INTRODUCTION

Time-Weighted Average Price (TWAP): The measure of an asset's average price over a specific amount of time is called time-weighted average price, or TWAP. It is possible to calculate TWAP for any given time period. TWAP trading algorithms aim to maximize the average price of a deal while carrying it out over a predetermined time frame. This is typically utilized to carry out huge orders anticipated to have a big influence on the market. The ease with which an asset may be exchanged on financial markets is called liquidity. An order book's depth is frequently used as a gauge of liquidity.

A token's price fluctuating after you deposit it in a liquidity pool is referred to as an impermanent loss for cryptocurrency liquidity pools (IL).

It is strongly tied to temporary loss to engage in yield farming, where you lend your tokens to receive incentives. It differs from staking, though, because, with staking, investors must put money into the blockchain to validate transactions and blocks in order to get rewards.

Yield farming, on the other hand, comprises lending your tokens to a liquidity pool or providing liquidity. Rewards vary depending on the procedure. While supplying liquidity has certain concerns, such as liquidation, control, and price hazards, yield farming is more profitable than holding.

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METHODOLOGY

Initially, the total ETH and USDC deposited as liquidity to the network is calculated along with the impermanent loss overall and the percentage as well as the average of the same.

The block numbers of the liquidity provided are in the range between 14000000 and 15180000. Now the impermanent loss in USDC and the percentage of the same with the ETH tokens are calculated and the Twaps of both are also accounted for by the liquidity providers along with the volume of the ETH and the USDC deposited by the LPers. This is followed by the total value added over time to see the timely analysis. Now the average percentage of the impermanent loss that happened for the liquidity providers is determined. Now including the WETH token, the impermanent loss with the token, and the USDC and WETH deposits over time, the deposit ratio is charted. The same is followed by the timely analysis of the liquidity added, removed, and the NetFlow of the liquidity including all the tokens. With the block numbers as the constraints mentioned, a timely analysis of impermanent loss can be done. Finally, the deposited USDC/ETH ratio and the volume over time are charted along with the ETH price, and also the overall impermanent loss that occurred in USD value is charted so that considering all these analyses a better TWAP methodology can be made.

The charts here indicate the average of the impermanent loss for the network, the impermanent loss occurred for the ETH, the loss for the USDC tokens in general.

The values here show the impermanent loss that occurred in general by accounting all the tokens and also the percentage of the same.

The chart here shows the ETH and the USDC deposited by the Liquidity providers.

The impermanent loss happened for the liquidity providers in the USDC token is charted here and it is seen that for most of the providers the loss happened is small except a single LPer.

The chart here shows the impermanent loss percentage of the Liquidity providers in the ETH tokens and it is seen that the percentage does not follow a same trend as a few users have more than 100% of the loss.

The bar diagram here shows the primary and the secondary TWAPS that are calculated for the Liquidity providers and the chart is represented in logarithmic scale of better representation.

The chart here shows the total volume provided as liquidity over time and it is seen that the volume has been decreasing over time and in the recent days the volume has decreased in large magnitudes on comparison with the earlier times.

The average percentage of the impermanent loss for the top Liquidity providers is charted here and the scale almost has the same trend.

The scatter plot here shows the average volume of the impermanent loss that happened for the liquidity providers and have more or less the same trend.

The impermanent loss percentage in WETH and USD are charted with time and it shows great trend in the loss happened for both the tokens.

The USDC and the WETH deposits over time is charted for time and it is seen that the WETH deposits has been increasing over time.

The charts here shows the liquidity that has been added and removed over pool in all the tokens, the above chart does not include the WETH but have SLP, ETH, & USDC and the right plots have all including WETH.

The left chart is an indication of the NetFlow of the Liquidity provided which is a reduced value of the provided and the removed liquidity and the right chart here shows the Net Liquidity that has been provided over time.

This chart can be used to see the average impermanent loss of the blocks by giving the block numbers as the constraints at the top.

WETH and the USDC tokens that has been provided by the users are charted for their volume.

The price of the ETH tokens over time is charted here.

The deposited volume and the ETH/USDC ratios given by the users are charted for time here. This chart has other data as mentioned in the legends and it is seen that the datasets follow the same trend.

The chart towards the left shows the overall impermanent loss that has been happened for the Liquidity providers by considering all the tokens and hence it is created with USD value.

These dataset analyses can be well used to create a net TWAP methodology for the Liquidity.