Try Quests to earn cryptoLiquidity providers (LPs) are an essential pillar of the Thorchain protocol. The funds they pool allow the rest of us to swap assets on Thorchain.
In this post I look at the retention of liquidity providers on Thorchain.
I begin by counting the number of new liquidity providers every month. This is done using Flipside's thorchain.liquidity_actions.
I select the min(date) of each from_address where lp_action = 'add_liquidity'. The result is grouped by month.
Large liquidity providers also have good retention on Thorchain.
We do not see the same monthly growth in new large LPs that we saw earlier.
Of the 16,700 LPs that provided liquidity some time in the past, only 8.25% have withdrawn all their liquidity from Thorchain pools.
A few notes on my methodology. Large liquidity providers do not take into consideration the liquidity balance of LPs. Withdrawals are also ignored from the calculation.
Large liquidity providers include any address that performed lp_action = 'add_liquidity' for a combined total amount greater than 10,000 USD.
Do large LPs behave differently?
I re-do the previous analysis, this time selecting for large providers of liquidity. These include any address that provided a total of more than 10,000 USD in liquidity.
The retention of large LPs is better than average.
Thorchain yields to liquidity providers, April 26, 2022
Of the 4,081 addresses that added more than 10,000 USD of liquidity, only 6.92% percent have removed all their liquidity from Thorchain.
The last two months have seen a growing number of new liquidity providers. This is good for Thorchain.
There is good retention of liquidity providers. Every month, there are vastly more new liquidity providers than there are LPs that leave the protocol.
Thorchain is adding a growing number of liquidity providers every month. Most LPs stick around and keep some liquidity in pools. Thorchain is a good place to park liquidity. The protocol offers some protection from impermanent loss, as well as attractive yields:
Now I take these monthly new LPs and group them by their current status:
- LPs that are still providing liquidity today; or
- LPs that no longer provide liquidity on Thorchain.
- So far, only 8.2% of liquidity providers have left Thorchain. This ratio is improved to 6.9% in LPs that added more than 10,000 USD of liquidity.
- The monthly number of new LPs has grown in the last two months. Most of this growth comes from LPs adding less than 10,000 USD of liquidity.
Thank you for reading!
Note: if the result does not show in the table, see below screenshot at Annex A
This is a screenshot of the above results table. A technical problem seems to have erased the content of the tables.
