What is the Merge?

The Merge is a transformation in the way Ethereum processes transactions and how new ETH tokens are created.
It is about the combination of the Ethereum blockchain with a new separate blockchain. The new system, known as Proof-of-Stake (PoS), reduces the energy consumption of the Ethereum blockchain by 99.9%.
Moreover, the Ethereum Foundation, a prominent non-profit organization that states it supports Ethereum, mentioned that the upgrade will pave the way for more blockchain upgrades that will facilitate cheaper transactions in the future.
However, the Merge brought some uncertainty to DEFI markets. It got many market makers (MM) to remove liquidity from defi to lower their risk. After the merge, some have redeployed the liquidity, and some haven't.

Overview

This dashboard analyzes the behavior of Sushi MMs 2 weeks prior to and after the Merge. Specifically, it goes into depth on the following topics:

Liquidity added and removed
Most affected pools
Users adding and removing liquidity
Redeployments after Merge
Identity of these wallets and common activities after Merge

Key Findings

The amount of liquidity removed from the Sushiswap pools during the two weeks previous to the Merge is 20 times larger than the amount added.
September 14th was the day with the most liquidity removed from the pools, while September 15th was the day with the largest amount of liquidity added to the pools. This was because there was a lot of uncertainity around the Merge, so many users removed their tokens to mitigate risks in case the Merge turned out to be a failure (which ended up not being the case).
The most affected pool by far before and ater the Merge was the USDC-WETH pool.
The number of users that removed liquidity before the Merge is very close to the number that added liquidity after the Merge.
Despite this, the majority of users that removed their funds before the Merge and redeployed them after the Merge are big investors (added between 1k and 10k USD and between 10k and 100k USD).
However, 88.7% of the users that removed their liquidity from the Sushiswap pools did not intend to add the liquity back (at least on the short run).
Most redeployments happened on the Merge day and the following days. The daily liquidity adding tendency from pre Merge withdrawers has been decreasing over time. This reinforces the argument that the users that removed their liquidity and redeposited did it to mitigate uncertain Merge outcomes.
Despite some names like matos.eth or the Tokemak deployer contract, most of the top wallets that removed liquidity before the Merge are private investors.
The wallet that added more liquidity 0x60ca1f1f3abc9146cc7561d39c9ab1a7a279f83f, added way more than any other wallet. Actually, this wallet deposited half of the total liquidity added after the Merge. This was done mainly in two transactions on September 15th worth 12k USDC each on the USDC-WETH pool (transaction 1 and transaction 2).

Most Affected Pools

Liquidity Added and Removed

The amount of liquidity removed from the Sushiswap pools during the two weeks previous to the Merge is 20 times larger than the amount added.

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However, after the Merge there was more capital being added to the pools than removed from them.

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The largest amount of liquidity added to the pools during the month of September was on the Merge day (September 15th). This was because many users saw that the Merge was performed succesfully, so the risk was lower.

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September 14th was the day with the most liquidity removed from the pools (65.88M USD). As mentioned, there was a lot of uncertainity around the Merge, so many users removed their tokens to mitigate risks in case the Merge turned out to be a failure.

The number of users that removed liquidity before the Merge is very close to the number that added liquidity after the Merge.

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The most common profile for users removing liquidity before the Merge withdrew between 1k and 10k USD.

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On the other hand, the most common group that added liquidity after the Merge added between 0 and 500 USD. Hence the reason why the total amount added is lower than the total amount removed.

Redeployments after Merge

Users Adding and Removing Liquidity

Identities and activity

Out of the 758 users that removed their capital before the Merge, only 86 of them (or 11.3%) redeployed their funds after the Merge.

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This means that 88.7% of the users that removed their liquidity from the Sushiswap pools did not intend to add the liquity back (at least on the short run).

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Thus, despite a small minority of liquidity removers redeploying their funds, those that did added large amounts of tokens.

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The majority of those that did added between 1k and 10k USD. The second most common group of liquidity providers after the Merge added over 100k USD.

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Most redeployments happened on the Merge day and the following days. The daily liquidity adding tendency from pre Merge withdrawers has been decreasing over time. This reinforces the argument that the users that removed their liquidity and redeposited did it to mitigate uncertain Merge outcomes.

9 out of the 10 wallets that removed more liquidity before the Merge are private investors. Their profile is does not have a publicly shared tag.

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However, the 10th wallet seems to be related to the ENS name matos.eth, as it is the wallet that sends and receives funds from this wallet.

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Also, the 6th wallet that removed the most amount of funds belongs to the Tokemak deployer contract.

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These two wallets are also amongst the top 10 wallets that added more liquidity after the Merge (top 2 and 3, respectively).

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The wallet that added more liquidity 0x60ca1f1f3abc9146cc7561d39c9ab1a7a279f83f, added way more than any other wallet. Actually, this wallet deposited half of the total liquidity added after the Merge. This was done mainly in two transactions on September 15th worth 12k USDC each on the USDC-WETH pool (transaction 1 and transaction 2).

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The accounts that added liquidity after the Merge did proportionally more deposits and swaps than those wallets that removed liquidity before the Merge.

Conclusions

The amount of liquidity removed from the Sushiswap pools during the two weeks previous to the Merge is 20 times larger than the amount added.
September 14th was the day with the most liquidity removed from the pools, while September 15th was the day with the largest amount of liquidity added to the pools. This was because there was a lot of uncertainity around the Merge, so many users removed their tokens to mitigate risks in case the Merge turned out to be a failure (which ended up not being the case).
The most affected pool by far before and ater the Merge was the USDC-WETH pool.
The number of users that removed liquidity before the Merge is very close to the number that added liquidity after the Merge.
Despite this, the majority of users that removed their funds before the Merge and redeployed them after the Merge are big investors (added between 1k and 10k USD and between 10k and 100k USD).
However, 88.7% of the users that removed their liquidity from the Sushiswap pools did not intend to add the liquity back (at least on the short run).
Most redeployments happened on the Merge day and the following days. The daily liquidity adding tendency from pre Merge withdrawers has been decreasing over time. This reinforces the argument that the users that removed their liquidity and redeposited did it to mitigate uncertain Merge outcomes.
Despite some names like matos.eth or the Tokemak deployer contract, most of the top wallets that removed liquidity before the Merge are private investors.
The wallet that added more liquidity 0x60ca1f1f3abc9146cc7561d39c9ab1a7a279f83f, added way more than any other wallet. Actually, this wallet deposited half of the total liquidity added after the Merge. This was done mainly in two transactions on September 15th worth 12k USDC each on the USDC-WETH pool (transaction 1 and transaction 2).

Methodology

The data used in this analysis was collected by combining the information on the dim_dex_liquidity_pools, fact_event_logs and ez_token_transfers tables of the core schema of the Ethereum database.

The first table was used to obtain information about the Sushiswap pools on Ethereum.

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The second table provided the data regarding the pool actions. A Burn event is emitted when liquidity gets removed from the pools while a Mint event is emitted when liquidity is added.

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Once we had the pools and the liqudiity events, we used the last table to obtain the information about the tokens in the pools where liqudiity was being added/removed.

The pool with the largest amount withdrawn before the Merge was the USDC-WETH pool, with 36.61M USD. This is no surprise, as most users wanting to mitigate risks wanted their funds in stablecoins. As liquidity is added in equal amounts of the two tokens, most users swapped half of the liquidity they got from the pool (the ETH funds) into USDC.

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The USDC-WETH pool was also the largest liquidity added pool after the Merge. There is a big difference in size compared to the second and third pools (FXS-WETH and SYN-WETH, respectively).

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Moreover, despite more liquidity being removed from Sushiswap before the Merge than added to the pools after the Merge, there was more liquidity added to the top pool than withdrawn.