Hype of the Week : Sushiswap
A mere two-weeks old and DeFi’s newest creation, Sushiswap has caused the uproar of 2020 in the crypto community. Conceived on the 28th of August, Sushiswap drained 80%($1.27 billion) of its forerunner’s, Uniswap, liquidity pool (LP) — within 3 days of launching. To add salt to the wound, on the 5th of September, the previously unknown creator of Sushiswap “Chef Nomi”, sold all his SUSHI tokens for $13 million worth of ETH. Then, he relinquished his powers at the helm of the infant company.
Over a fortnight ago, SushiSwap was making headlines — generally positive — as it presented itself as the community-focused approach to liquidity-farming. With the SUSHI token, a Chef Nomi creation, Sushiswap had seemingly improved upon its forerunner’s protocol via liquidity incentivization, distribution of rewards, and participant governance rights.
However, the method used to “transfer” users over from Uniswap to Sushiswap had already raised some eyebrows. For Sushiswap users to reap the benefits of SUSHI, they would have to replace their Uniswap LP tokens. Then, these tokens would be converted into SUSHI — meaning a liquidity drain from Uniswap to Sushiswap would occur. This “vampire mining” seemed to be effective, as Sushiswap caused $285 million in Uniswap’s LP to surge to $1.5 billion in under ten days.
Over the weekend Sushiswap seemed to be heading to the pile of failed DeFi projects, with the crypto community calling for Chef Nomi’s head. The community had picked up on what was going on and the price of SUSHI fell a deafening 70%. In a series of twitter rants, Chef Nomi had claimed that his actions were all done in the name of the community, justifying his actions by comparing his ordeal to that of Litecoin founder, Charlie Lee — but to no avail. On the 6th of September, the project and administration were transferred to FTX CEO Sam Bankman-Fried (SBF).
At the time of writing two major events have taken place. Currently, voting has closed as the community decides on new multi-sig signers; following SBF’s announcement that control should be designated to a multisig group. Additionally, Sushiswap has commenced with its migration of $830 million of crypto assets to a new and community-owned automated market maker. This comes after SBF rallied SUSHI participants by promising that “Sushi shall be back in the community’s hands” — a good shot at redemption as Sushiswap aims to revive itself after the whole saga.
*Update: Chef Nomi just gave back the $14 million worth of ETH, the community will now decide what to do with this money and how much Chef Nomi should get himself.
If you want to read more about Sushiswap, follow the links below:
Author: Stephan Eduard Pàl Roth