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What are Sommelier Whales Doing On-chain?
Jake Kennis
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Key Takeaways
6 min read

  • The 'Real Yield ETH' cellar consistently remains the best-performing strategy for ETH yield post-merge, with 9% APR since inception in April and 15% APR over the last 7 days, outperforming stETH by over 3x.

  • The ‘Sommelier Whales’ are a segment of 20 wallets with diverse on-chain activity. 50% are in the top 0.1% of Ethereum account balances (USD), and 45% are in the top 0.1% of all existing Ethereum accounts based on account activity.

  • The ‘Sommelier Whales’ are active yield seekers with heavy allocations to applications like Sommelier, Convex, B.protocol, Lido, Aura Finance, FraxLend, and the top token holdings include ETH, OETH, DYDX, and BITCOIN.

Introduction

Sommelier Finance is a DeFi-focused app chain on Cosmos that makes vaults for users to generate yield on their assets. Their approach allows for sophisticated strategies to be done on-chain that generate more yield for depositors. These include proprietary strategies that have been backtested and dynamically adjust for risk and volatility (i.e dynamically LP in Uni v3 pools, etc). To allow such sophisticated vault strategies, they have built out a Cosmos app-chain to align off-chain inputs to then be implemented on-chain on Ethereum.

We covered their chain extensively but this report will focus on their ‘Real Yield ETH’ cellar. We focus on this vault as it has the highest TVL, and it also consistently remains the best yield for ETH post-merge, with 9% APR since inception in April. Note, this does not factor in additional incentives in SOMM tokens. Over the last 7 days, the real yield vault sits at 15% APR which is more than 3x the returns of holding just stETH (4.1% APR as of August 21st). The key takeaway is that Sommelier Finance has the best-performing ETH vault for users to deposit their ETH for real yield.

Note, the strategy takes on exposure to multiple LSDs and a few DeFi protocols which introduce additional smart contract risk, counterparties, and slashing conditions. However, you can read more about the ‘Real Yield ETH’ vault here and see how the vault dynamically adjusts for risk in real time.

Finding the Current Power Users

Given the success of the ‘Real Yield ETH’ vault, we want to explore the top users. As of August 21st, there are 217 unique EOAs who have deposited to the ‘Real Yield ETH’ vault. Of course, many of these wallets have withdrawn funds or may have only deposited a little bit of WETH. We are only interested in the higher conviction wallets. To do this, we simply look at the top depositors in the vault since it opened up:

  • This focused on EOAs (with contracts, bots, and exchanges filtered out).
  • Look at the top 20 whale depositors ranked by their WETH deposits

After the above filters were added, we were left with 20 unique wallets who have deposited 94 WETH or more into the vault. These will be considered our ‘Sommelier Whales’.

Given this is a relatively new but outperforming vault, it's best to see who exactly these power users are and where else they are putting their assets to work.

Wallet Age: OGs and Newcomers

Source: Nansen Query

80% of wallets were active prior to 2023. The distribution of these wallets is heavily skewed towards the last 4 years but there are even some OGs from the 2018-2019 bear market.

Smart Money and other Segments

Out of the top 20 wallets, 2 of them are considered Smart Money:

  • 🤓 45471.eth*
    • Ranked 1st with 719 WETH deposited to the vault (over $1.18m at the time of writing)
  • 🤓 "MR703" on OpenSea
    • Ranked 4th with 317 WETH deposited to the vault (over $524k at the time of writing)

Outside of Smart Money, these wallets are quite diverse in their on-chain activity.

  • High Balance: Over 50% are in the top 0.1% of all existing Ethereum account balances.
  • High Activity: 45% of wallets are in the top 0.1% of all existing Ethereum accounts based on account activity.
  • Sandwich Attack Victim: 40% were victims to sandwich attacks.

These wallets also hold a lot of NFTs, are LPs across a number of DEXs, own many ENS names, have owned Unisocks, spun up multisigs and much more. In short, these wallets have an impressive on-chain track record across DeFi and NFTs and we will now track their current day allocations.

Sommelier Whales’ Chain Allocation

Sommelier Whales are mostly allocated to Ethereum and L2 ecosystems. As of August 21st, the top chains they are allocated to are:

  • Ethereum ($50.16m)
  • Arbitrum ($3.67)
  • Optimism ($1.69m)
  • BASE ($1.13m)

Other chains include Canto, Polygon, Moonbeam, and Avalance but the allocations are well below $1m across the 20 wallets.

Top Tokens Held and App Allocation

As for aggregate token holdings, below are the tokens sorted by USD value. We will only look at the top ten tokens sorted by USD value as of August 21st. Note, this is only assets idle in their wallets.

  1. ETH ($1.67m)
  2. OETH ($502k)
  3. DYDX ($502k)
  4. BITCOIN ($352k)
  5. cbETH ($280kk)

Idle assets only represent around ~6% of total net worth, which means these wallets are heavily allocated to applications (farming/staking, etc.)

App Allocation

Outside of Sommelier Finance’s ‘Real Yield ETH’ vault, these whales are heavily active across many apps. By TVL in each protocol, their allocations look like the following as of August 21st:

  1. Sommelier ($8m)
  2. Convex ($5.6m)
  3. B.protocol ($5.52m)
  4. Lido ($4.66m)
  5. Aura Finance ($4m)
  6. FraxLend ($3.95m)
  7. Frax ($3.76m)
  8. GMX ($1.37m)
  9. Yearn ($1.23m)
  10. Vesper ($1.2m)
  11. Maker ($1.19m)
  12. Instadapp Lite ($988k)
  13. Canto Lending ($602k)
  14. Morpho Aave ($553k)
  15. gTrade ($518k)
  16. Across v2 ($505k)
  17. Moonwell ($)501k
  18. IPOR ($477k)
  19. Uniswap v3 ($465k)
  20. Metronome ($461k)

The key takeaway is that these wallets are active yield seekers with most of their capital allocated to protocols - they like to put their capital to use. The top 5 protocols represent nearly 48% of the whales' net worth.

Top Entities Over the Last 30 Days

Now that we have seen the ‘Sommelier Whales’ protocol allocation and holdings, what else can give a more clear picture of this segment on-chain? We will look at the top entities they have interacted with, having filtered out some common DEXs, aggregators, and stablecoins. Below is a list of the top entities sorted by interactions and number of wallets.

Source: Nansen Query

Overall, the entities can be grouped into the following categories, which had at least 2 or more unique wallets that have interacted with them:

  • Yield/LSDs
    • Sommelier Finance
    • Lido Finance
    • Frax Finance
    • Curve.Fi
    • Convex Finance
    • Aave
  • L2/Bridges
    • Wormhole
    • Arbitrum
    • Optimism
    • BASE

Many of the above protocols are well established and may be considered relatively safe to use, which reflects well on Sommelier Finance.

Sommelier Whales

To track the ‘Sommelier Whales’, you can simply use the below dashboard to explore their portfolios further.

Source: Nansen Query

Smart Alerts

To also track the ‘Sommelier Whales’ in real-time, we set this prefigured smart alert template that shows transactions or transfers greater than $10k in value on Ethereum mainnet.

Conclusion

Sommelier Finance’s 'Real Yield ETH' vault stands out with a consistent yield performance of 9% APR since inception, and a remarkable 15% APR over the last week, providing a yield more than three times that of stETH.

We defined our 'Sommelier Whales,' a segment of 20 top depositors who have demonstrated diverse and lucrative on-chain behavior. These wallets consist of some of the top 0.1% of all Ethereum account balances and are heavily allocated to Ethereum and L2 ecosystems.

Moreover, their track record points to a well-defined and dynamic approach to maximizing yield across a number of applications.

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Disclosure: The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.