Analysis Overview📊 Behavior of DEX Swappers/Users/Traders 📊 Behavior of DEX Liquidity Providers
Overview of Avalanche DEX Liquidity Provider Segmentation and Retention Analysis (Historical Trends from May 2024 to April 2025)
The entire Liquidity Provision analysis on this dashboard captures liquidity addition events (Liquidity Providers' deposit/TVL additions to DEXs on Avalanche) and does not include liquidity removals, pool rewards/harvesting, swap transactions, or LP token minting events. This analysis aims to provide a comprehensive understanding of liquidity provider behavior across Avalanche's DEX ecosystem through the lens of user acquisition, engagement, retention, and monetization. It segments users into distinct tiers based on their liquidity provision volume, tracking their journey from entry to sustained participation while measuring cross-platform engagement patterns and value creation metrics. This analysis serves as a strategic tool for understanding LP behavior patterns, market dynamics, and platform performance within the Avalanche DEX ecosystem, providing actionable insights through the IDG framework.
Liquidity Providers’ Tier
Number of LPs
Total LP Actions
Total LP Volume (USD)
Avg Retention Rate %
Avg Deactivation / Churn Rate %
Avg Monthly LP Volume (USD)
Max Monthly LP Volume (USD)
Min Monthly LP Volume (USD)
Avg no. of Pools per LP
Avg no. of DEX Platforms Used
1
🐳 Whale74397336566454476560722102.480.3519.656109977649.4110240173473.763110952800.8113.921.77
2
🦈 Shark29685718534645074609111172.7264.0335.97142481163.27192668738.8270203402.636.341.94
3
🐬 Dolphin3710282835560792678027361.555.5544.4517804987.1425397547.8710981254.175.141.74
4
🐟 Fish7421468324468558067383136.746.1753.836266758.5615991681.533220817.043.961.59
5
🐙 Octopus148501057914000208162080967.536.263.81168137.381903329.887624602.631.37
6
🦀 Crab1497277736121214834410164.6826.7573.2582567.52278039.5430641.822.151.26
7
🦐 Shrimp2954520111576953122578255.0516.483.68807.4135827.341292.332.681.32
7
710B
52s
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Updated 2025-06-04
Liquidity Providers' Journeys and Behaviors

The tiers are based on the total USD volume of liquidity provided by each address:

  1. Whales: Top 1% of providers

  2. Sharks: Next 4% (top 1-5%)

  3. Dolphins: Next 5% (top 5-10%)

  4. Fish: Next 10% (top 10-20%)

  5. Octopus: Next 20% (top 20-40%)

  6. Crab: Next 20% (top 40-60%)

  7. Shrimp: Everyone else (bottom 40%)

Monthly Active Liquidity Providers
of course, the low-tier liquidity providers are always more active but contribute little to the TVL of these DEXs

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Active LPs, and values.
End of interactive chart.
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At a glance, the behavior of Liquidity Providers on Avalanche DEXs shows similar trend patterns to that of DEX traders/users.

The high-value group, although fewer in number and having higher retention rates and LP volumes (in USD), also leads in active months and liquidity provision actions compared to mid-value and low-value liquidity providers.

High-value LPs drive significant value with their consistent activity, but mid and low-value LPs lag in engagement. To boost their participation, Avalanche can introduce tiered LP rewards starting June 2025, incentivizing more liquidity actions across all groups.

Monthly New Liquidity Providers (LP Activation)
The low-tier liquidity providers are always active and looking for the next big thing, but for short term gains. That's why we always have new LPs every month.

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying New LPs, and values.
End of interactive chart.
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Monthly Retained Liquidity Providers (LP Retention)
Whales/Sharks/Dolphins (large LPs) tend to provide stable liquidity, hold positions longer, and are less reactive to changing rewards. Shrimp/Crab (small LPs) often add/remove liquidity quickly and respond more to changes in yields (APYs), making them less stable.

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Retained LPs, and values.
End of interactive chart.
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Monthly Reactivated Liquidity Providers (LP Reactivation)
LP tiers from Whale to Shrimp follow the same structure as traders, with reactivation strategies adjusted by tier.

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Reactivated LPs, and values.
End of interactive chart.
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Updated 2025-06-04
Monthly Deactivated Liquidity Providers (LP Deactivation)
Low-tier liquidity providers (LPs) aren’t loyal to the DEXs they supply liquidity to, likely due to DeFi market trends. They’re always chasing the next big opportunity.

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Churned LPs, and values.
End of interactive chart.
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LP Deactivation Rate %
LPs might "pause" during market dips but return later. However, the whales are more loyal and doesn't churn easily.

Chart

Chart with 84 data points.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying categories.
End of interactive chart.
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Updated 2025-06-04
LP Activation Rate %
Some Liquidity Providers enter only in high-yield phases, so this may swing erratically

Chart

Chart with 84 data points.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying categories.
End of interactive chart.
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Updated 2025-06-04
LP Retention Rate %
The OGs most times retain liquidity on these DEXs more because they are fans or lovers of these platforms regardless of the current market situation. They are locked-in for long term.

Chart

Chart with 84 data points.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying categories.
End of interactive chart.
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Updated 2025-06-04
LP Reactivation Rate %
Liquidity Providers who were inactive for a while and returned this month — this signals revived interest or favorable market conditions

Chart

Chart with 84 data points.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying categories.
End of interactive chart.
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Updated 2025-06-04

The activation, retention, reactivation, and deactivation rates (%) were calculated using the same methodology applied in my earlier analysis of DEX swappers/users/traders' behavior. Both patterns also look similar.

Net Liquidity providers' growth

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Net LP Growth, and values.
End of interactive chart.
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Liquidity Providers' Portfolio Diversification Metrics
These measure how widely LPs spread their liquidity across different pools and tokens.

Average number of different DEX platforms each LP uses
Almost evenly distributed among the LP tiers...but the Whales uses more DEX platforms than the others.

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Platforms per LP, and values.
End of interactive chart.
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Updated 2025-06-04
Average number of unique liquidity pools each LP participates in
The top-tier liquidity providers provide liquidity in multiple liquidity pools compared to the other LP tiers

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Pools per LP, and values.
End of interactive chart.
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Average number of distinct tokens each LP provides liquidity for
Whale-tier liquidity providers (LPs) typically supply liquidity across over 8 token pairs, significantly more than lower-tier LPs

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Unique Tokens per LP, and values.
End of interactive chart.
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DEX Platform-Specific Participation of Liquidity Providers
These show platform preferences and how LPs distribute their liquidity across different DEXes on Avalanche
Average number of Trader Joe pools per LP
The whale LP-tier leads in Trader Joe DEX

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg TraderJoe Pools, and values.
End of interactive chart.
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Updated 2025-06-04
Average number of Pangolin pools per LP
The whales also dominate massively in Pangolin DEX

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Pangolin Pools, and values.
End of interactive chart.
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Updated 2025-06-04
Average number of Pharaoh pools per LP
The whales have it

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Pharaoh Pools, and values.
End of interactive chart.
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Updated 2025-06-04
Average number of Uniswap pools per LP

Chart

Bar chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Uniswap Pools, and values.
End of interactive chart.
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Updated 2025-06-04
Activity & Volume Metrics
These indicate the trading activity and volume in pools where LPs participate, which can correlate with potential fee earnings
Average number of swap transactions in pools where the user provides liquidity

Chart

Line chart with 7 lines.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Swaps in LP Pools, and values.
End of interactive chart.
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Updated 2025-06-04
Average USD volume of swaps in pools where the user provides liquidity

Chart

Chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Swap Volume in LP Pools (USD), and values.
End of interactive chart.
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Liquidity Providers' Lifetime Value (LTV)
Total USD value of liquidity provided Monthly
This shows the total dollar value of all liquidity provided across all wallets

Chart

Chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Volume (USD), and values.
End of interactive chart.
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Updated 2025-06-04
Total number of LP-related transactions
This shows the total count of all liquidity provision transactions across all wallets

Chart

Line chart with 7 lines.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Total LP Actions, and values.
End of interactive chart.
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Updated 2025-06-04
Average USD value provided per LP
This shows the average dollar value of liquidity provided per unique wallet address

Chart

Chart with 7 data series.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Volume per LP (USD), and values.
End of interactive chart.
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Updated 2025-06-04
Average number of LP actions per provider
This shows the average number of liquidity provision transactions per unique wallet address

Chart

Line chart with 7 lines.
The chart has 1 X axis displaying Month. Data ranges from 2024-05-01 00:00:00 to 2025-04-01 00:00:00.
The chart has 2 Y axes displaying Avg Actions per LP, and values.
End of interactive chart.
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Updated 2025-06-04
Summary and Actionable Insights

Tier Segmentation

🐳 Whales (Top 1%): Highest volume providers, crucial for deep liquidity
🦈 Sharks (1-5%): Significant liquidity providers
🐬 Dolphins (5-10%): Medium-large liquidity providers
🐟 Fish (10-20%): Moderate liquidity providers
🐙 Octopus (20-40%): Regular active providers
🦀 Crab (40-60%): Small but consistent providers
🦐 Shrimp (Bottom 40%): Retail LPs

Significance for Avalanche Growth

Market Impact

  • Helps identify which LP segments drive most liquidity

  • Reveals retention patterns across different tiers

  • Shows platform preferences among different LP segments

  • Identifies potential areas for liquidity optimization

Key Growth Metrics

Volume Metrics

  • Total LP Actions

  • Volume (USD)

  • Average Volume per LP

  • Average Pools per LP

Retention Metrics

  • Retention Rate %

  • Cohort Retention %

  • Reactivation Rate %

  • Net LP Growth

User Behavior Metrics

Platform Usage

  • Average Platforms per LP

  • Platform-specific pool participation (TraderJoe, Pangolin, Pharaoh, etc.)

  • Average Unique Tokens per LP

  • Swap behavior in LP pools

Business Significance

Operational Insights

  • Helps optimize liquidity mining programs

  • Guides incentive structure design

  • Identifies platform strengths/weaknesses

  • Enables targeted marketing strategies

Risk Management

  • Monitors concentration risk

  • Tracks ecosystem health

  • Identifies potential liquidity gaps

Key Takeaways

Ecosystem Health

  • Multiple active DEXs indicate healthy competition

  • Diverse LP participation across tiers

  • Cross-platform liquidity provision

Areas for Improvement

  • Retention rates across tiers

  • Platform-specific adoption

  • Reactivation strategies for dormant LPs

Growth Suggestions

Short-term Growth (June)

Targeted Incentive Programs

  • Tier-specific liquidity mining rewards

  • Special rewards for multi-pool LPs

  • Cross-platform incentives

User Experience Improvements

  • Simplified LP interface for smaller providers

  • Advanced analytics for whale/shark tiers

  • Better portfolio management tools

Community Engagement

  • Educational content for new LPs

  • Tier-specific community programs

  • Regular AMA sessions with platform teams

Long-term Strategic Initiatives

Platform Development

  • Improved yield optimization tools

  • Better risk management features

  • Enhanced LP analytics dashboards

Ecosystem Growth

  • Cross-chain liquidity bridges

  • New pool types introduction

  • Innovation in LP token utilities

Market Development

  • Institutional LP outreach

  • Strategic partnerships

  • Geographic expansion focus

Action Items for Growth

Immediate Actions

  • Launch tier-specific incentive programs

  • Implement retention improvement strategies

  • Enhance user education initiatives

Medium-term Goals

  • Develop advanced LP tools

  • Improve cross-platform integration

  • Launch institutional LP program

Long-term Objectives

  • Build sustainable LP ecosystem

  • Reduce dependency on incentives

  • Establish market-leading position

This analysis provides a comprehensive framework for understanding and improving Avalanche's DEX ecosystem, with specific focus on liquidity provision and growth strategies. The key is to maintain a balance between attracting new LPs while retaining existing ones, all while ensuring sustainable ecosystem growth.