Description of work

In this dashboard, we want to analyze the behavior of SushiSwap Market Makers and its effects on liquidity pools before and after the Merge.

This dashboard includes the following sections:

1 - Definitions

• 1 - 1 What is the Merge?

• 2 - 1 What is SushiSwap?

• 3 - 1 What Is a Market Maker?

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2 - Analyzing liquidity volume added/removed from liquidity pools

3 - Analyzing liquidity pools status

4 - Analyzing Market Makers

5 - Conclusion

1 - Definitions

1 - 1 What is the Merge?

The Merge represents the Ethereum network’s shift to proof-of-stake (PoS), its new system (also called a “consensus mechanism”) for authenticating crypto transactions. The new system replaces proof-of-work (PoW), the more power-hungry mechanism pioneered by Bitcoin.

The Merge was scheduled to take effect once the cumulative difficulty of all mined Ethereum blocks hits a certain number – the “total terminal difficulty” (TTD).

In August, Ethereum’s core developers set the TTD at 58,750,000,000,000,000,000,000, which was reached Sep-15-2022 06:42:59 AM +UTC

Source: coindesk.com

• The time period considered for this work is from 2022-09-01 to 2022-09-28

• The phrase before the Merge in this work refers to the time period 2022-09-01 to 2022-09-14.

• The phrase after the Merge in this work refers to the time period 2022-09-15 to 2022-09-28.

2 - 1 - What is SushiSwap?

SushiSwap is an Ethereum-based decentralized exchange that lets users swap a vast array of tokens, as well as engage in other finance services.

It has no centralized authority or middlemen. Instead, it relies on smart contracts—or code that automates processes—and liquidity provided by other users to complete trades. SushiSwap is similar to Uniswap, which also runs on Ethereum, as well as the Binance Smart Chain-based PancakeSwap.

Source: decrypt.co

3 - 1 What Is a Market Maker?

A market maker is an individual participant or member firm of a stock exchange whose role is to buy and sell securities from their own account throughout the trading day in order to add liquidity to financial markets. Market makers are typically foreign-exchange firms, banks, or high-frequency trading firms tasked with facilitating trade of a particular asset.

A market maker owns a large inventory of stocks or digital currencies and sells them to other broker-dealers, which ensures that investors can access them on demand and that markets remain liquid (i.e., filled with buyers and sellers as well as low transaction fees).

Source: gemini.com

2 - Analyzing liquidity volume($) added/removed from liquidity pools

Methodology

• To find SushiSwap pools, we use data from [ethereum.core.dim_dex_liquidity_pools] table.

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• To find the amount of added/removed liquidities from SushiSwap pools, we use data from ‍[ethereum.core.fact_event_logs] table.

  • When a user provides liquidity for a pool, tokens that represent token pairs that exist in that pool are minted and sent to the user.

    For example, SushiSwap Liquidity Provider (LP) token represents the USDC and ETH pairing.

    When users remove provided liquidity from a pool, mentioned tokens are burned.

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• To find the volume($) of added/removed liquidities from SushiSwap pools, we get tokens price data from ‍[ethereum.core.fact_hourly_token_prices] table.

✔️Observations

• Before the Merge, the total liquidity of all SushiSwap pools has decreased by $65.97M.

  • Although a small volume of liquidity ($6.438M) was added to the pools, a large volume of liquidity ($72.4M) was removed from the pools. (removed volume is 11.2X greater than added volume)

• After the Merge, the total liquidity of all SushiSwap pools has increased by $30.22M.

  • Although $39.87M was removed from the pools, $70.09M was added to the pools. (added volume is 1.75X greater than added volume)

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• The most significant volume of liquidity removed from pools was recorded on September 9 ($44.9M - 1 day before the Merge), September 15 ($18.18M - the Merge day), and September 20 ($9.48M - 5 days after the Merge), respectively.

• The most significant volume of liquidity added to the pools was recorded on September 15 ($34.81M - the Merge day), September 16 ($12.48M - 1 day after the Merge), and September 22 ($7.56M - 7 days after the Merge), respectively.

3 - Analyzing liquidity pools status

✔️Observations

• Pools that have had the most significant decrease in liquidity($) from 2022-09-01 to 2022-09-28 are:
  • 1 - OHM-DAI LP - $9.2M decrease
    • View in SushiSwap analytics
  • 2 - AAVE/ETH LP - $6.58M decrease
    • View in SushiSwap analytics
  • 3 - OHM-WETH LP - $3.81M decrease
    • View in SushiSwap analytics
  • 4 - SUSHI-WETH SLP - $3.81M decrease
    • View in SushiSwap analytics
  • 5 - SRM-WETH SLP - $3.57M decrease
    • View in SushiSwap analytics

4 - Analyzing Market Makers

In this section, an address is considered a Market Maker who has removed at least $100K from pools before the Merge.

✔️Observations

• Among addresses that removed the highest volume of liquidity before the Merge, Olympusdao($7.36M), Tokemak ($6.86M), and MatosDAO($2.75M) addresses can be seen.

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• Among addresses that provided the highest volume of liquidity after the Merge, MatosDAO($6.03M) and Tokemak ($5.93M) addresses can be seen.

• 0x60ca1f1f3abc9146cc7561d39c9ab1a7a279f83f removed the highest volume of liquidity before the Merge($12.52M) and provided the highest volume of liquidity after the Merge($29.42M).

• The total number of addresses that are considered as MM equals 66.

  • Only 30.3% of total MMs redeployed their capital into pools after the Merge.

5 - Conclusion

In this dashboard, we analyzed the behavior of SushiSwap Market Makers and its effects on liquidity pools before and after the Merge. The following results were obtained:

• Before the Merge, the total liquidity of all SushiSwap pools has ==decreased by $65.97M.

  • Although ==a small volume of liquidity== ($6.438M) was ==added== to the pools, a ==large volume of liquidity== ($72.4M) was ==removed== from the pools. (removed volume is 11.2X greater than added volume)

• After the Merge, the total liquidity of all SushiSwap pools has ==increased by $30.22M.

  • Although ==$39.87M of liquidity was removed== from the pools, ==$70.09M of liquidity was added== to the pools. (added volume is 1.75X greater than added volume)

• Pools that have had the most significant decrease in liquidity($) from 2022-09-01 to 2022-09-28 are:

  • 1 - OHM-DAI LP - $9.2M decrease
  • 2 - AAVE/ETH LP - $6.58M decrease
  • 3 - OHM-WETH LP - $3.81M decrease
  • 4 - SUSHI-WETH SLP - $3.81M decrease
  • 5 - SRM-WETH SLP - $3.57M decrease

• 0x60ca1f1f3abc9146cc7561d39c9ab1a7a279f83f removed the highest volume of liquidity== before the Merge($12.52M) and provided the highest volume of liquidity after the Merge($29.42M).

• The total number of addresses that are ==considered as MM equals 66==.

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• Only 30.3% of total MMs redeployed their capital== into pools after the Merge.

• Among addresses that removed the highest volume of liquidity before the Merge, Olympusdao($7.36M), Tokemak ($6.86M), and MatosDAO(==$2.75M) addresses can be seen.

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• Among addresses that provided the highest volume of liquidity after the Merge, MatosDAO($6.03M) and Tokemak ($5.93M) addresses can be seen.