Distribution of Swaps in $RUNE and USD Values

Analyzing the distribution of swap sizes in both $RUNE and USD, both for all pools as well as broken down by pool.

Outline

In this report, we are taking a look at the distribution of swap sizes in THORChain, both in $RUNE and in USD.

This report is structured in the following order: 1) First we look at the general distribution of swap sizes both $RUNE and in USD, 2) Next, We categorize the swap sizes by each individual pool, 3) In this third section, we analyze the effect of time and market condition, on swap sizes in THORChain, 4) In the final section, we look at the type of tokens, stable vs. unstable, and their popularity based on the market condition.

Notes:

Since Bitcoin has a high correlation with almost all of the cryptocurrencies, we used its price as a proxy for the whole market condition.
In order to make the plots more informative, we clipped the swap sizes based on the tokens we analyzed.
We used a 100 $RUNE or USD range to bucketize the data.

The Overall Distribution of Swap Sizes in $RUNE and USD

The following plots show the distribution of swap sizes both in $RUNE and USD over the whole THORChain platform.

Note that we clipped the USD plot on 100,000 USD and the RUNE plot on 50,000 $RUNE.

Our observation:

Both distributions are skewed and long-tailed. This means that most swaps are executed on a low volume of assets, and it is rare for a transaction to have extreme value, both in $RUNE and in USD.
An interesting observation is that both plots increase in their initial steps. For example in USD plot the maximum number of transactions did not occur between 0-100 USD. Instead it was on 400-500 USD.
Most human performances, specially from financial aspects, follow a power-law distribution. Meaning lower volumes of money has a higher chance of occurring and large volumes happen rarely.

Distribution of Swap Sizes in $RUNE and USD per Pool

The following two plots show the distribution of swap sizes per pool, both in $RUNE and in USD.

Note that we clipped the USD plot on 20,000 USD and the RUNE plot on 10,000 $RUNE.

Our observations:

BNB-BUSD was the dominant pool in THORChain, considering the USD volume of swaps.
For the most parts, the swap volumes on pools rise and fall with one another.
Same as the previous section for the whole THORChain, the distribution is right skewed and long-tailed.
Notice that there high probability of spikes when the swap size is a round number. E.g. in USD plot the number of transactions spikes when the swap size is a multiple of 1000 USD. Same goes for the $RUNE plot.

Sizes of Swaps in Time

Next , we are interested in knowing whether the market condition had anything to do with the swap volume.

Our observations:

We can see that when the market condition is good (the price of Bitcoin is high), users tend to swap more in USD volume. We analyze the stable/non-stable tokens in the next section.
We can clearly see that as the market condition got weaker during the past few months, the volume of swaps in USD decreased too.
The straight line from July to September of 2021 shows the data was not available from Flipside Crypto.

Stable or Unstable

Finally, we want to analyze the destination of swaps that the uses make. The figure on the left separates the stable and unstable tokens that were the destination of THORChain swaps, and the figure on the right shows the percentage of swaps volume to stable tokens vs. the whole swap volume per day, along side the market condition.

Our observations:

We can see that these two token types rise and fall with one another and stable tokens’ volume are always below the unstable tokens, so most users prefer to swap to unstable tokens on THORChain.
On the right figure, we can see that as the market condition weakens, the share of swapping to stable tokens increases and vise versa, like what we can observe during the June of 2021, and May and June of 2022.
When the price of Bitcoin hit its all time high on November of 2021, swapping to stable tokens share experienced one of its lowest values

Conclusions

The distribution of swap sizes are right-skewed and long-tailed.
Different pools performed differently, based on the tokens they support.
Most destination for swaps on THORChain is regular/unstable tokens.
The market condition affects the tendency and the type of tokens that users swap to. users gravitate toward stable tokens when the market condition is bad.