What is Osmosis?

Osmosis is an AMM Structured blockchain build on Cosmos SDK. This means to interact with this network you basically are interacting with a DEX DApp (Decentralized exchange application). Being the biggest DEX on cosmos, Osmosis is growing everyday with its simple UI and multi optional UX provision. The ability to initiate custom pools is one of the winning cards of Osmosis which attracts many liquidity providers. Osmosis also is the magical portal between many cosmos chains and powers the true force of IBC goals. Apart from swapping tokens, and providing liquidity, you can transfer you tokens between cosmos chains.

What are we looking for in this analysis?

We are looking to find reliable and viable answers for some major question regarding liquidity providers on Osmosis pools:

• What are the top providers? Where they always among the top? How has this changed over time?
• Are they some few whales that provide liquidity or is it also other smaller users?
• Is liquidity providing a single action or do the providers frequently perform this action?
• Does the TVL of the target pool has any effect on the type of users that provide liquidity?

Some notes On Methodology & Definitions

To render this analysis I used flipsidecrypto database for on-chain track of Osmosis transactions.

• I chose the top 20 pools based on TVL provided by the Osmosis lab live analysis website. There are many pools which significant portion of them are inactive or having a low liquidity. I don't believe including them has any analytical value and it may disturb the viability of the results.
• I divided the liquidity providers into 7 categories based on the USD amount of provided liquidity. These categories are arbitrary but help us to distinct users and look for certain patterns in their financial behavior.
• I didn't implement any time restrictions for this analysis and used all range of flipside data coverage for Osmosis chain.

TVL division for pools is as follows:

• Low TVL Pools => Between 1M and 3M USD

• Medium TVL Pools => Between 3M and 9M USD

• High TVL Pools => More than 9M USD

Note that these ranking is subject to constant change

Data & Analysis

Liquidity providers are the backbone of a Decentralized financial system and having more liquidity providers is one of the most important signs of a healthy and developing exchange. Osmosis managed to attract near to 180 thousand unique wallets as liquidity providers. Although, this hasn't been a nice and steady upward movement and they experienced various up and downs specially is Q1 2022.

It is interesting that liquidity providing is not a once in a lifetime action. According to front chart, ~50 percent of provider wallets performed this action more than 2 times. There are also bots with tens of thousand of liquidity providing transaction most probably to take advantage of arbitrage opportunities or high yields in every starting pool.

Volume is what moves the market! To see how volume of liquidity providing reflects other criterion of user composition, you can start by seeing charts below, which shows how a few people are responsible for a significant portion of liquidity in Osmosis. But, The composition is not a simple opposition between volume and count, where low volume users are more and high volume user are a few. A simple comparison shows that the important turnaround is around Salmon and Crab categories which have big volume despite being in lower Count seats.

This is even more obvious when we crack down the pools based on their TVL. Low TVL pools (1 to 3 M) are more influenced by the Crab and salmon volume, while Dolphin and Nemo are much more in medium TVL pools (3 to 9). The powerful presence of whales is more or less limited or more significant in high TVL pools (more than 9).

In the end, I did a simple tracking of top providers wallets. These are the top 20 wallets that have the most provided liquidity right now. In the time bar you can see that how they gradually made their way into top providers and how some of them lost their leadership as time passed by.

Conclusion:

To answer the questions that powered this analysis I can say that based on these information liquidity providing in Osmosis pools is not limited to some few whales and is more or less distributed among different volume categories, specially if we divide the pools based on their TVL.

Top liquidity providers were never constant and the competition is a ever changing scene.

Liquidity providers tend to do this action more than just once or twice.