DOT DOT, Who's There?
DOT's market action within Osmosis
Introduction
$DOT is the native currency of the Polkadot blockchain and has been one of the few coins lucky to move across chains to the Cosmos ecosystem. The Cosmos is somehow a direct competitor to the Polkadot ecosystem as it was primarily developed to be the internet of blockchains. So it is not really clear how useful $DOT is within the Osmosis exchange.
So in this dashboard, we’re set to find out if we can understand what is happening with $DOT through volume and user activity on Osmosis in the DOT / OSMO pool (773).
Transactions involving $DOT on Osmosis are usually found to be in the excess of 100 a day. In early November there was an uptick, coinciding with the collapse of FTX but a draw down followed shortly afterwards. With limited utility of $DOT within Osmosis, we ask ourselves whether this is real activity or arbitrage trades.
Over 23 thousand transactions, representing 82.7% involve 2 or more hops, with the rest being only a single hop. This means that majority of the all-time trades in the DOT / OSMO pool were executed by Arbitrageurs and not of real demand and supply. Now let’s look at active users daily, weekly, and month in the DOT / OSMO pool.
Active users are defined as wallets with at least a transaction to their name within a specified time frame.
Looking at the above charts for the daily, weekly, and monthly active users we can see a clear trend of decline from its peak in late July 2022.
The chart above shows the daily swap volume flowing in and out of pool 773. We can see that the swap volume in and out are almost mirror opposites of each other which suggests the presence of arbitrage trades. Abitrage traders balance out the differences between pools and then keep the profit.
Typically, Arbitrage trades involve two or more pool hops embedded in a single transaction. So to differentiate Arbitrage from regular trades, we count the number of pool hops involved in each transaction and the results are displayed below.