Analyze Whale Dependency On LOOP DEX

With this article, we are attempting to determine which pools are dependent upon whales, that means where a low number of wallets provide a high percentage of total liquidity.

LOOP DEX(Decentralized Exchange)

The DEX allows tokens to be exchanged smoothly across the network and the various DeFi (Decentralized Finance) Applications. That means ,Keeping the Network decentralized and secure requires a DEX that ensures seamless asset exchange throughout the Network.

Using the Terra blockchain, Loop is a DEX (decentralized exchange) that allows token exchanges in a completely decentralized and anonymous manner. There are liquidity pools within Loop DEX so that you can trade, or add liquidity so you can earn yield.

loopfinance.com is the second automated market maker DEX on the Terra platform after TerraSwap. loopfinance.com has substantially improved upon TerraSwap exchange’s limitations. With the help of Wormhole Bridge, the platform would list Terra-based tokens for swapping and would enable the trading of Ethereum, Solana, and Thorchain Synthetic Assets, among others . In this manner, the Loop team is developing a complete multi-chain DEX on the network.

LOOP DEX Pools – Number of Liquidity Providers Vs Liquidity ($)

Liquidity on each DEX pool can be seen from the bar graph below. Liquidity ($) from bLUNA/LUNA Dex Pool contributed for 38.3% and the top 2 Dex Pool names contributed for 60.31%.

Comparing the liquidity with the number of liquidity providers on each Pool, the lowest total number is 1 (MIAW/UST) and the greatest number is 18K (LOOP TOKEN/UST). There are only 2K liquidity providers in the pool BLUNA/LUNA, but the amount of liquidity is 17.69M. This indicates that more whales are present in this pool. The following graph suggests that BLUNA/LUNA, LUNA/UST and AUST/UST pools may have whales in them. Although they have greater liquidity, they have fewer liquidity providers on each pool.

On the pool LOOP TOKEN/UST, there are a more number of farmers, due to the fact that it contains less liquidity 1.54M compared to the 18K Liquidity providers.

There are 34.35K liquidity providers in total. The Top 5 Pool Names contributed for over three quarters (78.37%) of the number of liquidity providers in total. LOOP TOKEN/UST have the most total number of liquidity providers (17.81K).

Below is a graph showing the average amount of liquidity provided by each liquidity provider. Here, the BLUNA/LUNA and LUNA/UST pools represent the largest liquidity shares. We can assume these pools can contain a lot of whales.

Growth of Liquidity Providers

We can see on the below graphs the growth of liquidity providers on each pool. They are categorized for our clear understanding here.We can see that BLUNA/LUNA pools’ liquidity providers are increasing. Likewise, we can find that AUST/LUNA pools’ liquidity providers have been started increasing from January 4th,2022 onwards. A New, innovative $aUST pools have launched on Loop DEX. we can see that from the following tweet.

Source: Twitter

In the beginning, it seems Liquidity Providers on the LOOP TOKEN/UST pools were more abundant. Gradually, we see the number of liquidity providers on this pool is reduced. The growth of liquidity providers on AUST/UST pools began more in January 4, 2022.

As you can see from the graph below, the growth of Liquidity providers on LOOP without LUNA and UST pools began to increase from Jan 4,2022.

Observations

From the above analysis,

  • With fewer liquidity providers and more liquidity in the pools BLUNA/LUNA, LUNA/UST, and AUST/UST, there is a possibility of whales being present.
  • It would be better to have a lot of farmers happy instead of keeping just one whale happy. If, by chance, there are 3-4 whale liquidity providers in a pool. And if they leave suddenly, that will negatively impact the pool’s liquidity. To avoid this, keep many farmers in the pool so that if some later leave, it does not affect on the liquidity of the pool.
  • As of Jan 4, 2022, we have seen an increase in liquidity providers on a daily basis on AUST/LUNA and AUST/UST. This was due to the launch of aUST on LOOP Finance.

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