Osmosis Pools & Pool of the Week Program

Osmosis is a multi-chain AMM developed for the Cosmos ecosystem. The DEX provides interoperability between blockchains using the Inter-Blockchain Communication Protocol (IBC) and Axelar, which facilitate the interconnection of blockchains within a decentralized infrastructure.

AMMs are typically pools of digital assets managed by a smart contract to enable decentralized trading. Liquidity pools and smart contracts replace the order book system; liquidity providers lock their assets into the pool and earn fees when people trade in these pools.

Liquidity provisioning (called "LPing") is the process of depositing assets into an AMM pool. AMMs are decentralized financial protocols that allow assets to be exchanged without a central intermediary.

> Since the start of November, the Osmosis Support Labs team has run the Pool of the Week program, highlighting important and/or new pools within the ecosystem

In this dashboard, we want to examine the four pools that were announced as the top pools of the week in November(2022) and find out whether or not this announcement of the top pool of the week had an impact on the behavior of liquidity providers.

Work Description

Since in this dashboard we are looking for the two actions pool_joined and pool_exited and the amount of capital entering and leaving the mentioned pools, we used the following table:

osmosis.core.fact_liquidity_provider_actions.

Note: for some tokens, the decimal value required to convert the raw numbers in the blockchain to real values was not correct in this table, and Osmosis' own documentation was used to find the appropriate values.

To investigate how the selection of a pool as the Pool of the Week affects the behavior of users providing liquidity, we used several criteria, such as the daily inflow of funds, the number of LP users, the average and the median volume of daily tokens provided into the pool after and before this event.

POOl#833 : stOSMO / OSMO - Date of Chosen as Pool of the Week: 2022-11-11

About Me

Mojtaba Banaie

Email : mojtaba.banaie@gmail.com

Twitter: @cryptolizr

Discord : smbanaie#5528

Date of Analysis : 200-12-8

Takeaways

It seems that the Pool of the Week program is still in its infancy and is not very popular among users.

An important point that for the lack of acceptance among users is the lack of suitable contents for this program on the Internet, so even when I was looking for a few suitable photos for this dashboard, I ran into problems finding some content for it.

However, such programs that show users suitable pools for investment may catch on over time and be welcomed by users.

Observations

• The most important point to note from the charts above is that declaring a liquidity pool to be the pool of the week did not have a large impact on the amount of capital deployed in that pool.
• For the pool IST/OSMO we see that the number of LP actions and the number of LPers increased after this pool was selected as the pool of the week. However, the volume of provided tokens to this pool is lower on average than in the days preceding this announcement. The average amount of LP provided to this pool in the days following the announcement as Pool of the Week show a sharp decline, indicating that new users providing liquidity with a small number of tokens.
• Another important point to note from the charts above is that for all four pools selected above, the volume of liquidity inflows in the days leading up to the announcement of the week's best pool saw a huge jump. The problem is that we don't see that jump in the days after the announcement. It is likely that the inflow of large liquidity was one of the reasons for announcing this pool as the Pool of the Week.
• For most of the above four liquidity pools, the amount of capital withdrawn from the pool in the days following the Pool of the Week announcement is much higher than in the days preceding it (with the exception of the wETH.grv/OSMO pool).

Board Parameters

This dashboard has a parameter named `analysis_weeks which specifies how many weeks before and after the announcement of the weekly pool of a liquidity pool, we should perform the analysis.

POOl #837 : IST / OSMO - Date of Chosen as Pool of the Week: 2022-11-15

POOl #840 : BNB/ OSMO - Date of Chosen as Pool of the Week: 2022-11-22

POOl #634 : wETH.grv / OSMO - Date of Chosen as Pool of the Week: 2022-11-29

Image Credit : Osmosis Community Updates on Medium