SushiSwap, a fork of the UniSwap project, has been approved by the community for the migration of Sushi on UniSwap. In a vote carried out for the approval of this migration, close to 87% of the community voted in favour. Following this decision, the liquidity valued at $180 million present in ETH/SUSHI pair on Uniswap will be shifted to the SushiSwap platform, native to the community.
In just a few days, SushiSwap has shown remarkable growth as its value stake grew from zero to $1.4 billion. This growth brings SushiSwap in the big leagues just behind UniSwap. It is now tied with popular deFi projects, Maker and Aave.
Ever since SushiSwap contract went into effect on the 28th of August, marked by block 10750000, the value of assets locked in the Uniswap exchange went up by almost $1.5 billion. This growth has made Uniswap the largest holder of assets belonging to the Ethereum Blockchain in the DeFi space.
By design, Uniswap and SushiSwap will always have a price at which they can any two tokens from their liquidity pools.
How SushiSwap Works
On the Uniswap platform, the liquidy providers (LPs) are incentivized with a 0.3% fee on the trades that take place within the liquidity pool which contains the liquidity submitted by these LPs. This means that Uniswap works based on liquidity pools containing two tokens each. The standard of the tokens is ERC-20 and users can make exchanges using any tokens pertaining to this standard.
In addition to this, each pool is equipped with a unique LP token which is given as an incentive to the liquidity providers when they deposit liquidity. Also, Uniswap is a venture-backed organisation whose platform is void of a governance token. On the other hand, SushiSwap allows users to enjoy incentives by depositing large amounts of liquidity into Uniswap and then exchanging the LP tokens received from the Uniswap platform on the SushiSwap platform.
This will be followed by the redemption of all the LP tokens received by the SushiSwap platform after a certain amount of time which will result in the transfer of a considerable amount of liquidity from Uniswap to SushiSwap. Considering the incentive model of SushiSwap, some people in the crypto world are referring to it as “vampire mining.”
Cause of the Security Fork
Pertaining to the reputation of the DeFi projects, there were limited security audits when it was launched. Quantstam reviewed the platform and identified vulnerabilities with respect to its security but none were found to be critical.
A security audit was performed by PeckShield too which issued a report saying “On the surface Sushiswap looks like another nightly-built vegetable farm with endless APY launched by the anonymously named NomiChef. But looking deeper we find a highly engaged community on discord genuinely discussing the growth of the very project they are invested in.”
The driving factor behind the fork is an aspiration to enhance the decentralization of the project. 10% of the total supply of Sushi token has been awarded by the pseudo-anonymous founders to the platform’s developers and contributors.
