Introduction

In this dashboard, we will be exploring user behavior regarding ETH tokens ahead of the Ethereum Merge. We will compare two types of DeFi protocols, DEXs and borrowing/lending platforms, to determine whether users are adding/removing more ETH liquidity in the few weeks leading up to the Merge. We will look at behavior on the Uniswap and Sushiswap DEXs, and the Aave and Compound borrowing/lending platforms.

Questions of Interest

• Are Ethereum users adding/removing more ETH liquidity to DEXs leading up to The Merge?
• Are more/less users removing ETH liquidity to DEXs leading up to The Merge?
• Are Ethereum users adding/removing more ETH liquidity to borrowing/lending protocols leading up to The Merge?
• Are more/less users removing ETH liquidity to borrowing/lending platforms leading up to The Merge?

Key Takeaways

• In general, more ETH was removed from both DEXs and borrowing and lending platforms in the week leading up to The Merge.
• The greatest net ETH LP removals on Uniswap occurred on September 7th, 2022, only a week before the merge, where a net 20K ETH was removed from Uniswap liquidity pools.
• Almost every day over the past month had a large net negative ETH liquidity pool change on Sushiswap, meaning far more ETH was removed from Sushiswap pools than provided.
• The volume of Aave ETH removals spiked leading up to The Merge, with the greatest volume of ETH removals on September 6th and September 13th, with ~175K and ~163K ETH removed respectively.
• Both the number of ETH removal transactions and the number of unique removers on Compound spiked the week leading up to The Merge.

DEX Comparison

Uniswap

• ETH removals peaked from August 17th - 21st, where almost 4 million ETH was removed from Uniswap liquidity pools.
• Both the number of ETH LP removals and the number of unique users removing liquidity have remained relatively constant over the past month.
• Around 500 - 600 users have removed ETH liquidity from Uniswap pools most days over the past month.
• The greatest net ETH LP removals occurred on September 7th, 2022, only a week before the merge, where a net 20K ETH was removed from Uniswap liquidity pools.
• Interestingly, the greatest volume of ETH removals from Uniswap pools over the past month was the week of September 5th, around a week before the merge.

Sushiswap

• The daily volume of ETH removals from Sushiswap LPs peaked on September 7th, when just under 3,500 ETH was removed.
• Around 300 - 350 unique users removed ETH liquidity from Uniswap most days over the past month.
• Almost every day over the past month had a large net negative ETH liquidity pool change on Sushiswap, meaning far more ETH was removed from Sushiswap pools than provided.
• Similarly to Uniswap, the greatest volume of ETH removals on Uniswap was the week of September 5th, about a week before The Merge.

Comparison

• Both Uniswap and Sushiswap had a relatively stable daily number of unique users removing ETH liquidity over the past month, and both had the greatest volume of ETH removals the week of September 5th.
• Interestingly, Uniswap had a relatively even split of days with a net positive and net negative ETH LP change, while Sushiswap had more ETH LP removed than added almost every day over the past month.

Borrowing/Lending Platform Comparison

Aave

• The volume of Aave ETH removals spiked leading up to The Merge, with the greatest volume of ETH removals on September 6th and September 13th, with ~175K and ~163K ETH removed respectively.
• The number of ETH liquidity removals from Aave also spiked leading up to the merge, with a peak on September 13th with 250 liquidity removal transactions.
• The greatest net negative ETH LP change on Aave occurred only a couple of days before The Merge on September 13th, where around 95K more ETH was removed than provided.
• The greatest volume of ETH removals on Aave occurred the week of September 5th, the week before The Merge.

Compound

• By far the greatest volume of ETH removals on Compound occurred on September 7th, where ~130K ETH was removed from liquidity pools.
• Both the number of ETH removal transactions and the number of unique removers on Compound spiked the week leading up to The Merge.
• The greatest volume of ETH removals on Compound occurred the week before The Merge on September 5th.

Comparison

• Both Aave and Compound had the greatest volume of ETH removals the week leading up to The Merge.
• Interestingly, Aave had a relatively stable number of unique users removing ETH liquidity while Compound had an increase in unique users removing ETH liquidity in the days leading up to The Merge.

Overall Comparison

In general, each DeFi protocol had at least a slight increase in ETH removals the week leading up to the Ethereum Merge. Interestingly, Compound had by far the greatest spike in removals, while Uniswap had a relatively small spike.