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Sushiswap's liquidity is nearly 1 billion US dollars, will it surpass Uniswap?



In the field of DeFi, DEX is the largest position. At present, Uniswap, Balancer, and Curve are among the top three. In addition, there are more than a dozen DEXs with a daily transaction volume of more than 10 million U.S. dollars. The transaction volume of DEX in the last 7 days has exceeded 2.68 billion U.S. dollars. The trading volume of DEX is increasing, and in fact it has become the future opponent of CEX.

In addition to more than a dozen DEXs with a certain trading volume, there are more and more exchanges optimized for Uniswap, and various swaps are still on the way. Follow-up Blue Fox Notes will also introduce various swaps to you one after another. The first thing I will introduce today is Sushiswap, Sushi means sushi. So, will Sushiswap be delicious? Will it be better than Uniswap? Does it have a chance to overtake Uniswap?

Sushiswap continues the core design of Uniswap

Sushiswap did not build a new model, it still continues the core design of Uniswap, and it is still the AMM model. The token pool of Sushiswap is basically the same as that of Uniswap.

The hacker organization LAPSUS$ began to sell NVIDIA data and unlock graphics card Ethereum mining methods: Jinse Finance reported that the semiconductor giant NVIDIA (NVIDIA) reported in late February that some of its online businesses were under potential cyber attacks. At that time, the hacker organization LAPSUS $ claimed responsibility at this time and added that they had stolen 1 TB of data from Nvidia. According to the latest report from PCmag, the hacker group has begun to sell relevant data, and will also sell methods to unlock Nvidia GPUs to limit Ethereum mining. According to LAPSUS$, they have custom software that can easily unlock the "Lite Hash Rate" limiter of Nvidia's RTX 3000 series graphics cards, and have also posted information about the service on social media. [2022/3/1 13:30:20]

The main difference between the two is that Sushiswap has added token economic incentives, that is, it distributes part of its transaction fees to holders of the Sushiswap token SUSHI.

In addition, on the front-end interface, Sushiswap is also consistent with Uniswap. In this way, if other DeFi protocols (especially those that have already integrated Uniswap) want to integrate Sushiswap, the conversion is relatively easier.

SUSHI fell below the $10 mark with an intraday drop of 13.21%: according to data from Huobi Global, SUSHI fell short-term and fell below the $10 mark. It is now reported at $9.9963, with an intraday drop of 13.21%. The market fluctuates greatly, please do a good job in risk control . [2021/5/23 22:34:12]

The core of Sushiswap is to increase token economic incentives

Uniswap leaves a large piece of reclaimable land for various other swaps

Blue Fox Notes previously predicted that Uniswap would launch its own token incentive mechanism soon. However, due to the rapid increase in its trading volume, it has an obvious first-mover advantage on DEX, which further reduces its willingness to launch tokens. Everything is under control, and the years are safe and sound.

However, the development of the DeFi field is very fast, and the current leader may not be the future leader. The same is true from the perspective of the locked amount and market value of assets. The rankings change significantly every year. Uniswap is facing competition from a bunch of various swaps. Liquidity provision itself does not have an absolute moat.

Since Uniswap does not launch a token incentive system, this leaves a large gap in the DEX market. In this blank space, various swaps began to perform, such as moonswap and Sushiswap, and some other swaps.

Lawyer: Users who lose money in SushiSwap can consult a lawyer: Jinse Finance reported that lawyer Preston Byrne has suggested that users who have lost funds in SushiSwap can consider consulting a lawyer. Byrne tweeted that the tokens do not comply with securities regulations and that victims can seek recourse under common law. It is reported that the SUSHI token fell from an all-time high of $11 to $2.38 last weekend. SushiSwap anonymous founder Chef Nomi is now accused of running an exit scam after $12 million was withdrawn from SUSHI liquidity pools. [2020/9/9]

Users who provide liquidity to Uniswap are incentivized with fees. However, there are two problems with this simple fee incentive:

1) It is not fair enough for users who participated in liquidity provision early.

The core of Uniswap's ability to operate is that liquidity providers provide it with a large amount of liquidity. Early liquidity providers took more risks, but did not get more benefits. They made early contributions but were unable to capture the value of protocol growth. Second, as the protocol grows, more and more large funds enter to provide liquidity (institutions, exchanges, mining pools, etc.), which dilutes the share of early liquidity providers, and the fee income they can obtain is increasing. reduce.

MOMOEX has opened the SUSHI/USDT trading pair: According to official news, the MOMOEX platform has opened the SUSHI/USDT currency pair trading. It is understood that SushiSwap (SUSHI) allows users to mine the governance token SUSHI by staking mainstream LP tokens on UniswapV2. 100 SUSHI are issued in each block, and these tokens will be evenly deployed in all 13 pools. In the first two weeks, each block can get 1000 SUSHI, and the SUSHI/ETH pool will get 200 SUSHI. SUSHI tokens have no practical value and only have governance rights. Once the liquidity of Uniswap is migrated to SushiSwap in the future, SUSHI token holders will share 0.05% of the transaction fee.

It is reported that MOMOEX is invested and deeply supported by the ChainUP Capital fund. The brand vision is to provide users with a high-quality trading platform with "More Safety, More Benefits, more safety, and more benefits". [2020/9/1]

2) The loss of impermanence cannot be compensated.

Voice | University of Sussex doctoral researcher: Bitcoin's high energy consumption is worth it: According to Theconversation, Steven Huckle, a doctoral researcher in blockchain technology at the University of Sussex, published an article saying that Bitcoin's high energy consumption is a problem, but it may be worth paying cost. He wrote in the article: "In economic game theory, a Nash equilibrium is reached when the system is stable because no one benefits from a change in strategy that produces a stable state. Miners are only given to help form an efficient Bitcoin blockchain, and the most profitable outcome, or Nash equilibrium, is when each miner reaches consensus with the majority. Therefore, despite excessive energy consumption, Bitcoin's proof-of-work algorithm has Proven to be effective." [2018/11/7]

Providing liquidity mining for Uniswap can capture fees, but there are also impermanent losses. If a token in the token pair rises or falls sharply, it may cause impermanent losses. Of course, it is essentially a rebalancing of assets. From this perspective, it is not considered an impermanent loss. However, when exiting, if it is denominated in fiat currency, there may be a possibility that the fee income obtained is not as high as that obtained by directly holding tokens.

Sushiswap's Liquidity Mining Incentives

Liquidity providers on Sushiswap can be incentivized by SUSHI tokens. SUSHI tokens can alleviate the above problems.

On Uniswap, liquidity providers get corresponding fees based on the liquidity shares they provide, which is more like a one-shot deal, and the long-term value of the agreement cannot be obtained. The SUSHI token represents the potential income of the entire Sushiwap protocol. It can capture part of the protocol's fees for a long time. Even if the early liquidity providers no longer provide liquidity for the protocol, the SUSHI they obtained in the early mining can continue to capture the protocol. long-term value.

This token incentive model binds the long-term benefits of the early liquidity providers and the protocol. At the same time, if the liquidity provider no longer provides liquidity for Sushiswap, then the tokens held by the early liquidity provider will be relatively diluted, because other liquidity providers continue to provide services for the agreement and can continue to obtain More tokens. This also takes into account the interests of latecomers.

Sushiswap takes aim at Uniswap's liquidity providers

Sushiswap first provided Uniswap’s liquidity providers with the opportunity to earn SUSHI tokens. Uniswap’s liquidity providers can pledge their liquidity token share (part of the LP tokens of the liquidity pool), and then start earning SUSHI at block height 10750000 (around 11:00 p.m. Beijing time on August 28) Token.

Sushiswap releases 100 SUSHI tokens per block, which will be distributed equally among all supported token pools. In the first 100,000 blocks, the SUSHI output is higher, releasing 1,000 SUSHI per block. This is mainly to motivate Uniswap's liquidity providers to provide liquidity for Sushiswap in the future.

The 13 liquidity pools that can participate in mining in the early stage are: USDT-ETH; USDC-ETH; DAI-ETH; sUSD-ETH; COMP-ETH; LEND-ETH; SNX-ETH; UMA-ETH; LINK-ETH; BAND -ETH; AMPL-ETH; YFI-ETH; SUSHI-ETH.

About two weeks after the protocol launch (initial 100,000 blocks), Sushiswap will launch a liquidity pool migration plan for Uniswap. These Uniswap liquidity pools that participated in Sushiswap mining in the early stage will migrate to Sushiswap. During the migration process, the first is to redeem token pairs on Uniswap, and migrate these token pools to Sushiswap. The new token pool is almost the same as Uniswap’s token pool, except that its fee allocation has undergone some changes, that is, the above-mentioned 0.25% is directly allocated to liquidity providers, and 0.05% of the fee is converted into SUSHI tokens.

After the migration is completed, traders can conduct token transactions of the above token pools on Sushiswap. During this process, stakers do not need to do any operations, and can obtain transaction fee income and SUSHI tokens from Sushiswap's liquidity provision.

Value capture of SUSHI

Liquidity providers on Uniswap can earn 0.3% transaction fees. In Sushiswap, 0.25% of fees will be directly allocated to liquidity providers, and the remaining 0.05% will be converted into SUSHI tokens. In addition, in order to ensure the continuation of R&D and operations, 10% of the SUSHI tokens will be used for development and future iterations, audits, etc.

From this token model, Sushiswap’s token SUSHI can capture 0.05% of transaction fees, that is, the value of SUSHI is linked to its transaction volume. On Sushiswap, the greater the transaction volume, the higher the fees captured by SUSHI. The trading volume of Uniswap in the past 24 hours is approximately close to 150 million US dollars (as of the writing of Blue Fox Notes), assuming that Sushiswap can reach this level of trading volume every day, then the value of 75,000 US dollars that SUSHI tokens can capture in one day, Annualized could capture over $27 million in value.

Risks of Sushiswap

Judging from the information announced by Sushiswap, it invited one of Trail of Bits, PeckShield, OpenZeppelin, Consensys, Certik, and Quantstamp to audit its contract. But so far no formal audit has been completed. There are potential risks here. Even if the audit is completed, any liquidity mining has a potential risk of smart contract vulnerabilities. Therefore, even if you participate in liquidity mining, you need to consider your own risk tolerance and control risks.


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