IL Insurance
Q54. What % of users that are removing liquidity are receiving IL insurance? Hint: use thorchain.liquidity_actions
This Bounty asks to analyse what proportion of users who are removing their liquidity are recipients of the IL insurance. In order to understand what's going on, it's important to first explain what impermanent loss is.
Impermanent loss is the difference between holding tokens in your wallet versus staking them in a liquidity pool. In the times when the value of the tokens in the pool isn't stable and fluctuates, bots work to balance the ratio, while profiting off of the price difference (arbitrage). This profit comes out of the pockets of liquidity providers. ThorChain provides users with Impermanent Loss Protection, which ensures that LPs always either make a profit or leave with at break even after a minimum period of time, which is set at 100 days.
The table above shows the number of transactions that had the IL Insurance, which on the 5th of April 2022 was only 6 transactions. The total number of transactions on that day was 161, which dividing the first by the second leads to a very small percentage of protected transactions, namely 3.73%.
NOTE: While writing this query, I have come across the same issue as in the previous Bounty (that is, "Small" LP Actions, Q55). The liquidity_actions
table seems to be incomplete and only has one data value, which in turn leads to very inconclusive results. With a bigger range of dates, it would be much better to see how the percentage of insured transactions changes. Sadly, I was not able to do this, due to the incompleteness of the table, and hence this dashboard does not have any plots - because it is impossible to plot anything with only one data point!