Introduction

Since Uniswap V3, liquidity providers are able to provide liquidity according to prices ranges for better returns, with the downside of not earning anything beyond the specified price range. In this dashboard, we will see how the most active liquidity providers react to being out of bounds (OOB).

Liquidity Provider Actions

In the period of less than 120 days, the top 20 most active liquidity providers have opened a total of 1071 positions, where 1026 positions still remain active today and with 45 of the positions closed.

Out of the 45 closed positions, 31 were closed preemptively before the OOB event occurs, while 10 were closed when the price exceeded their upper boundaries and 4 were closed when the price went below the lower threshold. On average, the positions were closed when the price is about 0.5% out of bounds, with a max of about 0.9%. Meanwhile, preemptive closures occur much earlier, where the position was closed when the price was 3.2% (max) price movement away from going OOB.

It was discovered that some positions have 0 lifespan, which means that these positions were closed the moment it is created, for reasons unknown. Out of the 45 closed positions, 23 of them have 0 lifespan, while only 5 of them have a lifespan of more than 0 minutes and closed due to being OOB.

Due to low sample size of 5, the average reaction time should not be obtained as it will not reflect the real situation. However, the reaction time in minutes of each of the positions to OOB events are found out and displayed below. It is seen that the positions were 36 minutes OOB at most before closure.

Conclusion

The most active liquidity providers are constantly monitoring the positions of their liquidity pools. However, it is found out that liquidity providers do not actually close their positions when adjusting their liquidities, instead, more positions are opened up. This is evident from the fact that there are only 45 positions were closed out of a total of 1071 positions. Out of the 45 closed positions, 23 were immediately closed after creation, for unknown reasons. Among the positions that were closed, only 5 of them are OOB and with a lifespan of more than 0 minutes. The reaction time of the liquidity providers to close these positions is at most 36 minutes, signifying that the liquidity providers are actively monitoring their positions.