The State of Osmosis-November 25, 2022
November has turned out to be an eventful month for crypto, bringing with it the collapse of one of the largest centralized exchanges and sending ripples throughout the industry.
The full extent of the damage has just begun to be felt in the form of continuing Bitcoin volatility as well as in every Defi platform, Osmosis included. This volatile week brought with it many of the signs we’ve come to expect as an AMM.
A roller coaster
I wanted to begin this week with a chart many of us become familiar with, the Total Value Locked and Volume chart seen on the info.osmosis.zone page.
As you can see, November brought some TVL highs and lows. Volume on the other hand has benefited from the lack of confidence surrounding various centralized exchanges throughout crypto. This however has not come without various changes in the behavior traders are exhibiting.
This week we continued to see some of the same activity we began to see during the week of the FTX collapse, stable coin liquidity continued to fall as users continued to lower their risk profiles:
- USDC -2.86%
- DAI -5.86%
One interesting behavior is the decrease in the total liquidity coming from all bridged assets as well.
- WBTC -5.17%
- WETH -4.05%
This is in stark contrast to the level of liquidity coming in from Cosmos assets such as JUNO, AXL, EVMOS and OSMO. Some possible scenarios based on this data:
- Users are de-risking by holding more stable coins
- Users are holding larger cap assets
- Users are trading Cosmos assets for “safer” assets
This is also aided by the level of Osmosis liquidity as a percentage of total TVL, which is back to October’s levels. The increase in Osmosis liquidity as a result of the drop in non-Cosmos assets help us to understand the amount of sell pressure OSMO is under.
It is a high probability that as price volatility to the downside continues, the number of stable coins will continue to drop, and the number of riskier assets will continue to increase in much larger quantities. As trading volumes have demonstrated, users continue to view Osmosis as the place to access the largest selection of tokens with the least amount of slippage.
Enter the laboratory at Osmosis.zone, the first decentralized exchange powered by the Cosmos SDK and IBC. See our published lab reports at the Osmosis blog, our bench notes at Github and help plan future experiments in our Commonwealth
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