Avalanche Centralized Exchange(CEX) Flows and their Impacts

    A dashboard that illustrates the inflows and outflows of assets from Avalanche. Look at items such as number of users and volume by CEX. Another thing to look at is which CEXes brings in the most active users to the ecosystem?

    What Do you Know About Avalanche?

    Introduction

    Avalanche is a blockchain platform that was created in 2018 by a team of developers led by Emin Gün Sirer, a well-known computer science professor. It is designed to provide high scalability, fast transaction processing, and low fees.

    Avalanche uses a consensus algorithm called Avalanche consensus, which is a proof-of-stake (PoS) protocol that allows for high throughput and transaction finality within seconds. The protocol is also designed to prevent forking and ensure security against attacks.

    One of the unique features of Avalanche is its subnetwork architecture, which allows for the creation of customized blockchain networks within the main Avalanche network. This enables developers to create their own blockchain applications with specific features and parameters.

    Image 1

    db_img

    Centralized Exchange

    A centralized exchange (CEX) in the context of cryptocurrency refers to a platform that facilitates the buying, selling, and trading of cryptocurrencies or digital assets. CEXs are operated by a centralized authority, such as a company or organization, which controls the exchange and holds users' funds in custody.

    On a CEX, users can place buy or sell orders for cryptocurrencies or digital assets, and the exchange matches them with opposing orders on the platform. The exchange charges a fee for each transaction, and users can typically deposit or withdraw funds from the exchange using fiat currency or cryptocurrencies.

    Image 2

    db_img
    Methodology

    This dashboard checks the inflows and outflows of centralized exchanges focused on the Avalanche blockchain. As explained, checking the cash flow of centralized exchanges is of great importance in the crypto world. So, using the data provided by Flipside, this issue is investigated.

    ✅ The period under review has been 30 days.

    To get the data related to cash flow on the Avalanche blockchain, we first get the address of the exchanges using the following code:

    select 
      address,
      Project_name as CEX_Name
    from avalanche.core.dim_labels
    where label_type = 'cex'
    

    Now, by using tables ez_token_transfers and ez_avax_transfers, the inflow and outflow of the exchange is obtained, the code of which is as follows:

    select 
      BLOCK_TIMESTAMP,
      TX_HASH,
      ORIGIN_FROM_ADDRESS,
      ORIGIN_TO_ADDRESS,
      TO_ADDRESS,
      SYMBOL,
      AMOUNT_USD
    from avalanche.core.ez_token_transfers
      where 1=1
      and BLOCK_TIMESTAMP >= current_date - 30
      and amount_usd is not null
    
    union all
    
    select 
      BLOCK_TIMESTAMP,
      TX_HASH,
      ORIGIN_FROM_ADDRESS,
      ORIGIN_TO_ADDRESS,
      ETH_TO_ADDRESS as TO_ADDRESS,
      'AVAX' as SYMBOL,
      AMOUNT_USD
    from avalanche.core.ez_avax_transfers
      where 1=1
      and BLOCK_TIMESTAMP >= current_date - 30  
      and amount_usd is not null
    

    The rest of the metrics that are analyzed in this dashboard are got based on this code.

    The most important questions to be answered are:

    • Which CEX has the highest cash flow, and on what dates did it occur?
    • During the last 30 days, what was the net amount of inflow to each of the CEXs?
    • What was the share of each CEX in the cash flow during the last 30 days?
    • What CEXs have the whales used the most?
    • Which coins account for the largest share of the inflow and outflow of exchanges?
    • What is the role of stablecoins in the amount of input and output from exchanges?
    • Is now the right time to buy Avax?
    db_img

    CEX Flows

    Flows to centralized exchanges (CEXs) can be important for several reasons, as they can provide insight into the overall sentiment and activity in the cryptocurrency market. Here are a few examples:

    Liquidity: CEXs often have large pools of liquidity, which can make it easier for traders to buy or sell cryptocurrencies quickly and at a fair price. High inflows of funds to a CEX can increase liquidity, which can be a positive sign for traders looking to make large trades or execute trades quickly.

    Market sentiment: Flows to CEXs can provide an indication of the overall sentiment in the cryptocurrency market. For example, if there is a significant inflow of funds to a CEX, it could indicate that traders are bullish on the market and expect prices to rise. Conversely, if there is a significant outflow of funds, it could indicate that traders are bearish and expect prices to fall.

    Exchange volume: Flows to CEXs can also impact exchange volumes, which can be an important metric for measuring the level of activity on the exchange. Higher volumes can indicate that there is more interest and activity in the market, which can be positive for traders looking to execute trades at a fair price.

    Price impact: Large flows to or from a CEX can also impact the price of cryptocurrencies, especially if the exchange is one of the largest in the market. For example, if there is a large inflow of funds to a CEX, it could potentially cause the price of cryptocurrencies to rise, as demand for those assets increases.

    Overall, flows to CEXs can provide valuable insights into the cryptocurrency market and can be an important metric to watch for traders and investors looking to make informed decisions.