Author: jpn memelord
Compiled by: TechFlow
There has been a lot of discussion lately about Solana surpassing all EVM chains in terms of transaction volume. I decided to take a deeper look at the quality of liquidity pools on the top blockchains to determine if this is just a passing trend or a true disruption to existing chains. Join me as I dive in.
The methodology for this analysis draws on the criteria for stock inclusion in major stock indices.
The three main criteria are:
Established transaction history
High liquidity
Sustained trading volume
These standards have similar applications in liquidity pools.
Methodology Construction
The following methodology summary is provided for informational purposes only. For full details, please review the methodology document at SP Global.
Applicability: All constituent stocks must be U.S. companies.
Market Capitalization Eligibility: To be included, a company must have an unadjusted market capitalization of at least $14.5 billion and its float-adjusted market capitalization must be at least 50% of the minimum unadjusted market capitalization threshold.
Public Flourish: Companies must have an Investable Weight Factor (IWF) of at least 0.10.
Financial Viability: The company must have positive earnings in the most recent quarter and in the most recent four quarters (combined).
Adequate Liquidity and Reasonable Price: Using composite pricing and trading volume, the ratio of annualized trading value (defined as the average closing price during the period multiplied by historical trading volume) to float-adjusted market capitalization should be at least 0.75, and the stock should have traded at least 250,000 shares per month in the six months prior to the valuation date.
Industry Representation: Industry representation is measured by comparing each GICS® industry's weight in the index to its weight in the S&P Total Market Index, taking into account company selection within the relevant market capitalization range.
Company Types: All eligible U.S. common stocks listed on eligible U.S. exchanges are eligible. Real estate investment trusts (REITs) are also eligible. Closed-end funds, ETFs, ADRs, ADSs and certain other types of securities are not eligible.
Are there stocks that are not in the major indices that can be traded? The answer is yes.
However, these stocks make up the “blue chips” of the traditional financial world, and finding DeFi analogs can help us assess what traditional finance might be eyeing when entering the DeFi space.
I collected volume data from all liquidity pools on Ethereum, Solana, BSC, @arbitrum, and @base, and tallied the total volume over the past 30 days.
Next, I reweighted pools that were created in the past 30 days to lower their ranking so that they met the “established history” criteria.
Finally, I weighted each pool’s trading volume and total value locked (TVL) to meet the other two criteria.
Next, I applied a weight adjustment to those liquidity pools created in the past 30 days to lower their ranking so that they meet the "established history" criteria. I then weighted each pool's trading volume and total value locked (TVL) to meet the other two criteria. The specific formula is: Ln(TVL)/Ln(MAX(TVL)) * TVL_weight.
This scaling method has little impact on pools with better liquidity, but will lower the ranking of pools with smaller TVL.
Here is the top 20 ranking of “New Premium” based on this weighted approach.
The first thing worth noting is that Ethereum, Solana, Arbitrum, and Base each have a representative pool in the top 4!
These pools are all “primary” pools that trade their respective chain’s native tokens against USDC.
Another notable feature is that Ethereum still dominates, accounting for half of the top spots in this ranking. High TVL combined with sustained transaction volume makes it an outstanding performer among all chains.
I strongly suspect this is part of the reason Blackrock chose to deploy to Ethereum.
Digging deeper, the first two pools are particularly eye-catching:
@AerodromeFi’s slipstream WETH-USDC pool has the highest volume, while the highest TVL is
@Uniswap’s v3 WETH-USDC pool on Ethereum.
Dune data link:
On most blockchains, the main liquidity pool with a fee rate of 0.05% is the top pool, but on the BNB chain, the 0.01% pool is the top pool, which is somewhat surprising.
Also, USDC is used in more top pools than USDT, which is also unexpected to me.
How many pools are there on each chain?
Ethereum：10
Base：5
Decision: 2
BSC：2
Solana：1
In this analysis, all other Solana pools are unable to reach the top due to insufficient TVL (Total Locked Volume). Despite the high transaction volume, these transactions occur with significantly lower liquidity than other chains.
Without considering TVL, Solana has a decent amount of volume in the top 150 pools, but it’s not close to surpassing all EVM chains, or even Ethereum (although it’s very close).
The top 20 assets traded across all pools include:
Stablecoins: USDC, USDT, DAI, pyUSD
Major currencies: ETH, BNB, SOL, cbBTC, WBTC and wsETH
Others: AERO
Surprisingly, Aero is the only token that is neither a stablecoin nor among the top five cryptocurrencies by market cap.
TVL of the top 25 pools per chain:
Ethereum: $1.04 billion
Base: $310 million
BNB: $194 million
Solana: $181 million
Arb: $155 million
Clearly, Ethereum is still the winner, but Base is leading among other chains.
Additionally, it’s worth noting that 4 of Base’s 5 pools are from Aerodrome, demonstrating their significant lead on the chain, even as Uniswap dominates Arbitrum and Ethereum.
Summarize
Most of Solana’s volume comes from illiquid pools, a significant portion of which comes from Pump Fun. (link)
Ethereum remains the dominant DeFi blockchain, but Base is unexpectedly emerging as a strong challenger as it has the pool with the highest transaction volume.
This focus on the economy is not a bad thing, but I think that sophisticated investors who want to dive deeper into DeFi are more concerned with sustained economic activity from deep liquidity pools than which animal coin is hot this week or today.
There are many aspects of this analysis that could be further explored and refined:
Automated calculation of TVL metric
Don’t just focus on TVL, but also look at liquidity depth (CL pools are very capital efficient)
Consider the pool’s fee tier
I will be releasing part 2 of this analysis in the coming weeks.
