Overview

Osmosis is an advanced automated market maker (AMM) protocol that allows developers to build customized AMMs with sovereign liquidity pools. Built using the Cosmos SDK, Osmosis utilizes Inter-Blockchain Communication (IBC) to enable cross-chain transactions.

AMMs are typically pools of digital assets managed by a smart contract used to enable decentralized trading. The liquidity pools and smart contracts replace the order book system; liquidity providers lock their assets into the pool and earn fees when people trade in these pools.

Methodology

This dashboard has been built with the goal to see what type of wallets provide liquidity on Osmosis. It is to say, if the liquidity is concentrated and owned by a small number of whales or are there a diverse range of participants in the LP ecosystem, as well as if it is affected by the TVL of the pool.

To do so, we are gonna try to analyze the following metrics:

• Total liquidity share rate per rank of pool
• Distribution of liquidity per LPs rank over time
• Number of pools per liquidity providers
• Average number of liquidity providers per pool
• Average percentage of user participation

Looking at the liquidity share rate per liquidity provider (LP) rank, we can see how the top 10 LPs represents more than 80% of the total liquidity on Osmosis, the top 10 to top 50 LPs represents around 10%, while the rest the other 10%.

This homogeneous distribution is not so good for the healthy of Osmosis ecosystem because the liquidity is owned by a small number of whales.

If we take a look at the distribution over time, we can see how the share of the Top 10 LPs was increasing over the first months and now seems consolidated at this rate.

Another important metric that Ive found relevant is the avergae number of LPs per pool. In this case, considering all the available pools, we can see how the average number increased over the first month, mainly from October 2021 to April 2022 when the average number of LPs increased from 32 to more than 150 per pool. However, afterthat, the average number started to decrease, and since the ATH above 160, the average number of LPs per pool reached an all time low below 25.

If we exclude the pools with less than 10 LPs, we can see at the right image how the average LPs per pool increase considerably. But the trend is identhic as the previous onw. In this case, the current average LPs per pool is 66.

Finally, in this chart on the left, we can see how the amount of LPs per pool are healthy distributed. In this case, there are some pools with less than 10 LPs, but there are a huge quanitity of them with more than 10 LPs. In fact, more than 10% have more than 500 LPs.

Finally, I have calculated the average percentage LP participation over time.

If we take a look at the image on the right side, we can see how the trend is not good at all. Basically, it has been decreaseing since the inception.

From June 2021 to October 2022, the average percentage LP participation has decayed from over 4.5 to as low as 1.12. Then, we can see that now, users are mainly doing a single transaction when use the Osmosis pool.

Key insights

• The top 10 LPs represents more than 80% of the total liquidity on Osmosis, the top 10 to top 50 LPs represents around 10%, while the rest the other 10%.
• The share of the Top 10 LPs was increasing over the first months and now seems consolidated at this rate.
• The average number of LPs per pool increased over the first month, mainly from October 2021 to April 2022 when the average number of LPs increased from 32 to more than 150 per pool. However, afterthat, the average number started to decrease, and since the ATH above 160, the average number of LPs per pool reached an all time low below 25.
• If we exclude the pools with less than 10 LPs, we can see at the right image how the average LPs per pool increase considerably. But the trend is identhic as the previous onw. In this case, the current average LPs per pool is 66.
• The amount of LPs per pool are healthy distributed. There are some pools with less than 10 LPs, but there are a huge quanitity of them with more than 10 LPs.
• From June 2021 to October 2022, the average percentage LP participation has decayed from over 4.5 to as low as 1.12. Then, we can see that now, users are mainly doing a single transaction when use the Osmosis pool.