On Sept 14th, a day before the Merge, 44 M USD worth of cryptocurrency are withdrawn from Liquidity pools on Sushiswap. It is a sudden surge in Volume withdrawn, 14 days before the Merge , as it records a range of 8.5 M USD to 170 K USD worth of asset withdrawn each day.

So from this, we can say that the anticipation of The Merge event, has indeed caused Liquidity Providers to remove their asset from Liquidity Pools.

What is Sushiswap?

Sushiswap is a Decentralized App (dApp) that works as exchange platform on Ethereum( and on many other networks) to facilitate trade by the means of AMM and Liquidity pools. This platform is known as DEX, a short for Decentralized Exchange.

What is the Merge?

The Merge is one of the Ethereum Network major update. It is meant to migrate the Ethereum Network from Proof of Work(PoW) to Proof of Stake (PoS). This is done to further decentralized the network and provide the foundation for scaling of the network. The Merge happens on Sept 15th 2022.

This analytics will measure the activity on Liquidity pools before, and after the Merge. So this dashboard is divided into 2 parts; Pre-Marge and Post-Merge.

Pre-Merge : discusses the activity that happens 14-days before the Merge

Post-Merge : discusses the activity that happens 14-days after the Merge

The majority of assets withdrawn is WETH, making up 72.5% of the total liquidity drained (USD)

A total of 76.4 M USD worth of cryptocurrency has been withdrawn from all liquidity pools on Sushiswap, 14-days before the Merge.

There are only 959 address that are responsible for removing of the LP.

The Table above lists the affected pools, ordered by liquidity removed. The total token volume removed by pool is included

Only 106 out of initial 959 address added back their liquidity capital into Sushiswap pools

There are 762 Unique Liquidity Providers participating in LP , 14 Days after The Merge

It is found that several identifiable wallets are involved in removing Liquidity approaching the Merge. Idex and Hotbit wallets were the CEXs wallets that withdrew from liquidity pools. a dApp - related wallet is also identified, belonging to abeseba1

The Bar chart on the left side visualizes the comparison of asset flow into and out of liquidity pools, Pre-Merge and Post Merge, in USD.

It is found that the total asset removed is double the USD valuation than that of added during the pre-merge. This shows that , in general sense, there are more capital are held than being put in liquidity pools.

This may due to users removing their WETH to collect ETHW (ETH PoW fork airdrop, approaching the Merge).

After the Merge , there are more capital dedicated into the Liquidity Pools than being removed. However, as we discussed before( in previous section), only few are returning Liquidity Providers.

And the total Volume of asset (USD) being added is lower than Pre-Merge, showing that the community are less interested in LP-ing, Post Merge, at least among the Big Moneys.

Findings

1. A Total of 76.4 M USD worth of asset were withdrawn from Sushiswap Liquidity Pools during Pre-Merge( 14 Days Before the Merge)

2. The highest Volume(USD) being drained happens a day before : 14th Sept `22

3)WETH consists of 75% of the total asset valuation that is being drained from Sushiswap Pools, valuing at 37.6 M USD

4. IDEX and HotBit are among the CEX entities involved in withdrawing assets from Liquidity Pools

5. Only about 11% of the initial Liquidity Provider , re-adds their capital into Sushiswap Pools, contributing a total of 55.3 M USD worth of asset.

6. The trend indicates there are more volume being withdrawn than being added during Pre-Merge, almost double that of Inflow

7. The Post Merge trend shows there are more capital dedicated to be added into Liquidity pools than being withdrawn.

8. The Overall Pre-Merge vs Post-Merge trend shows that there are more overall Capital flow during the Pre-Merge than Post-Merge.

While the trend indicates there are lesser capital commitment going into the Liquidity Pools, the factor that causes this is not so clear. Some of the factors that may affect less interest in LP-ing with Sushiswap are :

1. Overall Bear Market, affecting LP-ers capital allocation for Liquidity Pools

2. Price drops in crypto assets, reporting lower USD valuation

3. Better investment tools offered such as lending vaults, staking etc.

4. DEX competitors with better LP reward such as Uniswap`s Concentrated Liquidity Pool mechanism

5. Increase in risk aversion among LP-ers