# UNI-ETH liquidity pools on Uniswap and Sushiswap

Uniswap is the premier decentralized exchange for erc-20 tokens on Ethereum. UNI is the Uniswap Protocol token. At genesis, 1 billion UNI tokens were minted and vested over the course of 4 years (starting Sept 16, 2020). Here is how UNI is allocated:
* 60.00% to Uniswap community members `600,000,000 UNI`
* 21.266% to team members and future employees with 4-year vesting `212,660,000 UNI`
* 18.044% to investors with 4-year vesting `180,440,000 UNI`
* 0.69% to advisors with 4-year vesting `6,900,000 UNI`

There will be a perpetual inflation rate of 2% after 4 years, which encourages participation and contribution to Uniswap at the expense of passive token holders. The rest of the UNI tokens were distributed to historical liquidity providers, users, SOCKS redeemers (yes, actually socks. currently valued at [~$20,000USD](https://unisocks.exchange/)). Another proportion of UNI tokens were reserved for rewarding liquidity providers on certain pools.

UNI holders have ownership of:
* Uniswap governance
* UNI community treasury
* The protocol fee switch
* uniswap.eth ENS name
* Uniswap Default List (tokens.uniswap.eth)
* SOCKS liquidity tokens

You can read more about the UNI token on the Uniswap blog [here](https://uniswap.org/blog/uni)

# Liquidity Pool Report

This report will be providing an analysis of the UNI-ETH pool and do a side-by-side comparison of how this pool performs on Uniswap V2 and Sushiswap - a fork of Uniswap V2. Please keep in mind that the pool on Uniswap trades ETH while the pool on Sushi trades wETH (wrapped ether). Naturally we expect the activity of UNI-ETH to be greater on its native platform Uniswap. The chart on top represents Uniswap while the chart on the bottom represents Sushiswap.

## 1 Reach

#### 1.1 Number of Active Wallets (Nov-1 to Nov-21)


* UNI-ETH on Uniswap tends to typically have around 20-40 active wallets while UNI-ETH on Sushiswap tends to have around 10-15 active wallets.
* The spike on Nov 12 is due to the FTX fallout and stolen funds being moved around by the FTX adversary. The rest of the charts shown below will also highlight this outlier point. Here's a link to a known addresses containing these funds: https://etherscan.io/address/0x59abf3837fa962d6853b4cc0a19513aa031fd32b

#### 1.2 Number of New Addresses (Nov-1 to Nov-21)

* The number of new addresses on each pool tends to be in the single digits aside from some outlier days with increased activity. Nov 12 is one of these days.
* Interestingly, there are some days on Sushiswap that attract zero new addresses

#### 1.3 Swap Count (Nov-1 to Nov-21)


* Here is where the difference begins to show. When we compared the number of active wallets, the UNI-ETH pool on Uniswap had roughly double the activity.
* Aside from the outlier day of Nov 12, Sushi peaks around 45-50 swaps for this months while Uniswap is in the high 300's for swap count.
* Even though there are only twice the active wallets, the number of swaps is much greater than 2x that of Sushiswap

## 2 Retention

#### 2.1 Cohort Retention (2020-09-01 to 2022-10-01)

* It's pretty unsurprising to see that the cohort retention for UNI-ETH on Uniswap compared to Sushiswap
* However, there is still a subset of wallets that are still actively trading UNI on Sushiswap even after 9 months.

#### 2.2 Mint to Burn Ratio vs Market Volatility (since 2020-09-01)
* Since we're looking at the UNI token for both of these charts, the blue area which represents the price of UNI will be the same.
* The mint-to-burn ratio holds steady at `0` on a vast majority of days. This implies that holders of UNI are not burning UNI, but instead opting to hold or trade it for other assets.

#### 2.3 Stickiness Ratio (since last year)
* The stickiness ratio is a measure of daily traders divided by monthly traders
* UNI-ETH on Uniswap has a stickiness ratio of `.2519xx` while UNI-ETH on Sushiswap has a stickiness ratio of `0.1612xx`
* Again, this is unsurprising considering that UNI is native to Uniswap.

## 3 Revenue

#### 3.1 Swap Volume Over Time (this year)


* The daily TVL for UNI-ETH on Uniswap hardly dipped below the 7 figures in USD this year, while the daily TVL on Sushi very low in comparison. On many days, the TVL on Sushi is hardly above 2000.
* While there is much less volume on Sushi for UNI-ETH, Sushi has days where the TVL is in the 6 figures. There were also a handful of days that had 7 figures in volume this year (Jan 3rd, Apr 8th) along with a couple days that came close (Jan 16th, May 1st).

#### 3.2 Swap Volume Over Time (last year)


* There was significantly greater volume last year during the bull run so we'll take a moment to look at the TVL chart for last year as well.
* It's interesting to notice that even though UNI-ETH on Sushi has far less activity than UNI-ETH on Uniswap, the trends still appear to follow the same peaks and troughs.

#### 3.3 Top 10 Traders by Volume

* Most of the addresses shown here are MEV bots, while some of the others are router contracts
* The top trader for UNI-ETH on Uniswap has a total volume of 11,114,419 USD while the top trader for UNI-ETH on Sushiswap has a total volume of 573,289 USD.
* Notice that some of the same addresses are on both leaderboards. Actors in the space may be taking advantage of arbitrage opportunities between these two pools since the UNI-ETH pool on Sushiswap is more illiquid.

## How would you allocate $100,000USD in liquidity rewards between these two pools?
It's challenging to set an exact amount for how this basket of liquidity rewards should be allocated between two pools. This decision depends on a lot of factors. Here are a few of them:
* How efficiently liquidity is utilized for each pool (if a pool's liquidity isn't being put to good use, there isn't a reason to incentivise actors to add liquidity to it)
* Centralization risk (if actors are incentivized to only ever use one pool, there is a centralization risk of all UNI tokens being traded on one platform only)

Given these constraints, I would allocate a 50/50 split between UNI-ETH on Uniswap and UNI-ETH on Sushiswap. The Sushiswap pool performs similarly in the sense that both pools follow the same market trends. Even without liquidity mining incentives, there is still activity on the Sushiswap UNI-ETH pool, which shows that there is a demand for swaps and adding liquidity to it already. Based on the data we reviewed about these two pools, it would probably be fair to allocate these rewards evenly between the two pools.

## Links to referenced increment dashboards

- UNI-ETH Uniswap: https://www.covalenthq.com/platform/#/increment/pages/na-363/unieth-on-uni-v2-mainnet/
- UNI-ETH Sushiswap: https://www.covalenthq.com/platform/#/increment/pages/na-363/unieth-sushiswap-mainnet/