Here in this article, we are discussing about the average duration of liquidity held in each pool, weighted by the size of the LP.
Introduction
Let me give a few words introduction about the Thorswap.
DEX built by THORchain, THORswap is a cross-chain exchange that leverages THORchain’s features to provide instant liquidity and trade cryptocurrency within the network. By removing the barrier of token standards, THORswap allows users to direct exchange tokens on different blockchains with just one click.
RUNE functions as a liquidity connector between two types of assets. When swap transactions are performed, the token ratio changes, resulting in a difference in the exchange rate. As the price in the pool is different from the outside market, arbitrage traders will enter the trade and profit from the difference. This process is repeated at a high frequency. Eventually, THORChain settles with the external market. For LPs that stake for over 100 days, THORChain has implemented a permanent loss insurance formula similar to Bancor’s.
If we want to swap BTC for ETH, it first converts BTC into RUNE, then RUNE into ETH. In this case, RUNE acts as a liquidity connector between two types of assets.
As we already know , One who deposits their assets into liquidity pools is called a liquidity provider (LP). Liquidity providers allow traders to swap assets within the pool. Through trading fees, incentives, and block rewards, you can earn yield on your assets by providing liquidity for traders.
As you can see from the following graph, the average duration of liquidity in each pool on THORchain is displayed. Based on the below graph we can see that a maximum of almost 26% of wallets are held their liquidity in the BTC.BTC pool. Second largest amount of wallets that hold their liquidity in the ETH.ETH pool. These are the wallets, which are holding the third largest amount of liquidity in the ETH.USDC pool. After this, we have the 4th and 5th places for the most large amount of wallets who hold their liquidity in the BNB.BUSD pool and BNB.BNB pool respectively.
Average Duration Of Liquidity Held In Top 5 pools
The graph below shows the top pool BTC.BTC with the highest number of wallets, and with the average duration each wallet’s liquidity is held, you can separate the wallets according to their average duration. The maximum number of wallets in this pool is 5661, and they can hold their liquidity only for 5-10 days. Similarly, wallets with a number of 4908 can hold their liquidity in less than five days. The Long Term, means that there are almost more than 100 days of holding their liquidity in this BTB.BTC pool, with 2683 wallets being tied to it. There are only 11% of wallets in this pool that hold liquidity for more than 100 days, that is, almost out of all wallets in this pool. And also can see a majority of the wallets which are held their liquidity in less period of time only.
The graph below shows the second top pool ETH.ETH with the highest number of wallets, and with the average duration each wallet’s liquidity is held, you can separate the wallets according to their average duration. The maximum number of wallets in this pool is 3690(27%), and they can hold their liquidity in less than 5 days. Similarly, wallets with a number of 2388(17.5%) can hold their liquidity in 10-25 days range. The Long Term, means that there are almost more than 100 days of holding their liquidity in this ETH.ETH pool, with 2157(15.9%) wallets being tied to it. We can conclude that 15% of wallets in the ETH.ETH pool are holding their liquidity for longer than a 100-day period.
The pool BNB.BUSD is the third largest number of wallets holder. Here from the below graph we can see the average duration each wallet’s liquidity is held, you can separate the wallets according to their average duration. The maximum number of wallets in this pool is 2165(29.6%), and they can hold their liquidity in more than 100 days. Similarly, wallets with a number of 1613(22.1%) can hold their liquidity in less than 5 days. There are fewer wallets in this pool that fall under the category of 5-10 days. Based on this, we can conclude that almost 30% of wallets in the BNB.BUSD pool are holding liquidity for longer than a hundred days. Therefore, a greater number of wallets in this pool hold their liquidity for a longer period of time. Few wallets maintain their liquidity for a very short period of time.
The pool ETH.USDC is the 4th largest number of wallets holder. Here from the below graph we can see the average duration each wallet’s liquidity is held, you can separate the wallets according to their average duration. The maximum number of wallets in this pool is 3566(45.8%), and they can hold their liquidity in less than 5 days. Similarly, wallets with a number of 1587(20.4%) can hold their liquidity in 10-25 days range.The pool ETH.USDC has the 4th largest number of wallets. Using the below graph, we can see how long each wallet’s liquidity is held. In order to separate the wallets, we can look at the average duration of each wallet. There are 3566 wallets in this pool, representing 45.8%, and they can keep their liquid assets for less than five days. Similarly, wallets with a number of 1587(20.4%) can hold liquidity in a 10-to-25-day range.The Long Term, means that there are almost over 100 days of liquidity holding in this ETH.USDC pool, with 338(4.3%) wallets being tied to it.There are fewer wallets in this pool that fall into the more than 100-day category. As a result, almost 45% of wallets in the ETH.USDC pool hold liquidity within 5 days. A greater number of wallets in this pool do not hold their liquidity for a long period of time. Only a few wallets maintain their liquidity for a long period of time.
The pool BNB.BNB is the 5th largest number of wallets holder. Here from the below graph we can see the average duration each wallet’s liquidity is held, you can separate the wallets according to their average duration. The maximum number of wallets in this pool is 1991(45.3%), and they can hold their liquidity in more than 100 days. Similarly, wallets with a number of 518(11.8%) can hold their liquidity in in 25-50 days range. There are fewer wallets in this pool that fall under the category of 5-10 days. Based on this, we can conclude that almost 45% of wallets in the BNB.BNB pool are holding liquidity for longer than a hundred days. Therefore, a greater number of wallets in this pool hold their liquidity for a longer period of time. Few wallets maintain their liquidity for a very short period of time.
Observations
Based on the above analysis,
- From all pools, BTC.BTC is the one with the most wallets, if we look at the average duration of liquidity in each pool on THORchain. Here we can see only 11% of wallets in this pool are holding liquidity for more than 100 days, that is almost all the wallets in this pool. In addition, we see that most wallets (less than 5 days and 5-10 days) hold their liquidity for less than a week’s time.
- In the ETH.ETH pool we can see that 15% of wallets are holding their liquidity for longer than a 100-day period, making it the second top pool.
- Almost 30% of wallets in the BNB.BUSD pool are holding liquidity for longer than a hundred days, based on the BNB-BUSD pool data. Therefore, a greater number of wallets in this pool can hold their liquidity for a longer period of time. Only a few wallets can hold their liquidity for a short period of time.
- In the ETH.USDC pool, almost 45% of wallets hold liquidity within 5 days. The majority of wallets in this pool do not hold their liquidity for a long time. Few wallets maintain their liquidity for a long period of time.
- In the BNB.BNB pool, almost 45% of wallets hold liquidity longer than one hundred days. Therefore, a larger number of wallets in this pool hold their liquidity for a longer period of time. Very few wallets maintain their liquidity for a short period.