Aave

Uniswap

Compound

Introduction

On September 15th, Ethereum successfully performed “The Merge”. Ethereum successfully transitioned to the Proof of Stake (PoS) consensus model. With Proof of Stake, transactions are validated by users that have a big ‘stake’ in the network, meaning they have a considerable amount of ETH. Previously, using the Proof of Work model, miners were the ones validating transactions. The transition to Proof of Stake has made the miners obsolete.

In this dashboard, we’ll examine the user behavior leading up to the Merge on three of the biggest protocols on Ethereum: Aave, Uniswap and Compound.

Metrics

We’ll look at a few different metrics each protocol depending on the available data.

• Net deposits into the protocol: This metric will provide the most effective insight into user behavior as we can easily see if users are risk-on or risk-off.

  Negative net deposits would indicate that many users are taking their ETH off the protocol, possibly to sell it. A positive net deposit would indicate that many users do not plan to sell it and want to earn a yield.

• Net borrows on the procotol: Borrowing is also an important part of user behavior on the protocols. If net borrowing is negative then users are paying of their loans. This indicates that users are returning to safety. A positive net borrowing indicates that users are willing to take on more risk.

Methodology

• Net deposits on Aave: Calculated using the tables ethereum.aave.ez_deposits

  and ethereum.aave.ez_withdraws. We sum over the issued_tokens variable to get the amount of ETH deposited. We sum over the withdrawn_tokens_variable to get the amount of ETH removed. Finally, we calculate the net deposits by subtracting the total amount deposited minus the total amount withdrawn.

• Net borrowed on Aave: Calculated using the tables ethereum.aave.ez_borrows and ethereum.aave.ez_repayments table. For each day we sum of the amount borrowed and amount repayed where the symbol contains ‘ETH’.

• Total Variable Debt and Liquidity for WETH:

  Calculated using the ethereum.aave.ez_market_stats table. We select reserve_name = ‘WETH’ and aave_version = 'Aave V2'. We then calculate the average for the total liquidity and variable debt for the last 30 days.

Analysis

The Merge was on September 15th. Let’s start with net deposits. We can see that in the three days leading up to the merge users were withdrawing their ETH from Aave. -30k ETH on Sep 12th, -104k ETH on Sep 13th, and -170k on the day before the Merge. This means that the total liquidity of WETH dropped around 230k in the week leading up to the Merge.

A similar picture is painted for the amount of ETH borrowed. On the days leading up to the merge more users we repaying their WETH loans. Especially on the day of the merge on Sep 15th when a net 300k ETH was repaid.

This all indicates that users we taking a risk-off approach to the Merge on Aave.

Methodology

Unfortunately less data is for Uniswap compared to Aave and Compound, so we only have a graph for the net amount of WETH added to liquidity pool leading up to the merge.

This chart was created using data from the ethereum.uniswapv3.ez_lp_actions table. We then calculate the total amount of WETH added to liquidity pools using action = ‘increase_liquidity’ . To make sure we only get WETH liquidity pool actions we specify that either token0 or token1 is equal to the contract address of WETH: (token0_address='0xc02aaa39b223fe8d0a0e5c4f27ead9083c756cc2'

or token1_address ='0xc02aaa39b223fe8d0a0e5c4f27ead9083c756cc2')

We select all transactions were liquidity was removed using action = decrease_liquidity.

We then calculate the net amount of WETH added to liquidity using eth_added-eth_removed

Analysis

Similarly to Aave, the net amount to WETH added to Uniswap decreased leading up to the Merge. Since Sept 10th the net deposit was negative. On the day before the Merge, the net decrease in liquidity was the largest with about 34k WETH.

This suggests at Uniswap users were also taking a risk-off approach to the Merge.

Interestingly, the net WETH added became positive again after the Merge, indicating that users had the confidence to add their ETH to liquidity pools again.

Key findings

• Both net deposits and net borrows were negative on Aave leading up to the Merge
• The total WETH liquidity on Aave decreased by about 230k WETH in the week leading up to the Merge.
• On Uniswap, the net WETH added to liquidity pools was also negative leading up to the Merge
• A total of 80k WETH was removed from the liquidity pool in the week leading up to the Merge on Uniswap.
• On Compound, the net amount of ETH deposited also decreased leading up to the Merge. However, on Compound the day of the largest withdraws was one week prior to the Merge, instead of one day before on Aave and Uniswap.
• Contrary to Aave, the amount of ETH borrowed on Compound increased significantly leading up to the Merge.

Methodology

• Net ETH deposited into Compound

  Calculated using the ethereum.compound.ez_deposits and ethereum.compound.ez_redemptions table. We calculate the total amount deposited by taking the sum of the supplied_base_asset and setting supplied_symbol = ‘ETH’. We calculate the total amount of ETH removed from Compound by taking the sum of received_amount variable and setting received_contract_symbol = ‘ETH’. We calcule the net deposits using eth_added - eth_removed

• Daily average supply and borrowed ETH in Compound

Calculated using the ethereum.compound.ez_market_stats table in combination with underlying_symbol = 'WETH'. This table contains a variable called supply_usd which hold the total value of WETH in USD on compound. We divide by the price of ETH using token_price to calculate the supply in ETH. We then calculate the average value per day.

We do the same for borrows using the borrow_usd variable.

Analysis

Similar to Aave and Uniswap, the net amount of ETH deposited into Compound was negative on the days leading up to the Merge. However, there are some different trends here compared to Aave and Uniswap. First of all the largest net decrease in ETH on compound was on Sept 7th, one week prior to the Merge. On Aave and Uniswap the largest decrease occurred one day before the Merge.

Interestingly, ETH borrows look completely different than Aave. The amount of ETH borrowed on Compound increased significantly leading up to the Merge.