Try Quests to earn cryptoAdditional Swaps Required to Offset Emissions
Introduction
THORChain is a cross-chain decentralized exchange that is built on its own blockchain that was created using the Cosmos Software Development Kit (DEX). It utilizes an automated market maker (AMM) approach that is analogous to the initial iterations of Bancor (BNT) or Uniswap, with the exception that THORChain's native token, RUNE, will serve as the basis swap pair.
Method
- From the flipside prod db.thorchain.block rewards database, we examine the prizes given out for each completed block. Next, we examine the swap costs recorded in the flipside prod db.thorchain.swaps table. Then, using the data in the flipside prod db.thorchain.prices table, we calculate the RUNE price and convert the block rewards into USD. Finally, we determine the long-term block reward to swap fee ratio, where ratio is the number of times the swap volume must grow to offset emissions.
:telescope: Findings:
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Swap transactions have grown throughout time, although swap volume has fallen after hitting a peak point on April 4th, 2022.
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The incorporation of Terra into the thorchain in April 2022 caused a spike in the volume of thorchain swaps at that time.
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In the following visuals the swap fees volume and block reward with average ratio are shown.
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Increases in both swap costs and volume are much below the April 2022 high for block reward emission.
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While the swap cost has not been decreasing at the same rate as the emission of block rewards, the ratio between the two has been gradually shrinking.
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It is clear that the average ratio reached a peak of 25.4 on October 4th, 2021, indicating that the volume of weekly fees would need to increase by a factor of 25.42 in order to offset emissions. However, the ratio is currently at 4.2, which is quite close to offsetting emissions.
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In the second week of July 2021, the ratio was 0.37, which was too low to offset emissions.
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Overall, the volume of fees must increase by 3.8 times to offset emissions in cumulative state, given that the total amount volume of Block reward is $68M and the volume of Swaps fees is $18.11M.
✍🏻 Conclusion
- To reduce the amount of greenhouse gas emissions that are brought about by Block rewards, the volume of exchanges would have to climb to roughly 5.7 times what it is at the now.
- The swap fees have increased along with the volume of swaps, but they are still a considerable amount lower than the peak of the block reward emission in April 2022.
- Even though the cost of swaps has not been increasing at the same rate as the emission of block rewards, the ratio of swap fees to block rewards has been steadily decreasing, which is a fact that makes for an interesting statistic.
About:
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Author: HaM☰d
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Discord: 0xHaM☰d#8391
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Twitter: @arjmandi_hamed
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Email: h_arjmandi2012@yahoo.com
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Swap/economics: How much swap volume does THORChain need to offset emissions? (maybe a tool?)
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E.g if we 10x swap volume, the current block emissions can be offset by the additional fees generated from the swaps.
Hey there 👋!
Firstly, I appreciate you sticking with it until the conclusion.
I'm Hamed, a civil engineering Ph.D.
student interested in data analysis.
I've made many similar dashboards and visualizations since I started at Flipside in January.
Please take a look at my various contact details and let me know what you think.
:telescope: Findings:
In the last two charts above the Swaps volume and count of swaps transactions are shown on over time.
As can be observed, the highest difference have placed in Apr 2022, that was peaked at 6.2 times in Apr 4th.
In the other hand the difference for swaps transactions count are too much, so that the highest level was took placed on July 18th, with 138.24K transactions and required 770K to offset emissions.
