Try Quests to earn cryptoGas as a proxy of activity
Introduction
Sushiswap is amongst the top 20 DEXes according to CoinMarketCap data (https://coinmarketcap.com/rankings/exchanges/dex/). Sushiswap in many aspects are competing other DEXes the most important which in gas fee.
This dashboard investigates the relationship between total transaction fee generated on SushiSwap, Ethereum price and number of swaps on SushiSwap.
Hypotheses
How is Ethereum price related to the total transaction fee generated by swaps on SushiSwap?
Ethereum price can be an indicator of the crypto market. When Ethereum's price is at the highest level, it indicates that the crypto market is bullish. Therefore, the Ethereum price may correlate with the number of swaps which leads to a higher amount of transaction fee generated.
an increase in Ethereum price <--> positively correlates with the number of transactions --> increase the amount of transaction fee generated
Ethereum price directly influences the USD value of the transaction fee. When Ethereum's price is high this may discourage users to use swaps in general.
an increase in Ethereum price --> increase the USD value of transaction fees --> discourage swapping in general --> decrease the amount of transaction fee generated
However, as Sushiswap's gas fee on average is lower than the competitors, the high price of Ethereum may encourage users to use Sushiswap as an alternative to other DEXes. Also, the bullish market, in general, encourages swapping. Therefore, it is also possible that even with the high price of Ethereum the number of transactions and in turn total transaction fees are increased.
--> encourage swapping in general and in particular on SushiSwap
To sum up in this dashboard we test whether ETH price has a positive or negative relationship with tx fee in total or if they are unrelated. For this analysis, we take into account and control the number of swaps.
Graphs below show how the daily average Ethereum price, total transaction fee generated on Sushiswap per day, and the number of swaps on SushiSwap have changed over time. Also, graphs compare the three variables in pairs.
We can see that all pairs go up and down somewhat hand in hand. However, it is difficult to say which of the variables is the underlying factor. Also it is difficult to say what pairs are more related to each other when the third variable is constant.
The scatter plot below included the number of swaps into the relationship between tx_fee and ETH price.
We can see a U-curve effect of ETH price on total tx_fee.
When number of swaps is moderate (not very low or very high) the total transaction fee is at the low level (see the markers with the very small size in the middle of graph below).
Conclusion
The relationship between Ethereum price and transaction fee on SushiSwap does not have an straight forward answer when it comes to causal question and explanation of mechanism of relation.
Increasing Ethereum price directly increases the USD value of transaction fee, this may decrease the swap activities or be correlated with increasing swap activities. Either way can lead to an increase or decrease in transaction fee generated on SushiSwap.
The data shows that the daily transaction fee and ETH price have changed over time somewhat similarly. However, when we took into account number of transactions, found that the relationship between gas fee and swap activities are not always correlated. As the graph below shows When the ETH price is high or low the correlation between gas fee and actities is high, otherwise they are unrelated.
The spikes as the graph above shows are related to the times that the ETH price falls sharply.