Question:

Q109. Liquidity providers stats

1. Evaluate the distribution of various target segments who provide liquidity (LP)
2. Evaluate the profitability of an LP Provider & Yield Farmer

Overview of study:

> The structure of this study shaped out from two major parts. The first one represents the LP and Yield farm activities on Sushi. The second part wanna determine the profitability of an LP provider and Yield Farmer.

> SushiSwap’s native token, SUSHI (which is also a governance token), is awarded to liquidity providers. SUSHI holders, unlike Uniswap’s (UNI), can still earn rewards after they cease providing liquidity.

Approach:

To handle this investigation, the Data provided by Flipside community has been adopted, accordingly.

The data related to Optimism network have been shown by Ethereum.core tables on Flipside.

Sushiswap liquidity pool identified by dim_dex_liquidity_pools where PLATFORM='sushiswap'.

• LP users and total value of locked:

ORIGIN_TO_ADDRESS='0xd9e1ce17f2641f24ae83637ab66a2cca9c378b9f'

and origin_function_signature in ('0xe8e33700', '0xded9382a', '0xf305d719') -- Provide liquidity

and origin_function_signature in ('0xbaa2abde', '0x2195995c', '0x02751cec') -- Withdraw liquidity

• Yield Farm users and total value of locked:

ORIGIN_TO_ADDRESS='0xef0881ec094552b2e128cf945ef17a6752b4ec5d'

and ORIGIN_FUNCTION_SIGNATURE='0x8dbdbe6d' -- Deposit

and ORIGIN_FUNCTION_SIGNATURE='0x0ad58d2f' -- Withdraw

Questions of part 1:

1. What’s the total no. of unique LP providers?
2. What’s the ratio between Yield farmers vs. LP Providers?
3. What’s the average no. of LP positions opened by each unique wallet address
4. What’s the ratio of liquidity (Based on TVL) owned by the Protocol vs. Retail LP in both LP Pool and yield farms
5. The percentage (%) increase/decrease of LP Providers in Sushi over the last 1 year

Part 2: Correlation determination

Notable findings:

Now lets determine the correlation between profitability of an LP Provider & Yield Farmer by various parameters.

==The users have been grouped into 4 various bucket by day of providing LP or farming as:==

when days<7 then '1. Under 1 week' when days>=7 and days< 30 then '2. between 1 week to 1 month' when days>=30 and days<90 then '3. between 1 to 3 month' when days>=90 then '4. Over 3 month'

• The first thing to evaluate is the time of providing LP or yield farm. As it reveals, the LP providers over 3 months have been made profit among other group of LPs.
• Among farmers, the group with most profit belong to providers between 1 to 3 months.
• The LPs who withdrawn their provided liquidity on May 9 or June 15 have made a largest profit and its the validation of interdependency between withdrawal time and profit.
• This results related to time of withdrawal and correlation of it with profit of farmers represented in its graphic.
• The top and worst 20 pools based on their profit profitability ranked in the next graphs.

Notable findings:

Like said in the overview part, this section brings the LP providers and yield farmers on Sushi.

• The ratio between yield farmers and LPs has been revealed in the percentage and due to this investigation 16.3% of LPs are yield farmers too.

• The daily LP users and change of LP providers over the past 1 year reveals the large reduction pattern since 2022.

• The lag function has been utilized to determine the percentage of change for LP providers over the past 1 year. By considering it, the highest decrement with LP providers occurred on April 7, 2022 about 90% of reduction.

• From the yield farming point of view, the December 2021 was the busiest month in participation aspect specially December 26.

• The percentage o yield farmers over the past 1 year has volatile pattern as illustrated in the graphic.

• The address that provide liquidity or yield farm have been tested by the Dim_Labels table of Flipside to evaluate the ownership of accounts.

  when label is not null then 'owned by the Protocol' when label is null then 'Retail LP'

• The share of LP providers by retail LPs is over 98% of total LPs.

• Very very small part of yield farmers belongs to Owned by protocols accounts.

References and useful links:

• Sushiswap DOCs
• LP providing on Sushiswap
• Yield farming on Sushiswap

Author:

Credited by MZG

Discord handle: m.zamani#0361

Twitter handle: @GargariZamani