Investigation finds SushiSwap protocol administrator holds $27m in native tokens

The administrator of the DeFi protocol SushiSwap, which positions itself as the ‘evolution of Uniswap’, could dump $27 million worth of SUSHI in his wallet at any moment. These conclusions were drawn by Adam Cochran, a partner at Cinneamhain Ventures, following the smart-contract audit.

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. https://t.co/OQZ4QciqXw

— Adam Cochran (@AdamScochran) September 1, 2020

Cochran, after a cursory look at the code, suggested that the development fund is accumulated in a wallet that has been blocked by governance or where a timelock operates.

Subsequent analysis showed that this is a generic wallet, the keys to which are held by the anonymous protocol administrator who calls himself ‘Chef-Nomi’. Cochran did not rule out a sudden 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 suggested that many users would understand a dump by the ‘Chef-Nomi’ of even 10% of the current capitalization. The total market value of SUSHI составляет $250 mln.

3/6

Consider you just made a project that earned you $27M in revenue, and was worth $2B fully diluted.

Would you take a little bit of money off the table?

If Nomi announced that and took even 10% off the table, people would likely be ok with it.

— Adam Cochran (@AdamScochran) September 1, 2020

The researcher wondered why the administrator had not yet touched these funds. It was obvious to him that the project cannot be valued at $2B. Cochran suggested that a smart developer like ‘Chef-Nomi’ is not betting on further price growth.

4/6

But in my mind, not touching a $27M unlocked dev fund is almost more suspect.

It’s pretty obvious that the project isn’t worth a $2B fully diluted marketcap today. So someone as smart as Nomi likely isn’t banking on the token price going higher.

— Adam Cochran (@AdamScochran) September 1, 2020

The further reasoning led the analyst to conclude that this is simply an overlooked aspect of the ecosystem. He recommended moving these funds immediately to the wallet blocked by governance. Otherwise, in his view, the ecosystem risks 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

The volume of locked assets in SushiSwap surpassed $1.25 billion after nearly five days since the DeFi project began, according to Zippo.io data.

In a note at the time, Jay Hao, head of the bitcoin exchange OKEx, did not rule out, that the current ‘bubble’ in the DeFi sector would pop, but added that in the long run the prospects for decentralized finance cannot be ignored.

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