Sushi completes liquidity migration, takes away $1.3 billion in assets, and Uniswap falls to the second tier

Uniswap's clone (or fork) project Sushiswap officially completed its liquidity migration today, taking away nearly $1.3 billion in liquidity from Uniswap. This is the most important transaction in the DeFi field to date, and it also means that SushiSwap has officially separated from Uniswap. The liquidity of the two has been separated, which also means that the DEX war between them has entered the next chapter.

As a clone of Uniswap, Sushiswap not only has the same front-end UI and functions as Uniswap, but also provides generous liquidity mining rewards and decentralized governance, which is the main reason why it can grow step by step. Sushiswap has encountered many ups and downs before, from the project security being questioned, the anonymous founder Chef Nomi cashing out and leaving, the project ownership being transferred, to today's official completion of liquidity migration and listing on DEX.

If the earlier YAM brought liquidity mining into the vision of the entire cryptocurrency ecosystem, then Sushiswap has undoubtedly pushed this liquidity mining wave to its peak.

The sushi story shows how complex the Wild West of DeFi can be, and that the debate over centralization, open-source smart contracts, and liquidity mining rewards is far from settled.

Sushi's liquidity migration will transfer Uniswap liquidity provider tokens (LP tokens) that previously participated in liquidity mining to the new Sushi liquidity pool, creating a new destination for decentralized token exchange. As of press time, Sushi's locked value (i.e. liquidity) has exceeded $1.3 billion, currently ranking second, second only to Aave ($1.5 billion), while Uniswap, after being "robbed" by Sushi, currently has a locked value of only $473 million, ranking 12th.

Prior to the migration, SUSHI tokens were acquired by staking so-called “LP tokens” in Sushi, which can be used in the protocol’s decentralized governance decisions, and were received by users and could be used to deposit liquidity into pools in the original Uniswap.

The story of Sushi combines several ongoing themes in the DeFi space, including clone projects (of which there are many, including Curve’s clone Swerve), centralized versus decentralized control, and the competing incentives offered by the dizzying array of liquidity mining opportunities.

If Sushi can continue to maintain its current position, Uniswap will be in a very bad situation. As the former leader of DEX, Uniswap became the traffic center of DeFi during the wave of liquidity mining earlier this year, and its daily trading volume exceeded that of the mainstream exchange Coinbase, which is the first time in the history of DEX. If Uniswap cannot find a new shining point, its position may be completely eroded step by step by Sushi. Sushi can be said to be "standing on the shoulders of giants", and ultimately let Uniswap do the wedding dress for it.

Uniswap V3 is currently being planned and developed, and may be able to turn the tide, but in today's world where "one day in DeFi is equal to one year in the cryptocurrency world", it is still unknown whether Uniswap V3 can catch up.

However, if the migration is successful, it could lend credence to the idea that an anonymous team is an important hallmark of any project. More importantly, for some, at least for a while, there is even evidence that a trade-off is worth accepting in order to successfully develop and launch new DeFi products.