What Is SushiSwap? – The Defiant

SushiSwap is Uniswap’s jealous twin. After Uniswap pioneered decentralized exchanges (DEXs), it triggered a DEX race. SushiSwap was one of those race contestants.

Why did SushiSwap become popular, and what does it offer compared to Uniswap? And should you become Sushi “chef”? Find out in this SushiSwap overview.

SushiSwap Origin and Purpose

SushiSwap cannot be understood without looking at Uniswap. Both DEXs use their names to tell their purpose. Proposed by Vitalik Buterin in 2016, but implemented by Siemens engineer Hayden Adams, universal token swapping — Uniswap — came online in November 2018.

The open source protocol enabled anyone to list their cryptocurrencies as ERC-20 compliant tokens on Ethereum, without permission. Users would provide liquidity for token pairs, so that exchange would be possible without any central organization pouring liquidity.

Just before Uniswap hit the $300M TVL milestone, a pseudonymous developer known as Chef Nomi decided to fork Uniswap code and create a Uniswap clone — SushiSwap. This happened on Aug. 28, 2020.

Because Uniswap code is open-source, it was possible to do this hard fork. Meaning, developers tweak the code, so it no longer operates under the existing protocol. Instead, it branches off into a new one, leaving the original one intact.

This has happened many times, even with the first cryptocurrency Bitcoin. Since its launch in 2009, Bitcoin has been hard-forked more than a hundred times. But the situation with SushiSwap was a bit trickier:

• To draw existing liquidity providers (LPs) away from Uniswap, the new SushiSwap clone issued SUSHI tokens as yield rewards for LPs.
• To further realize its ambition to become the next big DEX, SushiSwap enticed Uniswap LPs to deposit their tokens in exchange for SUSHI. 
• When Uniswap tokens are then swapped for SUSHI, SushiSwap would gain Uniswap’s liquidity.

Upper Hand

In other words, SushiSwap was conducting a vampire liquidity mining attack on Uniswap. This SushiSwap migration was quite successful, with over half of Uniswap LP tokens being converted into SUSHI. The SushiSwap would have likely gained the upper hand without a black swan event — a crypto market crash.

Severe asset depreciations leave many weak-willed investors fleeing for the market exits. This is precisely what happened with SushiSwap’s chief, Chef Nomi. He cashed out SUSHI to the tune of $14M, which led many investors to believe that SushiSwap itself was just an exit scam, instead of a legit Uniswap hard fork.

Because of this sentiment, SUSHI further hit the devaluation floor. Amid this chaos, Chef Nomi gave away the protocol’s control to Sam Bankman-Fried, the billionaire crypto entrepreneur and FTX CEO.

To save SushiSwap, Bankman-Fried conducted another vampire mining attack on Uniswap, worth nearly $1B, in which LP’s Uniswap…