Osmosis: Unstaking Behavior

    In this dashboard we will be looking at unstaking behavior on the Osmosis blockchain. The primary focus is on what users do with their OSMO after unstaking it.

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    Volume / Amount

    A graph showing the amount of OSMO being unstaked each day (starting the 14 day period). And how many are currently waiting for their funds to undelegate (pending).


    Concluding:

    => The pending amount is usually relatively constant

    => Therea are 2 major exceptions caused by 2 spikes in daily unstake amount in may

    Transactions & Positions

    This statistic shows how many unique unstake transactions are sent out each day and how many of them are still pending. (Pending positions)

    Its very interesting to see that the May spike is a lot smaller on here and the graph shows a clear downtrend you cannot see on the amount graph.


    Concluding:

    => Most unstake volume must come from few transactions

    Addresses

    Here you can see how many addresses send a unstake transaction each day and how many wallets currently have a pending unstake position. (Only counting each address once per 14 day period, even if multiple unstakes were sent!)

    These results match the transactions & positions quite closely.


    Concluding:

    => Most wallets only unstake once.

    => Most unstake volume comes from few wallets

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    Dashboard Parameters

    tracked_days

    This parameter controls how far back from the current date to query data. Higher values result in higher processing time of the queries. For values above 100 you should expect several minutes of processing time.

    ignore_timeout_days

    Finding the first transactions that use OSMO after the undelegate is completed is an expensive operation. In order to achieve a long duration you have to add limitations somewhere else

    This parameter control how far to search for transactions using OSMO after the unstaked funds are available.

    If no transaction using OSMO is found it will show up as Nothing.

    Validators

    A validator is a special node that is responsible for processing transactions and writing the blockchain in consensus with the other validators. The voting power and influence into what goes onto the chain is determined by the amount of OSMO the validator has. Users can delegate their OSMO to a validator to support them and receive a fraction of the block rewards in return.

    While most validators grow their delegated funds (due to the ~25% network inflation) some lose delegators.

    This can be due to downtimes, unwanted decision in chain votes, bad rates, ….

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    Unstaking

    If a user decided to no longer delegate their funds to a validator they can undelegate and get their funds back into their own wallet. From there they are open to delegate it again, swap it and use it for whichever activity is available on Osmosis.

    While it is possible to redelegate funds, we will only be looking at the process of undelegating here.

    On the right (or below on small screens) you can see which activity is most common for users to do with their freshly unstaked OSMO.

    Methodology

    For every undelegate transaction I record the time at which the funds “unlock”. Then moving forward from that time ==the first transaction that uses OSMO is chosen== and analyzed for its type.

    While this cannot be 100% accurate without looking at the specific coin this method achieves a very high accuraccy.

    Note that:

    • Other: Unknown transaction type
    • Nothing: No transaction found in search range (see dashboard parameters)

    Unstaked OSMO being delegated again

    Below there is the breakdown of which delegators users are most commonly delegating there OSMO to, after they got it from a undelegation.

    The results interestingly show that the delegation transactions are very much centered on just 5 validators (~85% of transactions).

    In comparison to that the delegation volume looks completely different. The volume is also very centered on few validators (Top 5 making up ~80% of the volume) but none of the top volume validators appear in the top transaction count validators.

    => Whales make up a large part of the delegation volume!

    Hint:

    As there are no labels available its not about the identifying a specific delegator but about seing a trend.

    Findings

    • The ==biggest chunk is swaps==: Most users unstake to sell their OSMO / swap their OSMO for something else.
      • More detail about this below!
    • On ==second place you will find redelegations==: This is likely users switching validator and not knowing about the redelegate feature.
      • Once again, more detail below!
    • Third come transfers, biggest chunk is OSMO interal but there also are ~4% of IBC outs.
    • Last are LP additions: Its very uncommon for users to unstake and add the unstaked funds as liquidity. (~9%)

    Unstaked OSMO being swapped for other assets

    Below there is the breakdown of which assets freshly unstaked OSMO is being swapped to.

    The clear winner is ATOM followed by USDC on second place.

    ATOM makes sense as its an asset supported by most CEXes & Bridges allowing user to move the funds out of the ecosystem.

    USDC does not indicate users leaving the ecosystem as much but instead just indicates users wanting to protect themselves from the massive volatility in the recent months.

    Concluding

    Whale Domination

    Across the board you cannot identify a strong correlation between volume and transaction count.

    The only graph that shows some correlation is the swap tx count and swap volume one.

    Unstaked OSMO uses

    • The biggest fraction of OSMO is ==swapped into other assets== (~35%)
      • Mostly ATOM but also some USDC
    • Another big chunk is just being ==delegated again== (~25%)
      • Most OSMO is being delegated to a small set of Validators
      • The delegate transactions are also mostly targetting 5 Validators (~85% of transactions) but none of which shows up in the top 5 validators by volume
    • ==Liquidity pool deposits== make up barely anything compared to the previous categories (~8%)
    • The remaining OSMO has been sent to different addresses within the Cosmos ecosystem
      • 15% to an address within Osmosis

      • 3% to an address on a different chain via ibc

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    These conclusions and texts above all used 120 tracked_days and 21 ignore_timeout_days

    Osmosis

    Osmosis is a blockchain that is part of the Cosmos ecosystem. Its main purpose is to provide a basis for the Osmosis decentralized exchange.

    While the DEX is very interesting to look at we will concentrate on the staking in this dashboard.

    Osmosis uses delegated Proof Of Stake as consensus mechanism and as of now has a ~20% APR on staked OSMO. This makes staking a very interesting activity for users.

    In this dashboard we will look at unstaking in particular. How much OSMO is being unstaked? Which delegators is it mostly undelegated from. What do users do with the OSMO once the locking period is over.

    Sounds interesting? Grab a cup of tea and read along!

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    Before we dive in lets make sure we are all on the same page

    Proof of Stake (PoS)

    This is a consensus mechanism used by blockchains where users can lock their funds (stake) to gain a chance to be the one creating a new block and receiving the block rewards.

    Staking

    The process of locking up funds for PoS is called staking.

    Validator

    A validator is a special kind of node that validates transactions and has funds locked up (described above) and will mine a block if it wins the rights to do so. Depending on the chain there is a minimum amount of stake and high uptime required so this is not practical for the end user.

    Delegating

    Instead of running your own validator its an option to just delegate your funds to an existing validator. That validator will take a split out of the earnings generated from your delegated stake in return for the service of running the validator.

    Whale

    A whale is a wallet address that holds a significant amount of cryptocurrency (millions or even billions of $).

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