The decentralized finance (DeFi) craze is far from over, even after weeks of copycat projects and a series of unfortunate “rug pulls” (scams). A recently launched new decentralized exchange protocol, which incentivizes usage through a new token, has locked up more than $250 million worth in its first 24 hours of existence.
Audits are underway, but many in Ethereum and the broader crypto community see this as a sign of how “degen” DeFi users are.
What is SushiSwap?
To put it bluntly, SushiSwap is a clone of Uniswap with a few bells and whistles attached.
It makes sense why the pseudonymous developers behind the project, which includes a "Chef Nomi," would want to copy Uniswap. Decentralized exchange OG has become a powerhouse, processing over 100,000 transactions each day and facilitating as many value transfers as some mid-sized centralized exchanges.
The key difference between Uniswap and SushiSwap is that the former does not have crypto and the latter does. Appropriately named SUSHI, the coin was created to incentivize liquidity to migrate from Uniswap to SushiSwap. SUSHI also provides dividends to its holders: 0.05 percent of each transaction made on the exchange.
We developed the SushiSwap protocol as the advancement of the Uniswap protocol. We added community-oriented features to Uniswap's elegant core design in order to enhance the protocol's architecture and increase the advantages for all parties involved. The SushiSwap team noted the following on the justification for this hard fork.
The developers have also added a governance feature, which is different from Uniswap, which is centrally controlled by a company and its investors at the moment.
$250 million in Ethereum, stablecoins and more locked in the protocol
Although the term “SushiSwap” was only first mentioned a few days ago and contracts for the protocol only went live on Ethereum on the morning of August 28, the exchange has already gained a lot of traction.
According to Ethereum control panel Zippo, the contract that SUSHI grants by depositing Uniswap liquidity has $300 million in crypto locked into the contract. This sum of $300 million is mainly made up of Tether, USD Coin, Ethereum, and DAI.
What is remarkable about the $300 million is that this figure was obtained literally 24 hours after the protocol was launched. Furthermore, SushiSwap contracts have technically not been audited by notable programmers in the Ethereum space.
Importantly, leading smart contract auditor QuantStamp is reportedly working on an audit right now, though nothing has been released about it yet.
There were and still are some fears on Twitter that there was a backdoor in the contract that would allow smart contract operators to steal the $300 million locked in the contract.
Spencer Noon, director of DTC Capital, expressed concern when he wrote the following shortly after SushiSwap launched:
"SushiSwap TVL may be the finest gauge we have of DeFi stupidity and greed. It's the purest indicator of how much money the degens are willing to fire up."
