Exploring the the distribution of liquidity supplied on AAVE v2

Flipside Bounty: 2. [Easy] Aave Liquidity Concentration

Bounty description

"What percentage of the liquidity on Aave is provided by the top 10 liquidity providing addresses?"

Approach

This dashboard answers the bounty by answering the following important questions regarding the concentration of liquidity supplied to AAVE v2:

The analysis considers AAVE v2 liquidity and address balances on August 23rd.

Technical Method

Total liquidity supplied for each AAVE market was calculated using data from Flipside Crypto's AAVE market stats and Ethereum daily erc20 balances table. For each address, the liquidity supplied to a given AAVE market was calculated by:

  • Obtaining the balance of 'atokens' held by all addresses that have a non-zero balance for any AAVE market. This was acheived through joining the ERC20 balances table and AAVE market stats table, on the date and contract address fields.
  • Calculating the value of liquidity supplied by multiplying the atoken balance by the underlying token price.
The total value of liqudity provided by each address was then calculated by summing the balance value across all AAVE markets. See for tabulated data.

What proportion of all AAVE v2 liquidity is supplied by the top 10 addresses?

Based on total liquidity supplied across all markets on August 23rd, AAVE v2 liquidity is highly concentrated amongst a few addresses:

  • The top 10 addresses supply 52% ($9,218 million) of all AAVE liquidity.
  • This is a greater than the amount supplied by the other 19,233 liquidity providing addresses:
    • The next 90 largest addresses supply 28% ($5,001 million).
    • The following 900 adddresses supply 15% ($2,663 million)
    • The remaining 18,213 addresses supply only 5% all of AAVE liquidity.
  • The #1 address supplies over 20% of all liquidity, which is greater than the next 7 addresses combined.

It is likely that many of these addresses are not owned by individuals, and have significant debts on AAVE which are deposited in other pools.

Which markets are the top 10 addresses providing liquidity to?

  • The top 10 addresses supply a significant proportion of all liquidity in 8 different markets. Interestingly, they provide no liquidity to the other 17 markets.
  • The top three addresses alone provide a majority or large share of liquidity for the largest AAVE v2 markets, including ETH, USDC & DAI.

What is the concentration of liquidity when ranking addresses individually within each market?

The findings above considered the top 10 addresses ranked by their liquidity contribution across all AAVE v2 markets. Given that these addresses did not contribute to all pools, it is also of interest to rank addresses seperately by their liquidity contributions to individual markets.

Considering addresses ranked by their share of liquidity supplied for each market, we find that:

  • For each market except Synthetix (SNX), at least 50% of total liquidity is supplied by the ten addresses which provide the most liquidity to that market.
  • the largest liquidity providing address supplies a minimum of 17% of all liquidity (SNX), and a maximum of 95% (SUSD).

Appendix 1. Tabulated data for the top 10 addresses

Rank Address Total liquidity provided (millions)
1 0x3ddf... $4708
2 0x8ace... $1028
3 0x4a49... $629
4 0x4093... $532
5 0x602d... $495
6 0x763b... $450
7 0xccb0... $438
8 0xf8de... $342
9 0x3a0d... $298
10 0x6231... $298