Question in detail:

Like most assets in the last two years, DOT saw a meteoric rise in 2021 followed by a crater in 2022. However, DOT there still remains a little bit of DOT liquidity and volume flowing through Osmosis. Is the trading activity of DOT on Osmosis real user activity, or is this just arbitrageurs? How many users are active in Pool 773 every day, week, month?

Overview of analysis:

This dashboard divided into the following parts:

• The Liquidity stats on Pool #773
• Trade analysis of DOT
• The Arbitrage vs. ordinary swaps of DOT

Osmosis chain:

Osmosis is an advanced Automated Marketer Protocol (AMM) that allows developers to build custom AMMs with robust liquidity pools. Osmosis is built using the Cosmos SDK and uses the Inter-Blockchain Communication (IBC) feature to enable cross-chain transactions. The Cosmos ecosystem follows the "Blockchain as Decentralized Program" architecture; This means that Osmosis is a blockchain connected to cosmos Hub, which is also a decentralized exchange.

Osmosis, with the help of IBC, connects to the entire ecosystem of Cosmos chains and their more than 10 billion dollars of native assets. After supporting active blockchains on the Cosmos hub, the project aims to connect to other chains such as Ethereum and Bitcoin.

Methodology:

The data provided by Flipside has been used to handle this analysis. To handle this investigation the following steps have been passed as below:

• Step 1: The identification of LP actions
  • Table→ osmosis.core.fact_liquidity_provider_actions
  • Metrics→ Count of actions, unique LPer, Volume of DOT, cumulative analysis, 7-day moving average volume, Average LPer per day.
• Step 2: Trade analysis of DOT
  • Metrics→ Count of swaps, distinct traders, Volume of swaps, Average swap count per user and day, Average volume of swap per user and day
  • Arbitrage definition→ Traders who made over 20 swaps on single day consider as arbitrageurs
  • Swap To and From DOT
• Step 4: By aggregating the outcomes of the steps and deep dive into the LP actions and trades of DOT, draw a conclusion about how users interacted with liquidity pools.

Providing liquidity on DEXs of Osmosis

Liquidity pool provides a new standard for efficient trading of assets and at the same time allows investors to earn profit from their assets. DeFi (DeFi) liquidity pools are very popular nowadays and many people are thinking of joining these pools. A liquidity pool is actually an automated market maker (AMM) that automatically connects buy and sell orders based on predetermined parameters using a smart contract. Here it is not necessary to connect traders directly with other traders and liquidity will be available as long as investors have entered their assets into the pool. Market makers in exchanges that rely on the order book need to constantly adjust their buy and sell orders according to price fluctuations. Market makers need to be professional here and have the time and expertise to manage their strategies. But in a liquidity pool, there is no need for these things and it is not necessary to collect information from different exchanges about the price of an asset; Liquidity providers only need to enter their assets into a liquidity pool and leave the rest to the smart contract.

Part 1: Stats related to Pool #773

Findings:

• The volume and count of actions on Pool #773 demonstrate the domination of Pool join action and users provide LP are more than withdrawers.
• The average and Median volume of providing LP on pool #773 are larger than removing LP from this pool by far.
• The unique users provided LPs on pool #773 are more than liquidity removers as can be seen.

Findings:

• The aim of daily, weekly and monthly investigations demonstrated the trends and spike on these time basis. It can be seen that there was spike on volume of provided LP by DOT on August 16, 2022.
• The most busiest month on pool #773 was August, 2022 by all metrics of liquidity providing actions (join or exit).
• The 7-day moving average volume of provided/removed DOT reveals the increasing trend on adding liquidity over time.
• The cumulative investigations outline the pattern of volume and count of actions on poo #773.

Part 2: Trade analysis on Pool #773

Findings:

The trade analysis related to DOT on Osmosis has been placed in this part:

• The count of swaps and unique traders for Swap to DOT are more than Swap from DOT swaps.
• The average trader per day show that “Swap To DOT” has more unique traders than “Swap From DOT”.
• The volume and count of swaps for DOT was spiked on the second week of November, 2022 and on that week, the “Swap To DOT” swaps experienced highest count.
• The average swap volume for “Swap From DOT” type of swaps is larger than “Swap To DOT”.

Part 3: Ordinary swaps vs. Arbitrages

Findings:

Now lets investigate the swap types (ordinary swaps or Arbitrage) and the consequences are as below:

• The Arbitrage has higher volume of swaps compared to ordinary swaps on DOT.
• Only 32 unique traders made Arbitrage swaps on Osmosis also these traders made highest count of swaps too.
• As expected, the Arbitrage swaps has higher average and Median volume of DOT token.
• The swap per trader is high for Arbitrage swaps by far.

Conclusion:

The summary of the results related to such and such is placed in this section:

• Most of trades of DOT belongs to arbitrageurs compare to regular traders.
• These Arbitrage swaps have been manipulated the trades of DOT on Osmosis.
• Most of users provide liquidity into the Pool #773 as can be seen.

Useful links:

• Osmosis network
• Pool #773
• Providing Liquidity on Osmosis

Author:

Credited by MZG

Discord handle: m.zamani#0361

Twitter handle: @GargariZamani