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1. SushiSwap is the craziest story I've seen in crypto 
In days:
- An anonymous developer forked the biggest decentralized exchange.
- It attracted $1.4 BILLION.
- The developer left with $14M.
- It successfully migrated ~$800M from Uniswap.
It deserves a thread!
In days:
- An anonymous developer forked the biggest decentralized exchange.
- It attracted $1.4 BILLION.
- The developer left with $14M.
- It successfully migrated ~$800M from Uniswap.
It deserves a thread!
2. Until Sushiswap arrived, @UniswapProtocol was by far the largest decentralized exchange for cryptocurrencies.
It's incredibly simple: users swap cryptos using a smart contract. Price is defined by a formula, and anyone can provide liquidity to earn trades' fees.
It's incredibly simple: users swap cryptos using a smart contract. Price is defined by a formula, and anyone can provide liquidity to earn trades' fees.
3. Critics said that it wouldn't work, that traditional exchanges would always be faster and cheaper.
Sometimes it's true, but Uniswap found its place in the middle of the DeFi ecosystem and attracted ~$500M of liquidity. And it beats those exchanges in daily volume consistently
Sometimes it's true, but Uniswap found its place in the middle of the DeFi ecosystem and attracted ~$500M of liquidity. And it beats those exchanges in daily volume consistently
4. 10 days ago, @NomiChef, an anonymous developer, created a blog and announced his/her plans of forking (copying) Uniswap's web and smart contracts to launch SushiSwap.
But they added something: a token, $SUSHI
But they added something: a token, $SUSHI
5. Uniswap charges 0.3% per swap, which goes directly to the liquidity providers that enabled the trade.
Sushiswap will charge 0.3% too, 0.25% to the liquidity providers, and 0.05% for $SUSHI holders. And the governance of the project is based on $SUSHI (you can vote with them).
Sushiswap will charge 0.3% too, 0.25% to the liquidity providers, and 0.05% for $SUSHI holders. And the governance of the project is based on $SUSHI (you can vote with them).
6. To bootstrap SushiSwap, @NomiChef came up with a clever attack to attract Uniswap's liquidity: people bringing liquidity from there would receive free $SUSHI.
And to incentivize even more the transition, $SUSHI rewards during the first two weeks would be ten times higher.
And to incentivize even more the transition, $SUSHI rewards during the first two weeks would be ten times higher.
7. When people provide liquidity @ Uniswap, they receive tokens (LP shares) that can be destroyed to recover their cryptos
Depositing those shares at SushiSwap, people give @NomiChef the power of redeeming them. A bug in the smart contracts or a hack, and they'd lose everything
Depositing those shares at SushiSwap, people give @NomiChef the power of redeeming them. A bug in the smart contracts or a hack, and they'd lose everything
8. Depositing those LP shares was insanely risky, the code hadn't been audited, and @NomiChef could have hidden a backdoor to steal everything, but $SUSHI rewards were crazy high, so we didn't care.
In the first five hours, $500M worth of LP shares were deposited.
In the first five hours, $500M worth of LP shares were deposited.
9. To farm $SUSHI, people started to provide more liquidity at Uniswap to receive more LP shares, and Uniswap increased their TVL (Total Value Locked) to $1.8 billion.
On the second day, $1.4 BILLION worth of LP shares were sitting at SushiSwap, 78% of the total LP shares.
On the second day, $1.4 BILLION worth of LP shares were sitting at SushiSwap, 78% of the total LP shares.
10. Obviously, to reach $1.4 billion of TVL you need a few big players involved: Alameda Research, owners of @FTX_Official, supposedly deposited $30-40 million at SushiSwap to farm $SUSHI.
They quickly listed $SUSHI, Binance did it too, and $SUSHI skyrocketed from $2 to $14.
They quickly listed $SUSHI, Binance did it too, and $SUSHI skyrocketed from $2 to $14.
11. The Migration to launch SushiSwap exchange and transfer Uniswap’s liquidity was planned a few days later, but @NomiChef decided to speed up the process even more.
An unaudited, untested migration that was going to risk $1.4 BILLION.
An unaudited, untested migration that was going to risk $1.4 BILLION.
12. And here comes the grand heist!
20% of all $SUSHI farmed were sent to a dev fund. More people were involved in the project, but interestingly enough, only @NomiChef had access to that wallet.
People raised the alarms: https://cointelegraph.com/news/27m-of-sushi-funds-could-disappear-at-the-drop-of-a-chef-s-hat
20% of all $SUSHI farmed were sent to a dev fund. More people were involved in the project, but interestingly enough, only @NomiChef had access to that wallet.
People raised the alarms: https://cointelegraph.com/news/27m-of-sushi-funds-could-disappear-at-the-drop-of-a-chef-s-hat
13. Unexpectedly, @NomiChef sold all of them 
The dev fund held 2.6 million of $SUSHI, and they received ~$14 million for them. Ironically, they used Uniswap.
This obviously destroyed $SUSHI price, and people weren't happy. https://etherscan.io/tx/0x419a835b33eb03481e56a5f964c1c31017ab196cb7bb4390228cabcf50dfd6f1
The dev fund held 2.6 million of $SUSHI, and they received ~$14 million for them. Ironically, they used Uniswap.
This obviously destroyed $SUSHI price, and people weren't happy. https://etherscan.io/tx/0x419a835b33eb03481e56a5f964c1c31017ab196cb7bb4390228cabcf50dfd6f1
14. Chaos ensued.
$SUSHI holders were furious, other SushiSwap team members were furious, and the price kept tanking.
@NomiChef argued that "I stop caring about price and I will focus on the technicality of the migration"
https://twitter.com/NomiChef/status/1302214292792422401
$SUSHI holders were furious, other SushiSwap team members were furious, and the price kept tanking.
@NomiChef argued that "I stop caring about price and I will focus on the technicality of the migration"
https://twitter.com/NomiChef/status/1302214292792422401
15. SushiSwap looked doomed.
The migration was taking place in 48h, and the price kept tanking. Investors were rightfully angry, and they started to withdraw their LP shares.
People started tried to dox @NomiChef, and he/she even received death threats.
The migration was taking place in 48h, and the price kept tanking. Investors were rightfully angry, and they started to withdraw their LP shares.
People started tried to dox @NomiChef, and he/she even received death threats.
16. But remember Alameda?
They were farming $SUSHI with $30M, and they listed it in their exchange. @SBF_Alameda, Alameda's CEO, offered to take SushiSwap and complete the migration.
Some investors were happy, others theorized this had been the plan all along.
They were farming $SUSHI with $30M, and they listed it in their exchange. @SBF_Alameda, Alameda's CEO, offered to take SushiSwap and complete the migration.
Some investors were happy, others theorized this had been the plan all along.
17. @NomiChef agreed to transfer the project, and @SBF_Alameda got the ownership of every smart contract. But Nomi kept the $14 million in ETH. https://twitter.com/NomiChef/status/1302508803309498369
18. Alameda took over the project, canceled the old migration, and prepared a new one (after fixing a suspicious bug that allowed @NomiChef to print infinite LP shares).
Finally, yesterday the migration took place, and $850 million moved from Uniswap to SushiSwap.
Finally, yesterday the migration took place, and $850 million moved from Uniswap to SushiSwap.
19. At the same time, Sushiswap’s exchange was launched, supported by the "stolen" liquidity: https://exchange.sushiswapclassic.org/#/swap
For some trades it offers a slightly better price than Uniswap. For others, it's slightly worse.
For some trades it offers a slightly better price than Uniswap. For others, it's slightly worse.
