DPI User & Retention Analysis

I have been working on analyzing the DPI user base. I wanted to share the initial insights with the community for feedback, questions, and open discussion. What are we learning about our users? What are we learning about DPI as a product?

Key Results

  • DPI is experiencing the largest growth in the holder base with addresses that have exposure to <10 DPI. This bodes well for DPI’s value prop as the simplest way to start investing in DeFi.

  • Addresses with <10 DPI account for >75% of the holder base. This strongly suggests that the Index Coop can generate consistent, long-run growth in AUM by targeting small DPI holders.

  • The 75% of address with <10 DPI account for roughly the same amount of AUM as the handful of whales. Addresses with 10-249 DPI account for only 25% of total AUM.

  • In aggregate, addresses are increasing their exposure to DPI by nearly 80% in the first 50 days after initial exposure.

  • Retention across all DPI holders is improving. DPI is becoming more sticky over time. This is a great sign for DPI’s value prop as the simplest way to maintain exposure to the best assets across DeFi.

  • Retention overall is driven by increased retention in holders with < 50 DPI. For addresses with 50-249 DPI, there appears to be slight evidence that retention is improving, though not as strong.

  • Whales (250+ DPI exposure) have the most variability in retention across cohorts and over time. While retention is still strong (~70% at 30 days), there may be leading evidence that DPI is becoming less sticky for newer whales. This may be due to shifting yield farming / LP opportunities.

DPI Users & AUM

DPI is experiencing the largest growth in the holder base with addresses that have exposure to <10 DPI. Although, it should be noted that there appears to be solid growth across all exposure groups in January. This bodes well for DPI’s value prop as the simplest way to start investing in DeFi.

Addresses with <10 DPI account for >75% of the holder base. This is important to understand as Index Coop evaluates how to best grow DPI as a product. It is likely that these holders are generally newer and have less money in “crypto” broadly, although more analysis needs to be conducted to confirm that hypothesis.

The 75% of address with <10 DPI account for roughly the same amount of AUM as the handful of whales. Addresses with 10-249 DPI account for only 25% of total AUM.

DPI Unit Retention/Growth

Another great sign - aggregated across all addresses and anchoring on the day of initial exposure to DPI, addresses are increasing their exposure to DPI by nearly 80% in the first 50 days after initial exposure. This may be one of the most intriguing findings so far.

DPI Retention

It appears that DPI is becoming more sticky over time as newer cohorts are achieving higher retention. This is a great sign for DPI’s value prop as the simplest way to maintain exposure to the best assets across DeFi.

DPI Exposure Retention looks very strong for addresses with <50 DPI. It should be noted that we are dealing with much smaller samples with holders having exposure to >50 DPI (see DPI Holders Growth chart). One hypothesis could be that early holders with large exposure to DPI were driven more by yield farming opportunities than holders with smaller exposure to DPI, and that there is more variability in retention for holders with larger exposure to due shifting yield opportunities.

While the previous views look at whether or not a “whale” (250+ DPI exposure) retains any exposure to DPI, this view looks at whether or not the whales retain as whales. There may be some leading evidence here that DPI is becoming less sticky for newer whales. Again, this may be due to shifting in yield opportunities with DPI.

Outstanding Questions

  • What is the breakdown of where whale DPI sits? Uni/sushi pool? In a wallet?
  • Can we better understand how whales are using DPI differently than small-wallet DPI holders (those groups dominate AUM)?
  • For DPI holders, what fraction of their wallet holdings does DPI represent?
  • Please ask more!
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Interesting and valuable information, and good trends generally too!

My noob question is regarding how are liquidity providers accounted for? So, I think what I am trying to get at is - at what value does a wallet that bought a lot of DPI and then pooled it show as? And, following that, could it be that a lot of the <10 DPI holders are liquidity pool providers who were left with dust after depositing?

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@jdcook Great work, some fantastic insights here.

I’m very happy to see a large proportion in smaller wallets. Hopefully, these are long term buy and hold for DeFi exposure.

It’s not a great surprise that some of the larger wallets are more active and move into other positions. They can be much more income sensitive (we know there was a spike in DPI minted in Nov that correlates with the INDEX price spike) and gas fees have less impact on changing strategy.

If the smaller holders are more sticky, then I suppose that adds weight to the expectation that the bulk of the trading volume is driven by the whales. Which means we need to continue to maintain good liquidity / set up exchange issuance.

I know that when I looked at the INDEX claims from the initial liquidity mining that the Alpha farming pool was one of the larger holders, and they would have most likely fully unwound at the start of Dec before starting a new farm.

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@mrvls_brkfst I think it must account for addresses that have provided liquidity / staked. Otherwise we are missing 40% of the DPI. Also, my crude etherscan analysis found significant addresses holding DPI without moving it (14 addresses holding ~6% of the total DPI at the time)

All good questions, and it’s only going to get more complex as more extrinsic opportunities develop. I think we may get to the position where we can just look at net inflow / outflow from different protocols.

Particularly when 𝕊ecret Bridge starts to obscure transfers.

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@mrvls_brkfst good callout. This does account for providing liquidity. We track exposure to DPI regardless of whether it is sitting in the wallet or being use to provide liquidity.

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@jdcook thanks for this analysis. This is super informative. $DPI clearly appeals to small retail investors in line with the product philosophy put out by @puniaviision. Much of the value of $DPI is clearly the broad DeFi exposure it gives to smaller and newer investors.

My biggest conclusion from this analysis is our need for increased exposure on Fiat On-Ramp exchanges. Clearly there is a ton of demand for $DPI from small holders and we need to continue working to provide these investors with easy access to the token.

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