?
A: Use open-source tools like Etherscan's Contract Search to match selectors with known function signatures.
Q: Are event logs mutable?
A: No - once emitted and confirmed, events become permanent parts of the blockchain record.
Q: What makes contract calls more expensive than simple transfers?
A: Complex computations and storage operations drive up gas costs versus basic value transfers.
Q: Can smart contracts read event logs?
A: No - events exist purely for external notification purposes, not on-chain computation.
Q: How do wallets detect incoming tokens?
A: Frontends monitor Transfer events emitted by token contracts to trigger balance updates.