Pool 872 Analysis

    What is the Question?🚨


    As recently as January 2023, Pool 872 (USDC.grv/USDC) had ~$10,000 in TVL; however, today liquidity is less than $500. What happened? Where did these LPers go? Was the precipitous drop in LP activity driven by the release/incentivization of 3-Pools?

    Analyzed Topics:

    1. LP Activity on Pool 872 Since January 2023
    2. Actions Taken by Pool 872 LP Removers After They Exited Pool 872 on Osmosis
    3. Which Pools Pool 872 LP Removers Attended After They Leave There?
    4. What was the reason of Pool 872 TVL Drop?

    Introduction🚩


    What is OSMOSIS?

    Osmosis is a DEX protocol, which means it uses smart contracts to determine the price of digital assets, to produce liquidity via a peer-to-peer (P2P) methodology, and to exact trades between users. This approach to an exchange platform is known as an AMM — a DEX protocol that prices crypto assets in liquidity pools.

    More Info

    What is OSMO(Token)?

    The Osmosis token (OSMO) is used to vote, stake, and provide liquidity throughout its pools. Superfluid staking, a process novel to the Osmosis protocol, allows users to stake assets to secure the network while simultaneously providing assets in a liquidity pool.

    More Info

    Methodâš¡


    In this dashboard, i analyzed stable pool #872 (USDC.grv/USDC) on Osmosis to see why its TVL dropped so badly recently while it had 10K TVL at the beginning of 2023 but it only has 500$ right now.

    For this matter i extracted the data from ==Osmosis.core== database provided by Flipsidecrypto and mainly used fact_liquidity_provider_actions table to do my analysis on this pool.

    I filter this pool’s data on Osmosis chain with its pool_id which is 872 : Pool_id[0]=’872’

    I only considered successful transactions with tx_succeeded=’TRUE’ and analyzed this pool since January 1st 2023.

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    Findings👀

    • In this part as we see i showed an overview of Pool 872 (USDC.grv/USDC) since the beginning of new year so analyze users activity and what are doing on this pool.
    • From a general perspective, Adding LP has happened more than Removing LP and and most of this activity belongs to late January on Jan 28th and Feb 1st.
    • Although most of the lp actions and lpers were adding LP to this pool but the volume chart is showing us that most of the volume of this pool was removing by few users and this case got serious after Jan 18th. We will analyze later that what happened on Jan 18th to cause this event.
    • As i mentioned earlier, over 70% of lp actions were Add LP since January 1st meanwhile Removing LP accounted almost 90% of average volume share.
    • A total of 81 LP actions has been recorded on Pool 872 by 42 LP Adders and 34 LP actions has been recorded by 31 LP Removers. While number of Add LPs were almost double the Remove LPs, Remove LP Volume was more than 4x of Add LP Volume over time.

    1. LP Activity on Pool 872 Since January 2023

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    2. Actions Taken by Pool 872 LP Removers After They Exited Pool 872 on Osmosis

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    Findings👀

    • Charts above are showing that these LP removers mostly did Swaps after they left Pool 872 and after Swap, Transfer was their second popular action on Osmosis.
    • Swap accounted almost 70% of LP Removers actions share followed by Transfer with 23% and Staking activity with less than 5%.
    • These users nearly recorded a total of 4K swaps and recently their swapping activity has increased and peaked on Late January.

    3. Which Pools Pool 872 LP Removers Attended After They Leave There?

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    Findings👀

    • Above charts are showing Pool 872 LP Removers activity and they are showing that which pools that users went after they left Pool 872.
    • We can clearly see that STRD/OSMO was their most popular pool in terms of LP Actions and USDC.grv/OSMO was their most popular one in terms of USD Volume. Also STRD/OSMO pool is the second one in USD Volume term.
    • These LP Removers mostly joined STRD/OSMO with over 150 number of LPs and brought over 100K USD volume to USDC.grv/OSMO pool. They brought More than 200K USD Volume to USDC.grv/OSMO and STRD/OSMO pools together.
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    4. What was the reason of Pool 872 TVL Drop?

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    Proposal #404 : Composition of 3-Pool for Stableswap (BUSD/USDT/USDC)

    This proposal recognises the StableSwap 3pool of USDC/USDT/BUSD as a core StableSwap pool and enables OSMO incentives at the next routine incentives proposal.

    Details

    This is a signalling proposal to include the StableSwap 3pool USDC/USDT/BUSD into the set of pools that receive OSMO liquidity incentives by recognising it as a core StableSwap pool. After this proposal has passed governance, the pool will be added to the regular incentives program of OSMO and receive incentives as a Stable/Stable pool.

    The pool incentivised at this time would be Pool 877 with all assets listed provided via the Axelar bridge and as such are the canonical representations of these on Osmosis according to Proposal 206. If the canonical status of one of these assets is changed then incentives would move at the next routine proposal to the pool containing the new canonical assets, with the highest volume and matching the criteria stated in Proposal 377.

    Stable pools are incentivised by the model defined in Proposal 377. In brief, incentivised pools receive a subsidy of up to 2 times the value of fees generated in the pool in OSMO, with the total of the Stable/Stable category being capped as 4% of current Liquidity Provider emissions.

    This proposal depends on the passing of Proposals 402 and 403, which recognise USDT and BUSD as Stablecoin assets on Osmosis. If this proposal passes whilst one of the referenced proposals fail then it would have no immediate effect as one of the constituent assets would not be recognised as a Stablecoin asset. If all constituent assets become recognised by Osmosis governance as Stablecoin assets in future then this proposal would take effect.

    > ==Final Status : Passed==

    Source

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    Findings👀

    • In this section i showed the reason of USDC.grv/USDC pool’s TVL fall off. On January 18th, proposal 404 got proposed and after 5 days of voting, the coting period has been closed on Jan 23th and received over 23.6K YES votes and accounted 98% of vote share and obviously it got passed. This proposal was for 3-pool which was for stableswap and it contained BUSD/USDT/USDC stablecoins. After that this proposal got passed on Jan 23th, the net volume of Pool 872 decreased and after Jan 26th in only 3 days, over 5.5K USD volume removed from this pool.
    • We should mention that the LP Removing for this pool was started on Jan 18th when this proposal got proposed and users knew that it will be passed so they removed their liquidity from this pool earlier than Jan 23th.
    • According to TVL Chart, Pool 872 TVL started to decrease after mid January and dropped from around 9.5K USD to 500$ after 2 weeks.

    Conclusion💡


    • The reason of USDC.grv/USDC or Pool 872 TVL fall of was proposal 404 which represented 3-pool composition for stableswap and users preferred that pool instead of pool 872. They decided to remove their LP from this pool after Jan 18th, the date this proposal got proposed, and removed nearly 9K USD volume from pool 872 in less than 2 weeks.
    • Swap was pool 872 LP removers most popular activity among other activities on Osmosis followed by Transfer in the second place.
    • Users mostly brought their assets to STRD/OSMO and USDC.grv/OSMO pools after they left pool 872.
    • In this period since start of 2023, adding lp was more than removing it on Pool 872 but recently users removed huge amount of money from this pool in few number of transactions so the Remove LP volume got 4x more than Add LP Volume since January 1st.
    • Most of the money got removed from pool 872 by LP Removers on Jan 26th, 27th and 28th.

    Author: Sbhn_NP

    Discord : Sbhn_NP#8717

    Twitter : Sbhn_np

    Instagram : Sbhn_NP

    Thanks for your time!

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