The Merge is a culmination of multiple years of Research, Development and Testing. On September 15, the Merge was successfully carried out, transferring the Ethereum Mainnet consensus from Proof-of-Work to Proof-of-Stake, without any maintenance halt. However, the significance of the event, the complexity involved and the gravity of the consequences, made this a massive trade-able event, with PoW supporters hardforking the protocol, and possible negative consequences could result in negative price action. This meant, users were attempting to farm the hardfork Airdrop as well as hedge their capital at risk.

With major stablecoin providers siding with the PoS variant, it was obvious that DeFi on PoW is absolutely nuked. This meant, ETH in DeFi would be worth multiple orders less than native ETH in wallets. Hence there was a consistent attempt by users to increase their wallet ETH balances, via borrowing, selling tokens.

In this dashboard, we will look at flow of Ethereum to and from 3 protocols, each from a different kind.

1. A Lending Protocol - AAVE
2. A DEX - Uniswap
3. An Options Protocol - Opyn

This diversity, should help us understand the activity across different kinds of users. By choosing the protocols with most volume and popularity, the analysis should cover most of the userbase.

Each Protocol’s methodology will be discussed in the start of each section, followed by insights from the data and possible inferences.

In AAVE, inflows are comprised of Deposits and Repayments. Outflows are comprised of Borrows and Withdraws. With respect to Merge, users attempting to increase their PoW airdrop, would borrow against other DeFi assets or withdraw ETH from lending side. Thus an increase in Outflows or net-Outflow would be an indication of whether there was higher number of users trying to take advantage of a lending Protocol to increase their PoW airdrop.

We will look at (starting from Top-Left) Total ETH locked, NetFlows of ETH, Average sizes of ETH outflow and inflow.

Note: The average sizes are contrained between 1000 ETH, as the rest were outliers and very few.

Uniswap , the most popular DEX on mainnet, has two types of Flows. Swaps and LP activity. With the PoW team clearly stating LP positions wouldn’t receive any airdrop, and their respective airdrop will be funnelled to fund development on PoW (lol), Users wanting better PoW airdrop would want to pull liquidity out of the protocol. Moreover, the gravity of the event meant, volatility was inbound, which is clearly not a good thing for LPs.

While swapping, when a user sells ETH, its reflected as in volume, and the buy action is out volume. So a higher out volume signifies airdrop optimization attempt.

From top-left, the chats are Net-swap volume, net Liquidity movement and ETH locked in Uniswapv3

Opyn is one of the more complex protocols. With more tech and finance saavy users lingering on this protocol, activity on this protocol could be a strong indication of where the value lies post merge, i.e PoW or PoS.

A short position is opened by depositing ETH as collateral and minting Squeeth, which is sold into ETH-SQTH pool. Thus, short position sees an ETH inflow. A long position is opened by simply buying SQTH, which is also usually a ETH sell, thus a ETH inflow. No ETH flow is noticed. Only ETH outflow occurs during Liquidation, or long closing. However, SQTH is a directional convex bet, any open position tends to sacrifice their PoW airdrop. Thus a reduction in activity is expected, if users want to maximise their PoW airdrop.

From left, we see the Sqeeth Vault TVL and the size of Opyn Positions opened in ETH.

• From the Total ETH locked, we see that there was a net increase in Borrow towards the merge.
• This increased borrow activity, culminated with the entire supply borrowed for the snapshot block.
• This is also further made clear on the Net Flow chart, as there was quite alot of outflow towards the Merge and a massive return of funds post Merge
• Looking at the Average sizes, we see Average outflows having more daily average points over 600 ETH, compared to inflow.

The data suggests that AAVE platform users have indeed attempted to increase their PoW airdrop sizes. All metrics suggest, increased Borrowing and Withdrawal activity.

The crowning moment is almost all ETH being borrowed a few blocks before the merge and the immediate inflow this ETH once Merge was completed

• net Swap volume (aggregate of Swap volume or out_vol-in_vol ), doesn’t show significant out volume or buying
• net LP volume on the other hand saw multiple volume being pulled out as Merge was approaching.
• Once the Merge was finalized, we see liquidity returning
• Looking at the ETH liquidity chart, it does point a significant drop from 327,000 to 237,000 ETH; almost 10 Million in USD

Uniswap users are two types : → Swappers → Liquidity Providers.

Each group shows a distinct character.

Swappers don’t seem to show a significant liking towards PoW. Or it could simply be arbitrage bots immediately rebalancing the pool as most buys were insignificant volume sizes.

On the other hand, LPs have responded to the Merge. It could have been either to increase their PoW bags or just to ride out the Merge induced volatility. The immediate return of funds over the next few days, rather than the very next day could suggest that most LPs were trying to ride out the volatility. Cause, ranged volatility is a good market to earn Fees.

• TVL seems to be unresponsive.
• Thus, ETH positions opened are our only gauge
• However, there is no reduced activity in terms of positions being opened.
• Interestingly, there is more Short positions being opened, and we know that involves ETH deposits, thus lesser PoW airdrop.

Thus, Opyn users, haven’t shown any significant inclination towards farming PoW airdrop. Opening up more shorts and longs, thus depositing ETH into contracts, Opyn users were actively reducing their airdrop sizes.

Closing Thoughts

• AAVE users show significant indication of attempting to farm the PoW airdrop.
• AAVE ETH borrowing was maxed out at the snapshot block, with the funds returning immediately post-merge
• Uniswap swappers didn’t show any significant attempt at PoW airdrop
• LPs on the other hand tend to remove their LP positions, either to farm the airdrop or to skip the volatility
• Opyn users, have zero regard for PoW airdrop farming, as we see increased short volumes and long-short activity at the higher side