How Market Conditions are Affecting Gamma ETH Hypervisor Pools?

In this article, we will see how TVL in Uniswap V3 has influenced TVL in GAMMA/VISR over time. Is TVL in GAMMA/VISR ETH pools more prevalent during periods of increased volatility than it is during periods of more stable market conditions? Show the correlation between volatility and TVL in at least two visualizations.

Introduction About Gamma Labs

UniSwap V3 introduced a new feature of concentrated liquidity pools. These pools allow liquidity providers to concentrate their liquidity in a desired range for optimal utilization of their liquidity and earn higher fees as well. But all this flexibility comes with a lot of pain! In order for liquidity providers to ensure that their positions remain within the trading range, they have to actively manage their positions. In the event that someone forgets to maintain their liquidity positions in the trade range, their liquidity will be sitting idle and they will lose the fees they earned by providing liquidity. Due to this active management requirement, many small players will be forced to leave Uniswap, since they are unable to keep track and manage their liquidity positions. 

It was Gamma Labs that recognized this issue and developed a protocol that offers active liquidity management without having to worry about babysitting their positions. Gamma uses hypervisors, which are upgradable contracts, to automatically track the trading range and adjust liquidity accordingly. For anyone who does not wish to actively manage their liquidity yourself on Uniswap V3, Gamma Hypervisor is a lifesaver! 

In addition, VISR also merged with Gamma Labs after Dec22,2021. Through Visor’s development process, a series of role-specific contracts called hypervisors was developed, which are open source and interact with Uniswap v3 contracts as a replacement for the LP NFT, providing a much more flexible framework for managers and LPs. As part of its commitment to DeFi, Visitor has worked strenuously to implement discretionary asset management as a protocol. We can also see that Gamma’s reorganization is focused on security and performance after acquiring Visor.

Gamma Hypervisor ETH Pools TVL After Visor

In the below graph, we are able to see the Gamma Hypervisor ETH Pool TVL after merging with VISR and before merging with VISR.

Below is a chart showing the comparison between Gamma ETH pools’ TVL and ETH’s price. In the 1st week of November 2021, we observed a maximum average liquidity of $13M. ETH price and average liquidity ($) both show decreasing trends. From the beginning, the price of ETH has been reduced by almost half.The Value Gamma ETH Pools Liquidity was reduced from $13M to $4M, a reduction of more than 60%.

In the graph below, we can see how the Volatility of Gamma ETH Pools compares with the ETH price.In the week of November 14-20, 2021, we can see the Average Liquidity is reduced to -39.71%, while the Ethereum price is reduced by -7.4%. Taking a look at another example from the week of January 16-22, 2022, we can see that the Average Liquidity has decreased by -11.02%, and the Ethereum price has decreased by -5.53%.There is more of a correlation between TVL and ETH price in Gamma ETH Pools.

In the graph below, we can see how the Volatility of Gamma ETH Pools compares with the Uniswap V3 TVL.In the week of November 14-20, 2021, we can see the Average Liquidity($) is reduced to -39.71%, while the Liquidity(UNI) is reduced by -0.15%. Taking a look at another example from the week of January 9-15, 2022, we can see that the Average Liquidity($) has decreased by -10.69%, and the Avg Liquidity(UNI) has decreased by -6.75%. Meanwhile the correlation between the Gamma ETH pools TVL and Uniswap V3 TVL are not significant.

Conclusion

According to the above analysis, we can see that the Gamma ETH Pools TVL is following very close to the ETH Price comparatively with the Uniswap V3 TVL, which suggests the volatility of the ETH Price is generally reflected in the Gamma ETH Pools TVL.

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