Is It Safe To Eat DeFi Sushi Again?
The massive selloff this week in the crypto world hit the best known cryptocoins like Bitcoin and Ethereum with a 20% loss. For a regular stock market trader, this may seem like a severe crash, but for those accustomed to the wild swings of the crypto market, so far this is a mere blip in the long run.
Another story altogether was it in the DeFi space, the Decentralized Finance coins suffered in certain cases a near full loss or were halved from the top.
SushiSwap versus UniSwap
One of those that descended into the abyss was the one week old Sushi coin, which at the beginning of the week was making headlines having collected some $1.4 billion in trading volume (incredible for a week old coin) on the Uniswap platform and for reaching a top of $10.
At that time, trading in SushiSwap represented the largest part of trading on the Uniswap DeFi exchange.
Update: it seems that the anonymous SushiSwap founder sold a big part of his SUSHI bags.
The founder ensured the community that this wasn’t an exit scam and he just collected his share of ETH. Which he deserved since he created the token, did the audits and created a large community (his words). The selloff resulted in a price drop of 5%, but the panic may cause a bigger decrease. The reactions of the community are divided, while the founder is trying to explaining his deeds.
People asked if I exited scam. I did not. I am still here. I will continue to participate in the discussion. I will help with the technical part. I will help ensure we have a successful migration.@SatoshiLite did that and Litecoin had no problem surviving.— Chef Nomi #SushiSwap (@NomiChef) September 5, 2020
The selloff halved the value of Sushi which is at the time of writing trading at $3,72 on Coingecko. Other coins such as Kimchi and Hotdog fared far worse, with the latter getting wiped out completely, several hours after the selloff of this week began. As we’ve noted several times on this site, the Yam story of the second week of August should serve as a warning.
27 million developer coins
As to Sushi, questions had been raised on Twitter as to the validity of the coin knowing that a $27 million developer fund was able to swoop in at any time and dump the price at any time.
For classic investors, the plot setup that Canadian crypto analyst Adam Scochran refers to is the financial move made famous by the movie Wall Street, where an agitated Sir Larry tells Gordon Gekko (played by Michael Douglas) that he could at any time “dump the stock just to burn your *ss.”
In Sushiswap’s case, the somewhat preferred coins (a term which could be referenced to the preferred shares that Mark Zuckerberg holds in Facebook for example) are being held by an anonymous figure known as Chef Nomi.
In response to those questions from the market, the SushiSwap’s general Manager stated:
We are being audited by three firms and are on a partnership rampage. Look at hotdog finance if you want red flags.
Questions linger whether it is safe to start eating Sushi again, meanwhile it’s developers are getting ready to unseat market leader Uniswap themselves according to media reports today.