Description

Osmosis is a L1 Proof of Stake blockchain built on Cosmos that enables developers to design and deploy customizable Automated Market Makers on top of customizable liquidity pools. Using Inter-Blockchain Communication (IBC), it is possible to preform cross-chain swaps. This has created the grounds for Osmosis to be a decentralized exchange (DEX).

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Methodology

Beginning of May 2022 is the start point of our analysis. This timeline includes events such as the Terra crash and Exploited Liquidity pools on Osmosis. Two Approaches are taken to find the most popular contracts on Osmosis. Before proceeding, it should be mentioned that the term “contract” can be either the liquidity pool or the swap pairs that liquidity pools provide.

Popularity of contracts can be designated as the number of times they were used in the specified period or the amount of USD that was either routed through the pools or the USD volume that the swap pair has transacted.

The general approach taken can be explained in the following steps:

1. From osmosis.core.fact_swaps table, the adjusted amounts as well as transaction id (tx_id) , currencies and pool ids were obtained.
2. Since currencies were the ibc addresses of the swap pair, the obtained table in step 1 was joined with osmosis.core.dim_labels to acquire the token symbols.
3. Now that we have symbol of the tokens and the time of the swap, USD prices of tokens and their corresponding swap volume in USD can be obtained from an hourly averaged version of osmosis.core.fact_prices table. Null entries are dealt with in a symmetric manner such that insufficient data would not be noticable.
4. Once we have the data accumulated from the queries above, the rest can be accomplished by grouping by day, pool_ids or swap_pairs and performing aggregations.

Pool Popularity By Tx Count Or USD Swap Volume

Two charts on the left show the popularity of pools by number of transactions and total USD volume swapped since May.

The top 5 absolute popular pools have ids 1, 678, 560, 561 and 722. This is the same for both charts.

Pools with IDs 562 and 608 have more swap volume than 5 and 498 in the tx count chart.

Note that Pool with ID 1 has the most share of the volume and transaction numbers by a vast difference.

Swap Pair Popularity By Tx Count Or USD Swap Volume

Looking at two charts on the left, the first thing that draws the attention the most is the OSMO/OSMO pair swap. This pair (or rather a single) is swapped across different pools. The reason for this comes from a concept called Arbitrage. This is when an asset is traded on two different markets to take advantage of the price differences in the listings.

We can clearly see that the majority of the swaps since May has been on the OSMO/OSMO pair.

Daily Tx Counts Across Pools vs Across Swap Pairs

From the number of transactions across all pools based daily, we see that except for a few days on June, there’s a baseline of 50k. This could be bot activity that performs various Arbitrage.

The gap in the number of transactions coincide with the halt of the Osmosis blockchain due to malicious activity on the pools.

We can also see that on a daily basis almost 1000 different swap pairs are performed. The number of transactions across the swap pairs also experiences a spike on May 8 coinciding with Terra and Crypto crash, and a dip on June 8-11 coincident with network halt.

Conclusion

Since the Exploit incident on Osmosis blockchain, there have been some clear after effects that can also be seen above.

1. Users are sticking with Pools that are large and popular.
2. Most of the types of swaps are of arbitrage type.
3. Users are reluctant to create new pools and the cumulative count is saturating to a constant number as seen above.
4. Daily number of transactions have dropped from a baseline of 70k-90k in May to 55-75k since mid June.

Comparison of Creation Of Pools In two timelines

Finally if we compare two periods of time namely from May 2022 onwards and from 20th Feb 2022 - 1st May, We can see that from in the same time period the number of pools created are about the same. However There has been a clear drop in the cumulative number of pools since June 7th.

This show that the exploit that caused the removal of about $5Million from liquidity pools have made users reluctant to create new pools.