Growth of Liqudity Providers

    Uniswap quickly became the leading Decentralized Exchange (DEX) after its launch, partly because of the ease of use. The effectiveness of Uniswap hinges on two groups of users: the traders executing swaps and the users that provide liquidity to facilitate the trading. Without the liquidity providers, traders would experience steep price impacts that negatively affect them. Without the traders, liquidity providers will experience little to no return on the provided capital which would make it a poor investment strategy.

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    Summary
    Methodology
    Question

    Analysis can be done (but not limited to) the size of liquidity provided, the group of LPs who are most dominant volume wise (a lot of small LPs or a few whale LPs), how long do they tend to stay in pools to provide liquidity, how active the Liquidity Providers are and if this has a relation with the size of liquidity provided, impact of a large LP leaving small pool (will others fill the void?), Ethereum vs L2: is there a difference/overlap between LPs on L1 vs L2.

    Uniswap, since its inception, has seen approximately 1.8 million LP transactions and boasts 153.1 thousand Liquidity Providers, contributing to a substantial total LP volume of around 3,856 billion USD. On average, these providers hold approximately 2 million USD in Average LP volume, with a Median Liquidity Volume of 5.1 thousand USD, suggesting that roughly 50% of Liquidity Providers deposit around 5,000 USD.

    Uniswap Pools exhibit an average of 11 transactions per day and welcome about 5 users daily. When categorizing Liquidity Providers by their LP volume, it is evident that the majority contribute amounts ranging from $10,000 to $100,000, while those who provide between $500 and $1,000 represent the smallest number of LPs. Additionally, the majority of LPs across both volume and transaction groupings have fewer than 5 transactions.

    The analysis of Liquidity Providers' duration in pools reveals that over 33% of LPs have not closed their positions, with this group totaling approximately 24,000 LPs. Conversely, LPs remaining in the pool for 2 to 7 days account for only around 5,000 LPs, with a 7% representation.

    The examination of the Top 30 Smallest Pools on Uniswap highlights the impact of liquidity outflows, with the highest outflow volume occurring in May 2021, totaling around 18.23 million USD. This withdrawal had a detrimental effect on the pools, leading to a subsequent decrease in the number of Liquidity Providers and new LPs.

    Comparing L2 networks to Ethereum, it becomes evident that L2 networks outperform in certain aspects, with more LP transactions and Liquidity Providers. However, Ethereum leads in Liquidity Volume, indicating that most users on L2 networks contribute smaller amounts in contrast to Ethereum. Small LPs exhibit the highest transaction numbers, while Whale Users contribute the highest volume. Most Ethereum users maintain volumes between $10,000 and $100,000, while L2 users typically have volumes less than $10. Moreover, in terms of transaction numbers, the majority of users on both Ethereum and L2 Networks have fewer than 5 transactions.

    This dashboard is designed to investigate Uniswap's Liquidity Providers since its inception. To ensure the reliability of the data analysis, I have utilized a trusted source, Flipside, to depict the performance of Uniswap's LPs.

    The dashboard comprises six tabs. In the first tab, I provide an introduction to Uniswap, along with details about the methodology, a summary, and the overarching questions that I aim to address.

    Moving to the second tab, I present general data about Uniswap, including metrics such as the total number of LP transactions and the total number of LPs.

    In the third tab, I delve into the duration for which LPs tend to maintain their positions.

    The fourth tab is dedicated to showcasing the dominant users of Uniswap.

    The fifth tab focuses on an investigation into the impact of liquidity outflows on the Top 30 Smallest Pools of Uniswap.

    Lastly, in the last tab, I conduct a comparative analysis of all the metrics mentioned above, drawing parallels between Ethereum and L2 Networks.