Introduction:

The Ethereum merge brought some uncertainty to DeFi markets. It got many market makers (MM) to remove liquidity from DeFi to lower their risk. After the merge, some have redeployed the liquidity, and some haven't.

Questions:

Analyze the behavior of Sushi MMs 2 weeks prior to and after the merge.

• How much capital did they withdraw?
• which pools/chains got affected the most?
• Have they redeployed back their capital?
• Can we say anything about their identity (Tokemak, etc)?

Solution:

• We look at all the token and ETH transfers to the Sushiswap Router 0xd9e1ce17f2641f24ae83637ab66a2cca9c378b9f where the origin functions are one of the following for adding and removing Liquidity.

  • '0xe8e33700' -- addLiquidity

    '0xf305d719' -- addLiquidityETH

    '0x5b0d5984' -- removeLiquidityETHWithPermitSupportingFeeOnTransferTokens

    '0xbaa2abde' -- removeLiquidity

    '0x2195995c' -- removeLiquidityWithPermit

    '0xded9382a' -- removeLiquidityETHWithPermit

    '0x02751cec' -- removeLiquidityETH

• The analysis period is limited to Sep 1st until Oct 1st.
• \

Exactly what was expected happened.

That is, some people removed their liquidity from the pools before the merge and added liquidity again after it was successfully completed.

It can be said that in the two weeks before the merge, the inflow to the SushiSwap pools was negative and in the two weeks after that, the outflow from the pools was positive.

Add Text Here

Daily flow into and out of SushiSwap pools:

Total flow into and out of SushiSwap pools:

SushiSwap pools which removed liquidity from them:

Wallets which add or removed most most liquidity into or out of SushiSwap pools:

redeployed back