It has been a rowdy week for the decentralized finance industry. The Sushi debacle has affected many different projects in the space. Particularly Uniswap has seen an exodus of funds two days ago, although it is making up for lost time in quick succession.
The Rough Uniswap Weekend
It is evident the entire Defi industry has been shaken to its core. When the SushiSwap developer decided to withdraw his dev shares and convert everything to Ethereum, its native price crashed. What once was a token valued above $11 quickly dropped to just above $1. It is now regaining value, as the entire project is in more capable hands. In fact, the CEO of the FTX platform is now running the show – at least where the liquidity migration is concerned.
As a result the Uniswap liquidity was affected rather severely. Going from $1.821 billion to $1.139 billion in 24 hours wasn’t exactly the plan. It is not uncommon for this platform to see its TVL change. However, in the past two weeks, hundreds of millions in liquidity were added to Uniswap. Part of this comes from the SushiSwap project, yet people were withdrawing liquidity like crazy to minimize their losses in Ethereum. An understandable reaction, but it certainly has some consequences.
Now that things have calmed down regarding SushiSwap, the overall Uniswap TVL is on the rise again. Of the $681.98 million in funds withdrawn, a total of $466.81 million has come back to the platform.
Uniswap’s approach remains a viable one, even though another forked version was announced last week. Given the Sushiswap debacle, it is evident that these forks may not always work out the way people want them to.
Keeping the Momentum Going
Looking back at everything that transpired recently, one has to wonder what the future will hold. Although the SushiSwap incident isn’t an exit scam per se – the platform, code, and development are still ongoing – it has cast a dark shadow over decentralized finance. With the project now moving to an individual with a public profile, more legitimacy can be introduced.
It also shows that Unsiwap liquidity hinges on many other projects in the space. Especially when it comes to attracting more funds, new DeFi projects must be supported as quickly as possible.
Unfortunately, there is no real way to vet new projects in the DeFi space, Uniswap’s approach is to be decentralized without any oversight or middlemen. As such, anyone can add tokens to the ecosystem and introduce more liquidity, for better or worse. What those tokens and associated projects end up doing, is beyond anyone’s control.
To keep the momentum going, there need to be more honest projects and less shady ones. Achieving that goal may prove rather difficult, as money brings out the worst in people.