Try Quests to earn cryptoFriktion Liquidity
In this Analysis, You will read about Friktion Liquidity. Friktion now has many different Volt offerings for all types of market conditions (bear, bull, crab).
How is liquidity flowing into and out of their different Volt offerings?
Create a chart highlighting incoming/outgoing liquidity as well as liquidity flowing from one pool to another.
How have market conditions and new offerings changed how users have handled liquidity on Friktion? How do you think user behavior will change when we get into a bull market?
All data in this Analysis is from March 1st, 2022.
The platform provides traders and crypto protocols unified access to multi-asset, multi-protocol liquidity on demand without compromising on execution preferences, costs and immediacy. The firm's mission is to create a platform where traders can trade anything, with anyone and settle it anywhere.
To analyze better, I chose top liquidities from Friktion. I found each liquidity contract address on their Website. For example, the Sol liquidity of generate income is 4Hnh1UCC6HLzx9NaGKnTVHR2bANcRrhydumdHCnrT3i2. Then calculated each parameter. Also, I found each liquidity has to send and receive an address that deposit sent to their address and withdraw sent from their address. For example, the address that sends/receives in Sol liquidity is 4Hnh1UCC6HLzx9NaGKnTVHR2bANcRrhydumdHCnrT3i2.
You can see the total number of liquidity and out-of-liquidity. As you can see, during the bull market, users deposited into Friction bull liquidities. But after a month that users faced the market as a bear, A lower deposit happened on Bull liquidates. But it's not 100 true for all pools. As you can see Sol pool decreased. The highest number of withdraw happened on April 1st and May 13th.
From the below chart we can guess bull, bear, or crab market. I think During the last 3 months, we faced the Bull and Bear Marketx but the price of tokens can impact the user activities. From May some token prices dropped by 10-20%. Again From the end of March, the token prices increased by 20-30%. From May 2022, All tokens faced a 10-50% drop. For Example, Sol's price was near 100$ but decreased to 50$.
We already see the total number of in and out into Frikton liquidities. During the Bull market, the average deposit amounts were above 400K dollars on Sol. BTC and Sol had the most incomes. During the bear market, I mean last month, The total deposit amounts decreased. In the below chart, you can see how users withdraw their amounts during the Bear market. Again Sol and BTC had the most volume.
Volt #01 generates income by running an automated covered call selling strategy. Deposited user funds are deployed into the current epoch, and user earnings are auto-compounded weekly.
Volt #02 generates yield on stablecoin deposits. The volt runs an automated cash-secured put strategy. Similar to Volt #01, User deposits and earnings are auto-compounded weekly.
These charts are based on the second type of Friction liquidity. This is suitable for Bull Market. As you can see, during the Bull market, The total number of income increased, and as we near the bear market, the total number of deposits decreased. Sol is the most useable liquidity pool. During the bear market, totally withdraw increased. It shows users have perfectly transferred their liquidity positions.
We have seen the number of deposits and withdraws. These two charts show the total amount of deposits and withdraws. The trends are like the previous chart.
Volt #03 runs a delta-neutral automated volatility harvesting strategy. This Volt earns funding payments by putting on a short Power² perpetual position on entropy.trade while delta hedging with a long perp position.
This liquidity is suitable for Crab Market. These charts show the total number of deposits and withdraw on Frikton Crab liquidity. As you can see, when the price of assets started to decrease, The total number of deposits increased. Meantime, the total number of withdraw increased too. It seems users weren't sure where the prices went.
These charts show the total amounts of Deposits and withdraws on Frikton Crab liquidity.
Volt #04 runs a delta-neutral basis trading strategy. The USDC deposited by users is deployed into a long basis position on Mango. The position longs SOL-PERP and shorts SOL to delta-hedge. Epochs are resolved every Wednesday night (UTC). Large balance changes require a longer rebalance period.
These charts are based on Friktion Yield liquidity. As you can see, fewer users used these liquidities. Most deposits happened during May and most withdraw happened at the end of May.
These charts show the total amount of Deposits and withdraw. The highest amount happened on May 11 with 1K dollars and the highest amount of withdraw happened on May 12th.
I can conclude that users perfectly manage their positions. When they became sure that what would the market go, They decided to transfer their positions
Written by Hess
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