Date: 2022-04-29

This analysis focuses on the payed out IL protection by pools over time.

All data is from between May 1st and 12th 2022.

Methods

• queried and filtered thorchain.liquidity_actions to find Top 10 pools
• investigate these pools over time since January 1st
• timeframe 2022-04-12 - 2022-05-12

Overview

What is THORChain?

THORChain is a blockchain, based on Cosmos and Tendermint. It offers native swapping of assets between blockchains.

What is Impermanent Loss Protection?

Impermanent Loss Protection will be paid out when you withdraw from a pool. If the impermanent loss is greater than your revenue you have generated from providing liquidity (from fees and incentives) then you will be subsidized the difference ...

Source

Analysis

How much Impermanent Loss Protection was payed out by Top 10 pools in the past 12 days?

Conclusion

• TERRA.UST payed out most $USD in the past 12 days, as there were strong price movements
• IL Protection pay out only happens on special events
• Special events are strong price movements as we can see in ETH.ETH and ETH price comparison

Thanks for reading!

This analysis was created on 2022–05–12 for a bounty at Flipside Crypto by piper to answer the following questions:

ThorChain - IL Protection Over Time: Q88. With highly volatile prices recently, more IL protection has been paid out on THORChain. How do recent days or weeks compare to historical amounts?

All data used are from Flipside Crypto.

How do these pools look over time since the beginning of the year?

The chart above shows the Top 10 Pools by payed out IL Protection in $USD. It is clearly visible, that TERRA.UST payed out most $USD in the past 12 days, 95k $USD. Lets see how these pay outs look like the beginning of the year.

The chart tells us, that all pools pay out the IL Protection very rarely. It looks like these just happens on special days / events. The current TERRA LUNA crisis, for example, is clearly visible.

Let's compare ETH prices and ETH-ETH IL Protection Pay Outs to see if these causes these spikes.

It looks like after every ETH price increase the pay out is very high, which totally makes sense as the Impermanent Loss is caused by price moves. The protection therefore takes effect with every strong price change.