Liquidity Pools on Osmosis

Introduction

• Osmosis is a Layer-1 Blockchain built on the Cosmos framework, operates a DEX and the OSMO is the native token which serves as governance and staking for users.
• In this dashboard we’ll look the liquidity pools on Osmosis, specifically the type of users providing liquidity on these pools, and notice changes based in the TVL of the pools.

Simple Definitions

• DEX: A peer-to-peer market where users can buy and sell assets (Crypto-tokens) without giving their private keys to an intermediate.

• Liquidity Pools (LPs): DEX have their assets to swap(trade) in pools, where people can change one asset for another using the assets in these pools, Users can provide liquidity to these pools an be “investors” who stake their crypto-tokens on DEX’s LPs to earn “transactions fees” when users swap their tokens using these pools.

• Total Value Locked (TVL): The current total value of an asset in a protocol, or a LPs or in a blockchain node.

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Question

• What type of wallets provide liquidity on Osmosis? 
• Is liquidity concentrated and owned by a small number of whales? Or, are there a diverse range of participants in the LP ecosystem? 
• Do LP composition change based on TVL of the pools themselves?

Methodology

• Thanks to the new Osmosis tables on Flipside Data banks, LP’s information is easily found in:

  • osmosis.core.fact_daily_balances: There are 3 types of LP’s here

    GAMM pools from their Automated market maker (AMM)

    IBC pools from their Inter-blockchain protocol (IBC)

    Other pools of their tokens such as Uosmo(OSMO)-Uion

  • osmosis.core.dim_labels: Here i can correlate the distinct pools to their Name, but there aren’t enough labels for all the pools in the previous table.

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As expected of 2022 bear market past Q1, there are a few users providing liquidity to the pools in the past months (Q2-Q3), and therefore activity in liquidity is smaller.

From December 14 2021, to May 1 2022 there is an increment from 57k users to 300k. But from May until October, this increment is closer to 120k only.

At October 24, 2022 there are 1304 LPs with 422.944k different wallets providing liquidity, but most of half of these LPs have only 1 wallet providing liquidity, and if we add the LPs with only hundreds of wallets providing liquidity we have, Only a quarter of these pools are really active with thousands of differents wallets.

The top LPs on Osmosis presents a higher number of users providing liquidity with OSMO being the most active with 374.387k users.

The Null value is from the Pool address ‘ibc/27394FB092D2ECCD56123C74F36E4C1F926001CEADA9CA97EA622B25F41E5EB2’ which doesn’t have a project_name in the label table. This asset is the IBC ATOM (ATOM transferred through IBC).

The Percentage of these 15 LPs comes from the users providing liquidity only in these 15 pools, this doesn’t include the other users from the other pools.

Wallets on Osmosis providing liquidity

These Wallets are classified in 5 categories, note that LT stands for less than and their ranges are:

LT1k_Wallet: 0 to 1000 USD

LT5k_Wallet: 1001 to 5000 USD

LT10k_Wallet: 5001 to 10000 USD

LT100k_Wallet: 10001 to 10000 USD

Over100k_Wallet: More than 100000 USD

Summary

• On Osmosis blockchain LPs seems to follow the standard and the liquidity is concentrated by a small number of whales BUT these percentage of liquidity Owned by Whales seems to change depending of the pool.
  • There are Popular pools which have a lot of users providing liquidity, so the percentage of liquidity owned by whales seems to be less, but still the top users providing liquidity to the pools seems to have most of the percentage of liquidity.
  • Most of the Pools doesn’t have too much users providing liquidity, so a lot of these pools seems to be mantained by whales.
• Although most of the liquidity comes from a particular number of whale wallets, a LOT of wallets are providing liquidity on different pools in Osmosis, and this number seems to be increasing in the last months, (Most of the total Volume comes from smaller wallets) so this is a healthy environment for all types of wallets.

Most of the users on Osmosis doesn’t have more than 1k of USD in their balance as expected, but there is a good number of wallets with more than 1000 USD to 100000 USD, And surprisingly the numbers of wallets with over 100000 USD is relatively close to the thousand, so Osmosis environment is very good for all the types of wallets.

The activity on Osmosis per month seems really healthy, not only the wallets with less than 1000 USD but the Wallets within 1k to 10k USD have a lot of activity in the pools.

After the crisis in May 2022, Osmosis pools seems to recover with really good numbers in the TVL and activity with all wallets types.

As expected the wallets with less than 1000 USD have the most activity and usd volume in the pools, the wallets with more than 100000 USD although they don’t have the same activity as the rest, they have the 2nd place in total USD volume.

Because we know that most of the pools have less than 100 wallets providing liquidity is more probably that only a few “Whale wallets” concentrate most of percentage of the liquidity in these pools, but for the popular pools with a higher number of users providing liquidity, these “Whale wallets” doesn’t have the same percentage of liquidity as the pools with fewer users.