Experts discussed the impact of large players on liquidity in pools

Experts discussed the impact of large players on liquidity in pools

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by Eve Adams

2 years ago


Analysts at IntoTheBlock conducted a study that revealed the impact of large investors, known as «whales», on liquidity in the decentralized finance sector (DeFi). Their work, called Whale Exit Simulation, demonstrates the potential consequences of large withdrawals from liquidity pools.

According to the simulation data, the red columns on the chart indicate significant withdrawals that exceed the available pool liquidity. This can significantly affect the market. For example, the address 0x8cB7 is capable of withdrawing funds in an amount far exceeding the current liquidity, which can cause significant price fluctuations and volatility.

The blue columns on the chart published by the researchers showed movements that can be handled by the pool without significant problems. Specialists demonstrated that withdrawals can be «manageable» and often do not have negative consequences for the market. According to them, this scenario reduces the risk of market destabilization.

Experts emphasize that this data highlights the importance of monitoring whale activity to maintain stability and liquidity in the DeFi industry. Whale Exit Simulation is now available in the Risk Radar panel from IntoTheBlock for protocols such as Mendi Finance, Moonwell DeFi, and Benqi Finance.

This provides investors and developers with an effective tool for risk assessment and informed decision-making, emphasized the analysts.

Specialists note that the study confirms the key role of large investors in maintaining and altering liquidity in the DeFi market. Monitoring their actions can help prevent sharp fluctuations and loss of funds.

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