What is Yield Farming ?

Yield farming is a means of earning interest on your cryptocurrency, similar to how you'd earn interest on any money in your savings account. And similarly to depositing money in a bank, yield farming involves locking up your cryptocurrency, called "staking," for a period of time in exchange for interest or other rewards, such as more cryptocurrency.
When traditional loans are made through banks, the amount lent out is paid back with interest, with yield farming, the concept is the same: cryptocurrency that would normally just be sitting in an account is instead lent out in order to generate returns

Method:

1.Analysis LP providers and Farmers

2.Analysis opened Lp positions per Wallets

3.Analysis Retail and protocol TVL per pools

4.Analysis pool profits

The quantity provided by you would be in the form of a token pair, which are locked in smart contracts and are used to provide liquidity. The liquidity you provide is deposited into a liquidity pool, which is used in most cases, by decentralized exchanges. A liquidity pool is designated by the token pair it represents. For example, ETH-USDC is a liquidity pool that contains the liquidity provided for the token pair ETH and USDC.

The ratio of Yield Farmers to LP Providers is 0.17 which is quite low.
We have seen this ratio be as high as 0.47 during the week of Dec 27, 2021.
Most of the times this ratio has been 0.2±0.05.
Both the number of LP Providers and Yield Farmers has seen a decline since Jan 2022.

On an average each wallet only holds around 3 LP positions, which seems quite low.
The most number of LP positions are held by 0x1f14be60172b40dac0ad9cd72f6f0f2c245992e8 , totalling 1.2K positions, followed by 0x0202ed9ff0d505f9b064a610199a001cef9977bd with 571 positions.

We look at
- Retail TVL = The cumulative of Liquidity Added - Liquidity Removed
- Protocol TVL = Current Pool Balance - Retail TVL.
USDC-WETH Pool is one of the few pools where the Retail has a very comparable TVL, 17M $USD vs 23.4M $USD.
DAI-WETH Pool is one of the other few pools where the Retail has a very comparable TVL, 3.1M $USD vs 6M $USD.
WBTC-WETH pool is the only pool where the retail, owns around 3X the liquidity owned by protocol

pools profits