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The Origin of Origins (2020-08-31)
DeFi-protocol Sushiswap, a fork of Uniswap with a native SUSHI token, has amassed more than $750 million in user funds three days after launch. Like other new projects, Sushiswap has not been audited, though it has invited a number of well-known companies to do so.
SUSHI's lucrative farm has been joined by many users, including BitMEX CEO Arthur Hayes. But from the address assigned to the Gate io exchange, which listed SUSHI over the weekend, an unknown person sent to the SushiSwap token address and lost 400,000 USDT, because it is not provided to receive such transfers.
At this point, SUSHI costs $3.56.
A scheme for migrating liquidity pools from Uniswap to SushiSwap. Source: SushiSwap blog.
1/6 As far as I can tell the $SUSHI guys are sitting on $27M USD worth of their own token that could be dumped or used to dump against LP tokens.
When I first looked through the contract, I assumed that the dev fund was going to a wallet that was locked by gov vote or timelock.
— Adam Cochran (@AdamScochran) September 1, 2020
Adam Cochran already assumed, after a cursory glance at the code, that the developers' fund was accumulating in a wallet that had been blocked by management or where a temporary blockage was in effect.
The researcher's subsequent analysis showed that it was a universal wallet, the keys to which are held by an anonymous protocol administrator calling himself "Chef Nomi". Adam Cochran did not rule out a surprise dump of these tokens.
2/6
It seems however it is just a generic wallet that the SushiSwap admin has keys for.
That means without warning you could be dumped on.
Now, I’ve been impressed with the results of SushiSwap and the teams professionalism so far, but, let’s take a step back
— Adam Cochran (@AdamScochran) September 1, 2020
The expert admitted that many users would be sympathetic to the "chef" dropping even 10% of the current capitalization. At the time, the total market value of SUSHI is $250 million.
Further reasoning led the analyst to conclude that this was simply an overlooked aspect of the ecosystem. He recommended that these funds be immediately moved to the blocked wallet that was blocked by voting. Otherwise, he felt, the ecosystem would be at systemic risk.
6/6
otherwise they pose systemic ecosystem risk.
I don’t think the community would mind if Nomi cashed out a bit along the way, but that pool can’t just sit there in a generic admin key wallet.
— Adam Cochran (@AdamScochran) September 1, 2020
Blocked assets in SushiSwap exceeded $1.25 billion nearly five days after the DeFi project began, according to Zippo.io.
I’m transferring control to @SBF_Alameda now.
— Chef Nomi #SushiSwap (@NomiChef) September 6, 2020
Cinneamhain Ventures partner Adam Cochran suggested that the administrator withdrew funds from the fund without the knowledge of the other developers. He came to this conclusion based on an ultimatum that Nomi, co-founder of SushiSwap, had issued.
DAMN the $SUSHI saga gets better.
Cofounder calling out Nomi proving this was NOT planned and was Nomi taking funds without other devs knowing!
— Adam Cochran (@AdamScochran) September 5, 2020
Cochran had previously warned that Nomi could dump the SUSHI in the wallet he controlled at any time.
Opinions differed in the community as to whether the project would benefit from handing over control to the exchange. Some noted that an experienced and well-resourced team would help SushiSwap overcome problems. Others pointed out that FTX is the largest holder of SUSHI, and along with protocol control, it threatens to centralize the platform.
The price of the token reacted to the news by rising, momentarily to $3.11 (CoinGecko).
Recall that the other day the native tokens of SushiSwap clone projects (PIZZA and HOTDOG) collapsed to zero after a brief bump.
Changpeng Zhao, the CEO of Binance, explained the listing of the asset by the desire to support innovation and urged users to assess risks. Larry Chermack, an analyst at The Block, disagreed, arguing that the exchange should protect users' funds at the stage of project expertise.
As one of the leaders of the space, we support innovation. With innovation comes the chance of high reward, and high risk. Some projects make it to the moon, while some fall short. Always manage your risk accordingly.
— CZ Binance (@cz_binance) September 6, 2020
Cermak, in response to Zhao's deleted tweet, did not hold back the irony, explaining that Binance is constantly improving its due diligence on listings. When failures such as SUSHI occur, Zhao, as the analyst felt, simply unsubscribed and was gone.
Can’t have it both ways. CZ is constantly flexing how Binance’s listing team does the most due diligence and how its listed projects perform the best. When it doesn’t work — “we are only providing access to liquidity so other exchanges don’t make us obsolete” LMAO
— Larry Cermak (@lawmaster) September 6, 2020
In turn, trader Michael van de Poppe drew attention to the form published earlier by Zhao for listing tokens on Binance, where the obligatory condition is to voice the name of the project founder or his manager in case of unforeseen circumstances. Sushiswap was overseen by a certain "Chef Nomi," who, after the dump, handed over control of the protocol to FTX exchange CEO Sam Bankman-Fried.
The point is not that he lists it, as other exchanges do that as well.
The conflict of speech and the questionable integrity of Binance is the question here.
Openly stated takes on this from @cz_binance, which should be critically reviewed by his customers and that’s us.
— Crypto Michaël (@CryptoMichNL) September 6, 2020
"Chef Nomi" regrets what happened
(2020-09-20)
Sushiswap protocol creator "Chef Nomi" apologized to the community for earlier decisions and announced the return of $14 million withdrawn from the protocol last week, thereby dropping the token price by 50%. In addition, he summarized the successful migration of liquidity from Uniswap and stated his willingness to support the project.
The SUSHI token price immediately responded with a 20% increase.
An initial liquidity mining program will go live September 18 2020 12:00am UTC. The initial program will run until November 17 2020 12:00am UTC and target the following four pools on Uniswap v2:
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ETH/USDT
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ETH/USDC
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ETH/DAI
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ETH/WBTC
Since the end of last week there has been an outflow of funds from the platform, at the same time the competing protocol Sushiswap recorded an inflow.
The projects' native tokens, after reaching the lows at the beginning of the month, have significantly increased in price - UNI has risen by 115%, SUSHI - by 180%. However, given the above changes over the last 24 hours, SUSHI has outperformed UNI (+13% and -9%, respectively).
Currency.com's token list includes USD Coin Stablecoin (USDC) and Maker DAO (DAI) as well as tokens:
- DeFi-protocol Wrapped Bitcoin (WBTC);
- SushiSwap (SUSHI) decentralized exchanges;
- OMG Network (OMG) financial service;
- Brave Web Browser (BAT);
- 0x (ZRX) decentralized exchange;
- Kyber Network (KNC) decentralized liquidity platform;
- L2 platform Matic Network (MATIC);
- Aave decentralized lending protocol (AAVE);
- Augur (Augur) decentralized forecasting platform;
- Synthetix synthetic asset platform (SNX);
- Yearn.Finance (YFI), a profitable farming service;
- UMA (UMA) synthetic asset platform;
- Republic Protocol (REN) atomic swap protocol;
- Ocean Protocol (OCEAN), a decentralized data trading protocol;
- Band Protocol (BAND) decentralized oracle service;
- Bancor Decentralized Network (BNT);
- Aragon (ANT) platform for creating DApps, DAOs and protocols.
Today we’re unveiling Grayscale DeFi Fund, our second diversified investment product, which tracks the @CoinDesk #DeFi Index. Accredited Investors are now able to gain exposure to a selection of industry-leading DeFi protocols through the Fund.
— Grayscale (@Grayscale) July 19, 2021
The fund is open for daily subscription to accredited investors.
Grayscale intends to provide secondary trading of the Grayscale DeFi Fund. Representatives of the management company stressed that they cannot give assurances regarding the approval of this initiative by the SEC and FINRA.
As of July 1, 2021, the CoinDesk DeFi Index included:
- Uniswap (UNI), 49,95%;
- Aave (AAVE), 10,25%;
- Compound (COMP), 8,38%;
- Curve (CRV), 7,44%;
- MakerDAO (MKR), 6,49%;
- SushiSwap (SUSHI), 4,83%;
- Synthetix (SNX), 4,43%;
- Yearn Finance (YFI), 3,31%;
- UMA Protocol (UMA), 2,93%;
- Bancor Network Token (BNT), 2%.
According to the press release, the index is formed by market-capitalization-weighted, liquid DeFi-protocol tokens. It is compiled by CoinDesk Indexes, which, like Grayscale Investments, is part of the Barry Silbert Digital Currency Group conglomerate.
In March, Grayscale opened nine openings mentioning the exchange-traded fund.
A month later, the company announced plans to convert the bitcoin trust into an exchange-traded fund based on the first cryptocurrency.
In July, William Cai, co-founder of the bitcoin-ETF Wilshire Phoenix, which applied to the SEC for approval, doubted a positive resolution before 2023.
I am going to ship Trident, and if you do not give us the autonomy to continue operations, the capability to form leadership, and increase compensation across the board I will leave.
— Joseph Delong 🔱 (@josephdelong) December 5, 2021
Until September, the project was run by user 0xMaki. He was given control by FTX CEO Sam Bankman-Fried after the scandalous story of the disappearance of an anonymous founder under the nickname Chef Nomi. The latter took $14 million from the developer fund, and then returned it with an apology.
It turned out that 0xMaki's departure might not have been voluntary. In a vote in Telegram's internal group, 10 out of 11 developers favored his "expulsion. Along with 0xMaki, some other team members also left.
Who are all the people in Sushi core right now, and what are their roles. Who has left and why? Pretty sure @0xMaki, @0xKeno, @LevxApp, @Mudit__Gupta are not part of Sushi right now.
— BoringCrypto (@Boring_Crypto) December 4, 2021
In an official statement, the SushiSwap team admitted that they had stopped working with the main developer in Asia because of his "unprofessional behavior. In particular, he was found to be a spreader of accusations for firing 0xMaki.
The SUSHI exchange rate reacted by more than 15%.
Conclusion
SushiSwap is a unique experiment that challenges the competitive advantage of the already successful DeFi Uniswap protocol. As a fork of Uniswap, SushiSwap added new features to its protocol, the key difference being community management. SushiSwap has an unusual history, having experienced the heyday, the fall, and the departure of part of the team. In 2021, SushiSwap also introduced an NFT platform to participate in the thriving NFT market. But as successful as SushiSwap has been, it is an example of no one product or service having an undeniable advantage in DeFi.
Thus, within a year, the coin went from its ATH to changing hands at $1.6 earlier this month. Marking a 92% decline, SUSHI investors are suffering losses higher than most of the existing coins.
But it’s not just the spot market that’s noting a decline. Being a DEX SushiSwap has been observing a fall in participation as well as usage.
At its best, the Decentralized exchange registered almost 100k new users in a month in November 2021. The figure has since dropped significantly.
This month SushiSwap only marked 35k new users, and only 38k old users were still active in May 2022. Combined, these users represent about 3/4 of the just the new users SushiSwap had back in November.
Given the uncertainty surrounding the crypto market, even DEXes can’t be expected to perform well month-on-month, which is the case with SushiSwap.
But when a recovery is triggered, investor activity will increase as well.