1 [Sushi] Weekly Active Users

    What Is SushiSwap?

    SushiSwap is a decentralized exchange (DEX) and automated market maker (AMM) with its own smart contracts. It was developed by “Chef Nomi” in 2020 and runs on the Ethereum blockchain. Decentralized exchanges have been a stable environment for peer-to-peer cryptocurrency transfers, without neither the requirements nor interference of any middlemen or third parties. Providing its own AMM ensures that assets are priced using a trading algorithm, rather than an order book in the way conventional exchanges operate.

    SushiSwap is a fork of Uniswap, with several significant variations and additional features, the most notable of which is the SUSHI token. Essentially, the token serves two purposes. First, it grants holders governance privileges and entitlements unique to SushiSwap. And second, it represents a share of the protocol’s payments. SUSHI holders, to put it another way, “control” the overall protocol.

    Sushiwap's troubled relationship with Uniswap

    SushiSwap emerged amidst the DeFi euphoria of summer 2020 as a fork of the biggest and one of the most well-known decentralized exchanges in the space, Uniswap.

    The project was initially envisioned by an individual operating under the pseudonym of Chef Nomi, who was soon joined by another pseudonymous core contributor called 0xMaki.

    The founding team created SushiSwap by copying the open-source code of Uniswap. The platform’s initial liquidity was ported from Uniswap using a very creative, novel and somewhat ethically questionable method dubbed a vampire attack

    This strategy for bootstrapping automated market makers and sourcing liquidity is called a vampire attack because the initial liquidity is not drawn organically but rather sucked out of one platform for the sake of porting it to another.

    SushiSwap heavily incentivized liquidity providers on Uniswap to stake their LP tokens by using extra rewards paid out in SUSHI, which represents supplied liquidity, on the SushiSwap exchange.

    Once about $1 billion worth of liquidity pool tokens had been staked on the platform, the SushiSwap team initiated the vampire attack; on September 9th, 2020 migrated a total of $840 million worth of liquidity from Uniswap.

    An interesting tidbit to note here is that, just days before the final migration, when the SUSHI token was breaking new all-time highs, Chef Nomi—who was still the sole beneficiary of the project’s admin key—decided to sell all of their SUSHI, worth around $14 million, which singlehandedly crashed the token’s price nearly 50%.

    10% of the minted SUSHI tokens were allocated to the devfund, over which Chef Nomi had full control at the time. The tokens were rightfully his, so he decided to sell them all at once, crashing the price and upsetting the SUSHI community.

    After an initial effort to justify his actions as good for the project, the community lost faith in Chef Nomi and effectively forced Chef Nomi out of the project.

    Before leaving, Chef Nomi transferred the project’s control to Sam Bankman-Fried, CEO of cryptocurrency exchange FTX and quant fund Alameda Research. After finalizing the liquidity migration, Sam moved the admin key’s control to a multi-signature wallet managed by nine individuals chosen by the community.

    Days after the successful migration, Chef Nomi returned, bought the same amount of SUSHI tokens he sold, and put them all back in the devfund, and apologized to the community.

    Despite its initial furor and dubious origins, today SushiSwap is the second-largest decentralized exchange on the market with total liquidity locked of approximately $4.8 billion.

    Let's see how it goes up against the 1000-pound Gorilla — Uniswap.

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    Sushiswap active users have been growing at a consistent rate

    While Uniswap v2 users have been decreasing due to launch of Uniswap v3, it's interesting to note than Uniswap v3 number of users have not overtaken number of Sushiswap users.

    Using a 100% stacked chart to illustrate Sushiswap's growth we notice the following:

    1. Uniswap dominates the number of users with almost 60-40% distributions of number of users.
    2. Sushi started with 25% of the users but has slowly risen that number to about 40% of the users every week. In absolute number terms, Sushiswap has more than doubled the amount of addresses transaction on Sushiswap.
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    Despite increasing weekly users, Uniswap still dominates weekly transaction count and volume

    In the above charts, we see a clear upward trend in the number of Sushiswap users. However, when we actually look at how many swaps those users are doing, Sushiswap falls short.

    Number of Swaps

    On most weeks Uniswap often dominates close to 90% of the number of swaps. While there was a short increase in the swap volume share to 15% for Sushiswap between August and October, it has come back down in November.

    Amount Swapped (USD)

    Comparing the amount of USD swapped, Uniswap shows an even more dominant position as Sushiswap has lost some of this share since February. In that month, Sushiswap had about 25-30% of the swap volume share but it has since come down to about 5-10% with a weekly peak beyond 10% here and there.

    Conclusion

    1. Sushiswap is gaining more weekly active users compared to Uniswap
    2. However, those new users are not translating into more swaps or the amount swapped compared to Uniswap.
    3. Uniswap still is totally dominant with close to 90% share of number of swaps and amount swapped.