The State of Osmosis-November 11, 2022
It was a turbulent week for crypto markets. Downside volatility increased due to significant events outside of the Cosmos ecosystem. These events have created a ripple effect throughout Osmosis’s liquidity flows.
This week I want to analyze the effects this liquidity crunch, stemming from the collapse of a centralized exchange, has had on Osmosis. Specifically, I want to focus on the liquidity flows in the largest pools. Were there any significant changes in sentiment and investor behavior?
Fear in the market?
Did volatility cause a shift the amount of liquidity coming into Osmosis? Let’s begin with the largest Liquidity Pool, ATOM/OSMO which holds 35% of all of Osmosis’s TVL.
First the amount of GAMMs in Pool #1:
There was practically no change in the number of ATOM/OSMO tokens leaving this liquidity pool from November 4 to November 10.
Let’s take a look at the second largest pool, which also had one of the largest spikes in trading activity, Pool #678 USDC/OSMO:
The story shifts a bit here; this pool had the largest trading volume of any pool on Osmosis, 57.7 Million over the last 7 days. This signifies how crucial stable coin liquidity is to the ecosystem, serving as gateway liquidity to the rest of the Cosmos.
Over the last 7 days, the number of USDC tokens is down -11.38%. An interesting dynamic occurring here is that the number of OSMO tokens has spiked up and have reentered pools on Osmosis, basically reversing the Binance listing.
As of last week, we have gained a total of 9.5 Million OSMO tokens. Which is relatively a welcomed sign. See below for the historical chart showing the TVL composition.
The current data does not show any large changes in Pool #704 WETH/OSMO and Pool #712 WTBC/OSMO in terms of the number of GAMMs deposited in liquidity pools.
One caveat I was able to spot is the number of GAMMs waiting to unbond, which can be seen on Dexmos, is reflective of this data.
This of course could change in the next two weeks, but as of today the highest percentage of unbondings is coming from the major pools holding USDC, WETH and stATOM.
Volatility and Fees
Volatility is a double edged sword, one which Osmosis is able to wield to generate substantial fees for liquidity providers.
Here is an overview of the fees generated by Osmosis over the last 30 days.
Here we can see how the effects of the Binance listing, which caused the price of the OSMO token to increase, resulted in a similar pattern for a drop in the price of various tokens on Osmosis.
In the last 30 days Osmosis has generated over $2.7 Million in fees paid back to liquidity providers, 45% of which were generated in the last 2 days for those who chose to stick around and ride the waves generated by these market forces.
Osmosis has seen ups and downs, and the resiliency it has shown over the last week in continuing to hold liquidity has been impressive to watch. To date Osmosis’s TVL is above $220 Million, with the majority of tokens not seeing any major or concerning outflows. Tuning out the noise the market makes in this case has been the most profitable move.
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