SushiSwap (SUSHI): The ‘All You Can Eat’ DeFi Buffet
The DeFi current state of the DeFi space can be summarized in two words: food fight. It feels like a new ridiculous food themed DeFi protocol is being added to this culinary carnage every other day. The most recent weapon of choice? Sushi.
For some of you, the introduction of SushiSwap signaled that DeFi has officially gone too far. The controversial events surrounding the project which have unfolded in the short weeks since its release have likewise spoiled the appetites of many in the DeFi space.
However, there is much more than meets the eye (or the nose) when it comes to SushiSwap. The initial 2500%+ annual returns on deposited funds are just the tip of the tilapia. SushiSwap was temporarily the largest DeFi protocol on the market and continues to be in the top 5 (although it has not been officially ranked).
The SUSHI token also remains listed on Binance and the protocol itself was recently taken over by a reputable player in the crypto space. By the end of this article, you will know why SushiSwap may just deserve a Michelin star.
Who made SushiSwap?
SushiSwap was founded by two anonymous developers named 0xMaki and Chef Nomi. On August 26th, Chef Nomi released a Medium post detailing the SushiSwap protocol. This enticed 0xMaki to join the SushiSwap Discord.
Being one of the first participants, 0xMaki spoke at length with Chef Nomi and consequently became the cofounder of SushiSwap. It is believed that there were around 5 developers working on the project in total at the time of release.
While not much is known about 0xMaki or Chef Nomi, in a recent interview 0xMaki confirmed that Chef Nomi is based somewhere in Asia. The fact that the Hearthstone card game from which the Chef Nomi pseudonym comes from is popular in China, this suggests Chef Nomi is Chinese.
Given 0xMaki’s French accent, appearance, and time-zone hint, he is likely based somewhere in France or a French-speaking Middle Eastern country. 0x is in reference to the starting number and letter of all Ethereum addresses, and Maki is a popular sushi dish.
SushiSwap’s fishy history
In addition to being created by two anonymous developers, SushiSwap was not audited prior to release. That being said, Chef Nomi openly invited some of the most reputable companies including Quanstamp and Consensys to audit SushiSwap’s code in the first Medium post about the project.
Within the first week of its release, SushiSwap had accumulated over 1 billion USD in locked funds and temporarily surpassed Aave as the largest DeFi protocol. Interest rates on locked funds exceeded 2500% per year.
On September 5th, Chef Nomi suddenly liquidated over 14 million USD of SUSHI tokens which had been accumulated as development funds by the protocol. In a series of Twitter posts he noted he felt entitled to the funds. This drew immense outrage from the cryptocurrency community, most notably yearn.finance creator Andre Cronje.
Popular YouTuber Ivan on Tech also weighed in and remarked that “[SushiSwap] is just as bad as real sushi”. Ivan also noted that the sudden sell off of SUSHI likely caused a crash in the cryptocurrency market the next day due its effect on the entire DeFi Space.
Chef Nomi subsequently stepped away from Sushiswap and handed it to Sam Bankman-Fried, the CEO of the FTX cryptocurrency derivatives exchange. Andre Cronje had also been considered by the SushiSwap developers to be the new defacto leader of the protocol.
The SushiSwap community voted to select 9 individuals in the DeFi space such as Compound Finance’s founder Robert Leshner to be keyholders for the multi-sig wallet holding SushiSwap’s development funds.
On September 9th, Uniswap was stripped of its title as the largest decentralized exchange when SushiSwap users migrated over 1.14 billion USD of Uniswap’s 1.9 billion USD locked cryptocurrency assets to the new SushiSwap platform.
Though this migration had been planned since the protocol’s announcement, 0xMaki believed that no more than a few hundred million dollars of cryptocurrency would be moved. This sudden transfer of liquidity from one protocol to another has been dubbed a vampire attack.