Swap Controversy: Uni Stops Mining, Sushi Seeks Change
Editor's Note: This article comes fromHoneycomb Finance News (ID: fengchao-caijing), Author: Kyle, reproduced by Odaily with authorization.
Editor's Note: This article comes from
Honeycomb Finance News (ID: fengchao-caijing)
Honeycomb Finance News (ID: fengchao-caijing)
, Author: Kyle, reproduced by Odaily with authorization.
As an old rival of Uniswap, SushiSwap quickly added the function of "one-click migration liquidity" after the opponent stopped mining, which provided convenience for Uniswap users to transfer positions; not only that, it also increased the mining rewards of some pools, attracting more city capital inflows.
Seizing the opportunity of the competition to stop mining, SushiSwap took the initiative to seek change, and the effect was immediate. The lock-up volume reached 1.12 billion US dollars on November 21, a surge of 163.5% compared to the 425 million US dollars on November 16 a week ago. During this period, the price of SUSHI has also risen steadily, with an increase of 80%.
According to Lin Ming, the co-founder of FirstPool, SUSHI can rebound strongly not only because Uniswap stopped liquidity mining and brought capital inflows, but also because of the improvement of its economic model, which has shaped a new supply-demand relationship. The repurchase mechanism also provides SUSHI with a means of value capture.
Behind the Swap dispute between Uni and Sushi is the change in DeFi governance in the post-liquidity mining era. In addition to product competition, the exploration of token economic models and usage scenarios will become the key to victory.
Sushiswap builds a bridge to divert Uniswap funds
Uniswap has stopped liquidity mining on November 17 as planned, and the community is discussing whether to continue this incentive policy. As a leading decentralized exchange, Uniswap plays an important role in the DeFi field. After it suspended mining incentives, a series of chain reactions quietly occurred.
The outflow of market-making funds is the most direct result. According to the data of Okey Cloud Chain, on the afternoon of November 17, the amount of funds locked in Uniswap after the "stopping mining" dropped sharply. The market-making funds of the trading pairs participating in liquidity mining all showed significant outflows.
As of 3:00 pm on November 23, the total lock-up volume of Uniswap was 1.76 billion US dollars, which has shrunk by nearly half compared with the high point of 3.36 billion US dollars on November 13. Its ranking in the lockup ranking also slipped from No. 1 to No. 3.
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After the suspension of mining, the lock-up volume of Uniswap dropped sharply
This situation is not unexpected, and when rewards stop, it is not uncommon for "smart" money to flow to other protocols with higher returns. It is worth noting that despite the outflow of market-making funds, the trading volume of Uniswap has not decreased. According to Okey Cloud Chain data, after November 17, the trading volume of Uniswap remained within the normal fluctuation range, with a daily trading volume of about 300 million US dollars. This also shows that after the market-making funds of the four liquidity mining pools have flowed out substantially, the remaining liquidity can still meet normal transactions.
Uniswap’s main competitor, SushiSwap, is the biggest beneficiary. According to data from Okey Cloud Chain, on November 17, the day Uniswap stopped mining, SushiSwap’s lock-up funds inflowed sharply. The locked-up amount on that day reached 999 million US dollars, a surge of 135% compared with the previous day’s 425 million US dollars.
In the next few days, SushiSwap’s lock-up volume continued to grow, reaching a peak of US$1.12 billion on November 21, approaching Uniswap, and also ranked seventh on the lock-up volume rankings.
Behind this fund migration process, there is the proactive attack of the SushiSwap team. They immediately provided a one-click liquidity migration function, allowing other protocol users to easily migrate liquidity to their own camp to continue mining and profit. Not only that, SushiSwap also intends to increase the mining rewards of some pools, including the liquidity pool where Uniswap stopped mining.
The target of SushiSwap's attack is already very obvious, and the decision-making has worked. During the "empty window period" when competing products stopped mining, SushiSwap successfully took over most of the outflow funds of the other party, and the price of the governance token SUSHI also rose accordingly. From November 15th to November 23rd, SUSHI rose from $0.92 to $1.66, a surge of 80%. During the same period, UNI rose from $3.70 to $3.81, a slight increase of only 2.9%.
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Multiple DeFi protocols explore token value-added paths
Delphi Digital, a cryptocurrency research organization, believes that liquidity is more like a commodity without a moat, so with the end of UNI token incentives, other DeFi projects and yield farming farms now finally have the opportunity to poach from Uniswap and take away Part of the liquidity.
Although the price of UNI currency has not been affected much by the sharp drop in Uniswap's liquidity, in the eyes of industry insiders, the governance model of SUSHI tokens is better than that of UNI. At present, in addition to governance voting, Uniswap has not set up more value capture mechanisms for UNI, and SushiSwap has explored this aspect for some days.
Lin Ming, the co-founder of FirstPool, believes that SUSHI’s token model has been continuously polished and has created a new supply-demand relationship. As we all know, in the early days of SUSHI’s release, it once skyrocketed more than ten times. However, due to the founder’s cash-out scandal and the unreasonable token model in the early stage, SUSHI continued to sell in the secondary market, falling from a maximum of 13.3 US dollars to a minimum of less than 0.5 US dollars.
However, SushiSwap has gradually recovered its decline by modifying the token model and repurchasing tokens. Previously, SushiSwap reduced SUSHI's block rewards from 1,000 per block to 8 per block, and the total number of tokens issued was also fixed from unlimited to 250 million.
On the basis of slowing down the release speed, SushiSwap has increased the repurchase and dividend distribution mechanism - in addition to 0.25% of the platform transaction fee is distributed to active liquidity providers, another 0.05% will be used to buy SUSHI and distribute to SUSHI token holders. This is the typical operation method of CEX platform currency in the past, and the "old routine" is used by SUSHI. Theoretically, the greater the trading volume of SushiSwap, the more SUSHI buying orders can be spent in the market, and the purchasing power can be used to increase the price of SUSHI.
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SUSHI recently showed a strong rebound momentum
It is not difficult to find that DEX, like CEX, needs to adopt various means to increase the value of tokens. Only relying on liquidity mining to stimulate short-term demand for tokens, this road is obviously not long-term.
SushiSwap has always been one step ahead of Uniswap in terms of governance token operations. This is undoubtedly the focus of liquidity capital wait-and-see, after all, people hope that the "mine" dug has the potential for appreciation. SushiSwap continues to make changes in the token economic model, and has long shown its ambition to catch up with Uniswap.
