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@DataVortex_1. VWAP (Volume Weighted Average Price)
VWAP represents the average price of a token over a specific period, weighted by the volume traded during that time. It helps traders understand the true average price at which a token has been traded, reflecting the market's overall pricing behavior. A higher VWAP suggests that the majority of trades occurred at a higher price, which can indicate strong demand.
2. Liquidity
Liquidity refers to how easily an asset can be bought or sold in the market without significantly affecting its price. High liquidity means there are many buyers and sellers, making it easier to trade large amounts quickly. Liquidity is crucial for efficient market functioning and minimizing slippage during trades.
3. Slippage
Slippage occurs when the price at which a trade is executed differs from the expected price due to market movement or low liquidity. High slippage usually occurs in illiquid markets where there aren't enough orders to match the trade size, causing the price to move.
4. Platform Share Percentage
This metric indicates the share of total trading volume that each platform contributes in a given market. Platforms with higher market share, like Uniswap V3 or QuickSwap, are often more liquid and have a broader user base, leading to more trades and greater overall influence in the market.
5. Liquidity Provision
Liquidity provision refers to the process by which users deposit assets into liquidity pools on decentralized exchanges (DEXs). These assets are then used to facilitate trading, and liquidity providers earn a portion of the fees from trades that occur within the pool. Higher liquidity provision ensures smoother trading and lower slippage, making the platform more attractive to traders.
Here’s what i observed for some of the metrics after analysis based on the 3 Month data(21 october 2024):
1. Top Trading Pairs
WETH/USDC dominates with over $302M in total volume, followed by USDC/WETH. This emphasizes the liquidity and demand for these top tokens, reinforcing the role of stablecoins and major assets in driving liquidity.
2. Largest Single Trade Event
The largest trade was USDC to USDT for $173K, followed by USDT to USDC. Stablecoin pairs tend to be highly liquid, allowing traders to move large amounts with low slippage, showing stablecoins' importance for liquidity.
3. Top Swap Tokens
USDC leads with over $1.1B in volume, followed by WETH and WMATIC. This highlights the dominance of stablecoins and core assets in driving overall market volume, reflecting the growing reliance on these tokens in swaps.
4. VWAP (Volume Weighted Average Price)
VWAP tracks the average price based on volume over specific days. For example, on 2024-07-18, it was $4622.34. This metric helps assess the market's efficiency, as higher values indicate larger trades at higher prices.
5. Average Slippage
VERSA/USDC experienced the highest slippage at 80%. High slippage can indicate a lack of liquidity in certain token pairs, showing room for improvement in market depth for specific tokens.
6. Slippage Patterns by Time Period
Mid-peak hours had the highest trading volume ($1.26B), suggesting that traders tend to swap during non-peak periods for better liquidity. Off-peak hours still see significant volume, reflecting continuous demand across different times.
7. Platform Market Share
Uniswap V3 dominates with nearly 60% of total volume, followed by QuickSwap V3 with over 31%. This suggests strong platform competition, but Uniswap continues to lead the decentralized exchange space in liquidity provision.
8. Liquidity Utilization by Platform
WooFi had the highest liquidity utilization at 2500.20 on 2024-10-20, followed by Curve. High utilization suggests efficient capital deployment, but lower-ranked platforms like Uniswap V2 are under-utilized.
Each metric underlines the increasing adoption and liquidity of decentralized platforms, reinforcing the narrative that platforms like QuickSwap and Uniswap play a critical role in the Polygon ecosystem's growth.