Data Analysis | Nansen's analysis of liquidity mining activities on the blockchain

In this article, Nansen has compiled multiple MasterChef.sol contracts that distribute rewards for yield farming activities, along with related on-chain activities, in an attempt to uncover any insights hidden behind the data. MasterChef.sol is possibly one of the most forked contracts in DeFi. Through forking the codebase, developers may change variable names but most of its functionalities remain unchanged. The structure and interfaces of the contract are largely similar. This could be advantageous as it allows developers to easily implement the expected token distribution process and is more secure since this contract has been used on Ethereum for some time. Originally deployed by Sushiswap in 2020 with the SUSHI token, MasterChef.sol incentivizes users to lock assets in LP to aggressively attempt to capture liquidity from Uniswap. To this day, this remains a mainstream way for new projects to attract capital inflows.

Research Method

In this article, researchers organized all Masterchef contracts to see if they could find insights into yield farming activities. The researchers obtained a dataset containing contracts with the word "Chef." There are nearly 400 such contracts, sorted by the number of calls to these contracts.

Unsurprisingly, Sushiswap's Masterchef contract leads in terms of call frequency. In this study, only contracts that have been used at least 500 times were examined, excluding Sushiswap's MasterChef contract, leaving approximately 28 MasterChef fork contracts.

The researchers considered token in and out contracts as representing deposits and withdrawals, respectively:

• Any tokens entering such contracts are considered deposits
• Any tokens exiting the contract are considered withdrawals

By examining the difference between when tokens were transferred in and the last time tokens were transferred out of Masterchef, the researchers obtained samples of approximately 40,000 farm entries and exits, triggered by a total of 33,882 unique addresses. Through some analysis, they were able to identify the duration between someone entering and exiting a yield farm, as well as the time difference from deploying the farm to each person's first entry.

Results

How steadfast are the funds in these deposit contracts? The results are not very loyal. The vast majority of farmers move their funds within the first five days of entry, with about half of the farmers never staying more than 15 days. However, 13% of addresses have still not withdrawn their funds.

The researchers also created a heatmap visualizing the relationship between the time users "enter the yield farm" and the duration of their stay. Unfortunately, there seems to be no clear correlation between the time users enter the yield farm and their stay duration. Note: The users who entered later did not have a shorter stay. The rightmost part of the image represents users who have not withdrawn their funds yet.

Here is a potentially more interesting data point: up to 42% of farmers enter the yield farm on the first day it opens and exit within twenty-four hours, while approximately 16% exit within forty-eight hours. By the third day, 70% of people exit the contract. This is due to decreasing yields as rewards typically decrease over time and more users share the rewards.

Capital in the DeFi world is indeed mercenary; users diligently move their capital elsewhere, never falling behind!

The Smartest Ones

Can we find addresses that always enter yield farms early? It seems that there are some: approximately 11 addresses entered at least 6 MasterChef contracts within five days of each contract release.

The researchers compiled a list of these wallets here. If anyone wishes to mine more meaningful information from this data, the author also suggests using Nansen's smart alert feature to notify oneself of actions taken by these addresses.