Introduction

Ethereum's upgrade or "Merge" changed how crypto transactions are performed on the blockchain.

Previously, the Ethereum blockchain, like the Bitcoin blockchain, ran on a ==proof-of-work(PoW)== model, involving nodes—computers that are part of a larger network—competing against each other to solve complex mathematical problems. The miner pools tried to produce the new block of the chain and receive their reward.

This upgrade moved Ethereum to a proof-of-stake(PoS) model, a more energy-efficient and environmentally friendly system. This requires the selection of nodes through an algorithm that gives priority to nodes that hold more of the network's currency.

In other words, their "stake" in the network is rewarded over the computing power rewarded in the proof-of-work system.

This update was completed on September 15, and the Ethereum blockchain migrated from PoW to PoS. Such events usually cause extreme fluctuations in the crypto market, and users try to manage their capital. As a result, they try to reduce the risk, which leads to the withdrawal of assets from liquidity pools and the stake. Therefore, the analysis of the rate of withdrawal of ETH from the protocols is of great importance, which we will discuss in this analysis.

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Methodology

• In this analysis, 3 protocols are examined, which are: Aave, Maker, and Uniswapv3.

• The amount of ==input, output, net, average, the number of depositors, the number of withdrawers==, and such data are examined.

• The period of one month before the date of Merge is checked and this period is divided into "==before Merge==", "==one week before Merge==", "==day of Merge==", and "==after Merge==".

• Finally, all 3 protocols are examined in the general mode so that the effect of this event on the total amount of ETH withdrawn is checked.

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Analysis

Aave

Observation:

• The ==highest amount of ETH output== from the Aave protocol is related to ==a week before the date of Merge==, and on the last day, September 14, the net output from this protocol was equal to 177K ETH.
• The black line shows the 7-day moving average, which, according to the chart, has been going down since exactly one week before the date of Merge and reached -33.8K one day before Merge.
• On the ==Merge day==, the ==net amount of deposition== to this protocol was positive and equal to 69.5K ETH.
• On average, the amount of withdrawal in each transaction was more than the deposit of ETH to the protocol.

Observation:

• According to the graph of the amount of ETH withdrawn from Aave, users have withdrawn the most significant amount of ETH in the last week, and also in the last month, the ==largest amount of withdrawal== occurred on September 14 with a volume of 248.8K ETH.
• look at the chart of the cumulative net amount, it is clear that the chart trend has become negative since a week ago and users have withdrawn their assets.
• The ==highest accumulated net volume withdrawn== in the last month was equal to ==201K ETH==.
• The number of withdrawal transactions as well as the number of users who have tried to withdraw ETH has grown sharply in one week before Merge.
• The total number of transactions and the number of wallets that have made deposits and withdrawals in the past month are shown below.

Observation:

• The ==highest amount of ETH deposited== in one transaction is equal to 85.9K, while the ==highest amount withdrawn== is equal to 78.5K.
• The ==median== of deposited ETH is 2.5 and the median of withdrawn ETH is equal to 12.64, which have a difference of about 5 times.

Maker

Observation:

• Similar to the Aave protocol, the ==highest amount of ETH output== from the ==Maker== protocol is related to a week before the date of Merge, and on the last day, September 14, the net output from this protocol was equal to 14.3K ETH.
• The black line shows the ==7-day moving average==, which, according to the chart, has been going down since two weeks before the date of the Merge and reached -4505 one day before the Merge.
• ==On the Merge day==, the ==net amount of deposition== to this protocol was positive and equal to 8759 ETH.
• On average, the amount of withdrawal in each transaction was more than the deposit of ETH to the protocol.

Observation:

• According to the graphs, the intensity of ETH withdrawal from Maker protocol has started earlier than other protocols, but users have withdrawn the most significant amount of ETH in the last week, and also in the last month, the ==largest amount of withdrawal== occurred on August 26 with a volume of 15.54K ETH.
• look at the chart of the cumulative net amount; it is clear that the chart trend has become negative since a Month ago and users have withdrawn their assets.
• The ==highest accumulated net volume withdrawn== in the last month was equal to 59.9K ETH.
• The number of withdrawal transactions and the number of users who have tried to withdraw ETH has grown sharply in one week before Merge, but as said, in Maker protocol, the increase in the number of transactions and the amount of ETH withdrawal started a month ago.
• The total number of transactions and the number of wallets that have made deposits and withdrawals in the past month are shown below.

Observation:

• The ==highest amount of ETH deposited== in one transaction is equal to 6.83K, while the ==highest amount withdrawn== is equal to 14.93K.

• The ==median== of deposited ETH is 13 and the median of withdrawn ETH is equal to 25,

  which have a difference of about 2 times.

Uniswapv3

Observation:

• Similar to the previous 2 protocols, the ==highest amount of ETH output== from the ==Uniswapv3== is related to a week before the date of Merge, and on the last day, September 14, the ==net output from this protocol== was equal to 34.7K ETH.
• The black line shows the 7-day moving average, which, according to the chart, has been going down since about one week before the date of the Merge and reached -10.3K, one day before the Merge.
• On the Merge day, the ==net amount of deposition== to this protocol was positive and equal to 17.1K ETH.
• On average, the amount of withdrawal in each transaction was more than the deposit of ETH to the protocol.

Observation:

• According to the graphs above, the amount of ETH deposits and withdrawals from Uniswapv3 has a downward trend, but its net amount has been upward until a week before Merge, the ==net amount of inflow== has also become negative and reached its highest value one day before Merge, that is equal to -58.8K ETH.
• The number of withdrawal transactions and the number of users who have tried to withdraw ETH has grown sharply in one week before Merge.
• The total number of transactions and the number of wallets that have made deposits and withdrawals in the past month are shown below.

All Protocols

Observation:

The time frame examined here is one week before Merge.

• As it is clear from the graph, the ==net amount of deposition is negative== in almost all 3 protocols.
• In general, ==445,000 ETH have been withdrawn from these protocols.==
• The ==highest net deposition== is related to Aave protocol with -348K ETH. Uniswapv3 is in second place with -62.2K and Maker is in third place with -34.42K ETH.

Conclusion

• As expected, users have withdrawn their assets from the protocols to reduce their capital risk, and the ==net output from the protocols has been positive.==

• Uniswapv3 is larger in terms of the number of users and the amount of transfer volume compared to the other two protocols, but the ==first place in terms of net output is related to Aave==.

• The highest amount of net output from protocols is related to the last week and especially the last day, before Merge.

• In total, ==445K $ETH was the net output from all 3 protocols==.

• Considering the average price of $ETH at $1,600 in one week before Merge, something equivalent to $700 million has been removed from the protocols.

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Contact me

Thank you for being with me so far in this analysis. If you have any questions, you can ask through the following ways. I will be pleased to answer the questions.

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Observation:

• The ==highest amount of ETH deposited== in one transaction is equal to 25.9K, while the ==highest amount withdrawn== is equal to 25.8K.
• The ==median== of deposited ETH is 0.7 and the median of withdrawn ETH is equal to 3.86, which have a difference of about 5.5 times.