With the Release of Roadmap 2.0, Can SushiSwap Rise Again?

1. SushiSwap is losing users, which is why recently, the project has increased activity, trying to create a "self revolution".

2. SushiSwap added the governance token SUSHI as an incentive to Uniswap's liquidity pool + AMM mechanism.

3. 0.25% of the handling fee on SushiSwap belongs to LP-token holders, and the remaining 0.05% of the handling fee income will be used to repurchase SUSHI in the market.

4. The larger the transaction volume on SushiSwap, the higher the commission income, the greater the number of repurchased SUSHI and the higher the price of SUSHI.

On April 26, SushiSwap, a well-known decentralized exchange (Dex) on Ethereum, announced the release of the SushiSwap 2.0 community proposal and launched the future development roadmap of SushiSwap. The project will spend 6 million $SUSHI to make determined reforms in organizational structure, product renewal, community governance and other aspects within four years.


Since its release and rapid rise in August 2020, SushiSwap has been considered one of the top players in Dex. However, with the continuous iterative versions and innovative mechanisms of competitors such as Uniswap, SushiSwap's own positioning is gradually blurred, and its advantages are no longer prominent. SushiSwap is losing users, which is why recently, the project has increased activity, trying to create a "self revolution".


The rising road from imitation

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SushiSwap was originally born as the imitator of Uniswap, the largest Dex on Ethereum, or the "community fork" of Uniswap. Dex and lending are the two most important applications in the field of DeFi, and the foundation for the prosperity of the Dex project was laid by Uniswap in 2019.

In the traditional financial field, transactions are often completed through the order book mode. First, some users act as “makers” and then some act as “takers”, so as to complete the transactions between the two sides. Early exchanges in the DeFi field adopted similar ideas, but due to the small number of users, low liquidity and insufficient trading depth of these exchanges, the performance of the order book model is not good, and the trading is slow and has a large sliding point. In the order book model, there are often professional market makers in the market. They earn arbitrage income by providing liquidity in the market. Is it possible to establish an algorithmic market maker according to the characteristics of "code is law" in DeFi to provide liquidity for other real users? Uniswap innovated on this basic mode of matching transactions and launched the so-called AMM automatic market maker technology.


On Uniswap, each trading pair corresponds to a liquidity pool, and the price in the liquidity pool is determined by the simple formula x*y=c. Users can put their digital assets into it, and then obtain a certain amount of LP-tokens representing the liquidity share, and obtain the market-making income of the corresponding share in the pool. This mechanism is simple but efficient, which significantly improves the transaction speed and reduces the slip point as much as possible. Meanwhile, it also provides sufficient incentives for users to invest their digital assets into the liquidity pool. With the great success of Uniswap, more exchanges want to enter the market, and SushiSwap is one of them.

Although the Uniswap mechanism is good, it comes with some problems. First, it is not absolutely safe for users to deposit their funds into the liquidity pool, and there may still be losses in the form of impermanent losses, and the lower the total amount of liquidity in the pool, the greater the possibility of risks; Second, the incentive of the liquidity pool is only based on the amount of liquidity in the pool, and there is no specific risk compensation for users who have invested in assets at an early stage.

SushiSwap added the governance token SUSHI as an incentive to Uniswap's liquidity pool + AMM mechanism. Uniswap will provide LP-token to liquidity providers, but this is not a governance token, but a voucher representing the liquidity share in the liquidity pool. SushiSwap not only provides LP-token, but also provides SUSHI to major liquidity pools in batches. Each block will produce 100 SUSHIi, with an unlimited total. These SUSHI are still allocated in proportion to the liquidity pool, so early investors in the liquidity pool can get more SUSHI because the number of participants in the pool is still relatively small. The SUSHI reward for the liquidity pool has become a compensation for impermanent losses and has also played a role in encouraging early investment.

In terms of handling fee income distribution, SushiSwap's handling fee is 0.3% the same as Uniswap, but unlike Uniswap's return of the handling fee to LP-token holders, 0.25% of the handling fee on SushiSwap belongs to LP-token holders, and the remaining 0.05% of the handling fee income will be used to repurchase SUSHI in the market. The larger the transaction volume on SushiSwap, the higher the handling fee income, the greater the number of repurchase SUSHI and the higher the price of SUSHI. Therefore, the price performance of SUSHI is closely related to the overall operation of SushiSwap, and can also be considered the platform currency of SushiSwap.


"Vampire attack" on Uniswap

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Another controversial move made by SushiSwap at the beginning of its launch was the so-called "vampire attack" on Uniswap. SushiSwap copied the underlying technology of Uniswap and made its own mechanism innovation, but this is not enough to make Uniswap truly successful. Sushiswap provides the opportunity to stake the LP-tokens provided by Uniswap to obtain income, redeem all these Uniswap LP-tokens through smart contracts after a certain period of time, and convert them into LP-tokens of the same liquidity pool on Sushiswap. After the launch of SushiSwap, nearly $2 billion of liquidity was transferred from Uniswap to SushiSwap, and SushiSwap quickly gained a foothold in the field of decentralized exchanges.

There is no doubt that SushiSwap was successful. The project gathered a large number of liquidity and users in the short term, and even forced Uniswap to launch its own governance token UNI, and made a high amount of airdrop worth tens of millions of dollars. This has also impacted the advantages of SushiSwap. Users deposit assets on SushiSwap to earn short-term high income, and then quickly take out assets and sell SUSHI tokens, resulting in the rapid decline of token price. Meanwhile, an anonymous executive of SushiSwap privately sold $14 million worth of SUSHI tokens, which led to the rapid collapse of the confidence of the crypto community in SushiSwap.


Consequently, Sushiswap established a new operation team with "0xMaki" as the leadership core, and the situation improved slightly. However, in September 2021, there were personnel changes within Sushiswap, 0xmaki team left the company, the project operation fell into chaos again, and the token price and market share fell all the way.


Compared with top decentralized exchanges such as Uniswap and Curve, Sushiswap has lagged behind in TVL, average daily trading volume and other data. In this case, the project team chooses to take the initiative to seek change and seek turnaround. After the storm, can SushiSwap break the status quo and rise again? Let's wait and see.
Finally, you can also access transaction page of $SUSHI on the Gate.io platform, please refer to the following page for details:
https://www.gate.io/trade/SUSHI_USDT



Author: Gate.io Researcher: Edward H. Translator: Joy Z.
* This article represents only the views of the researcher and does not constitute any investment advice.
*Gate.io reserves all rights to this article. Reposting the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.



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