In Uniswap fork, $800 million of assets were locked three days after launch

The volume of assets locked in SushiSwap exceeded $815 million three days after the DeFi project began operating, according to data from Zippo.io. The protocol, positioning itself as the “evolution of Uniswap” and with a governance token SUSHI, did not pass an audit.

According to the project’s blog, the fork from the original is distinguished by the presence of a governance token.

The project distributes SUSHI among liquidity providers at 0.05% of collected trading fees. 0.25% of the collected fees goes directly to them, while in Uniswap — 0.3%. The obtained tokens can be sold on the market or used in governance voting.

As of writing, SUSHI is trading at $3.56.

The SushiSwap creators count on migrating liquidity providers to the pools on Uniswap.

In each block, 100 tokens are created. Over the two weeks after the project’s launch as an incentive to migrate from Uniswap to SushiSwap, this number will be ten times larger. The new pools will be almost identical to the standard pool of the original. At the protocol level and in the operation of the smart contracts, the new project will use the same interface.

In the creators’ plan, once the migration is completed, the transformed liquidity will support the initial SushiSwap pools and immediately launch the protocol. Liquidity providers won’t have to take any action — they will continue to earn rewards in SUSHI tokens.

Scheme of migrating liquidity pools from Uniswap to SushiSwap. Source: SushiSwap blog.

Lack of an audit ties SushiSwap to another project, YAM. The latter quickly gained popularity, but after the discovery of a critical bug in the smart contract its token plunged by 99% within 24 hours.

Blockchain startup Quanstamp agreed to an advance of 5 ETH for auditing SushiSwap. Later, its team could claim additional compensation as part of the 10% allocated from each SUSHI distribution. From this fund, further code updates and project development will also be financed.

Bumping this up again. Devshare $SUSHI is up for all of you. So far only @Quanstamp stands for the community to do the audit. Other firms, @TrailOfBits @PeckShield @OpenZeppelin @Consensys @Certik_io, I would appreciate if you join us or give us the timeline that works for you https://t.co/9tVMqj28QF

— Chef Nomi #SushiSwap (@NomiChef) August 31, 2020

Co-founder of the Dharma Labs decentralized lending platform Brendan Forster expressed hope that the SushiSwap experiment would “fail.” He believes that due to the fork liquidity users will face less attractive exchange rates and liquidity providers will incur impermanent losses. The benefit, according to Forster, is obvious only for the project’s founders.

He was echoed by the founder of the non-custodial exchange 0x Will Warren. He stated that a SushiSwap victory would be “terrible” for the Ethereum community.

Agree it would be terrible for the space if SushiSwap won. It’s in the Ethereum community’s best interest to reward builders.

That said, forking liquidity would only result in worse swap prices for people that go direct to single source rather than an aggregator.

— Will Warren 🍵 (@willwarren89) August 30, 2020

Shortly before SushiSwap’s launch, The Block analyst Larry Cermak suggested Uniswap might be in a bind if someone forks and introduces a liquidity-provider reward system, though that move would raise ethical questions.

I can only imagine that if someone pulled this off and also got some funding (from that 10% of supply) to hire a team, it would be very hard for Uniswap to do anything. And liquidity goes where subsidy is. Sure it would be a shitty move but a lot of people are pure profit driven

— Larry Cermak (@lawmaster) August 23, 2020

The daily turnover on Uniswap first exceeded Coinbase’s corresponding figure.

Among users, expectations grow that in the next version the non-custodial exchange will have a native governance token. The previous team launched it in May.

In early August, Uniswap attracted $11 million in investment.

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