On the Ethereum blockchain, gas refers to the cost necessary to perform a transaction on the network. Miners set the price of gas based on supply and demand for the computational power of the network needed to process smart contracts and other transactions.

Hence generally busier network implies a higher demand for gas and hence higher price. This means activities like Borrows and Deposits will get prized out when there are gas wars - When the network is congested, the transaction fees can skyrocket as users pay more fees to the miners in order to incentivize them to proritize your transactions

Gas vs Volume of USD

We will look at the daily average volume deposited and borrowed, comparing with the median gas price of that particular date.

Comparing both gas with borrows and deposits respectively, don't seem to show any serious correlation, with the volume growth most likely a result of increased adoption of DeFi ecosystem.

Gas vs Tx volume

We will look at the daily number of deposit and borrow transactions, comparing with the median gas price of that particular date.

While the volume didn't have much correlation to the gas prices, it seems though the transaction volume has a correlation atleast during time before NFT-mania

Correlation

Lets check what the snowflake's inbuilt correlation function tells us about gas correlation to AAVE protocol activity.

We will divide the data into two chunks, one that consists of data point before May, the other thats only 6 months data since. This will provide us clear distinction between pre NFT mania gas prices and current NFT fuelled gas wars.

We see an almost insignificant correlation before the NFT craze season, between volume of USD moved in AAVE protocol. And recently we have seen an increased correlation.

This can be interpreted as :

• Initially, gas prices didn't have much correlation on Volume moved. This could be because this was the Yield Farming season hence profits were the major driving force. Hence gas was usually ignored. Moreover the price of ETH itself wasn't extremely high to create an issue
• Now, due to a combination of higher GWEI and high ETH value, most users are discouraged to move assets unless they are moving large sums that the gas prices and transaction fees feel insignificant.
• As the market was generally bearish and AAVE rewards dropped low, borrow volume dried up with more people focussing on the lending side to get profits. Hence borrow correlation dropped, while deposits increased

The transaction volume correlation gives a different outlook at these.

• Before the NFT craze, we see a positive correlation. Once again a combination of low ETH price and rewards meant, gas prices didn't have a huge correlation with number of transactions.
• However, now the same combination of higher ETH price and reduced farming rewards means, their is a negative correlation, a very strong one, indicating users avoiding high gas prices to make interactions with the protocol.