SushiSwap’s liquidity grab actually made Uniswap stronger — Data shows
SushiSwap is widely thought to have syphoned liquidity from Uniswap but new data from Flipside Crypto, a cryptocurrency on-chain analytics resource, suggests that the decentralized exchange’s launch mechanism actually benefited Uniswap by bringing new money into its liquidity pools.
According to Flipside Crypto, much of the liquidity that entered Uniswap during the SushiSwap launch appears to have come from new users and additional funds deposited into the liquidity pools in order to receive SUSHI rewards.
Initially, liquidity providers who elected to migrate were probably impressed with the strong performance of SUSHI token but Chef Nomi’s unexpected rug pull negatively impacted the price. A few weeks later Uniswap’s UNI token was launched and all this new liquidity was captured by the exchange.
Total Value Locked (USD): Uniswap vs SushiSwap. Source: Flipside Crypto
Since UNI’s launch on September 16, liquidity on Uniswap grew significantly. According to Defipulse, the total value locked has surged 165% from $786 million to $2.09 billion. Meanwhile, SushiSwap’s total value locked has dropped 46% from $754 billion to $402 billion.
The way that UNI launched may have also contributed to the increased inflow to its liquidity pools. Uniswap’s suprise airdrop distributed 400 tokens to users that provided liquidity before Sept. 1 most recipients likely exchanged the tokens for Ether or used the funds to provide liquidity to other asset pools listed on Uniswap.
Something may be fishy about SushiSwap
SushiSwap was able to attain short-lived success despite its controversial launch. However, the red flags mentioned earlier appear to have damaged the DeFi community’s confidence in the project.
These issues, along with the current bearish altcoin market resulted in SUSHI price dropping from it’s all-time high at $9.85 on Sept. 1 to $1.24 a month after launching. Meanwhile, UNI is trading around $4.34, after dropping roughly 76% from its record high at $7.66.
Given that governance tokens are not meant to accrue value and the token has limited use cases outside of yield farming and providing certain holders with voting rights, it is unclear if it will follow the steps of its vampire clone.