Uniswap vs Sushiswap: Why Are DeFi Wars Beneficial?
Decentralized finance (DeFi) wars are more about healthy competition than just a liquidity war. As cryptocurrency investors flock to projects emerging from the DeFi world, it will not be possible to stop the current DeFi boom. No wonder the competition is heating up, the DeFi battles are just beginning. Uniswap and Sushiswap are the main sides of this war.
Blockchain-based applications are transparent and decentralized by nature. Since all processes are transparent and reliable, investors and users know what is happening conceptually. However, open source projects can be forked or updated simply by making minor changes to the source code.
DeFi Wars Start to Heat
Competitions can arise between companies operating in a limited arena and serving limited users. As DeFi reaches new growth milestones, projects now have a strong user base and product portfolio and reliable revenue streams. As protocol wars heat up, the community benefits from increased competition as more services are provided by competitors. Any new player can enter the market simply by entering a new code.
The DeFi battles began in August 2020, when some unknown developers launched Sushiswap with minor changes to the Uniswap model. The new platform offered everything Uniswap did and more. SUSHI launched its token. As if the SUSHI token wasn’t attractive enough, liquidity providers were offered exciting incentives and rewards. There is no doubt that Sushiswap quickly gained strength to take over Uniswap’s user base and gain even greater liquidity control.
Advantages include improved trading implementation, increased trade volume, and more market participants. Currently, Uniswap makes about a million dollars a day in fees alone. In response, Sushiswap introduced an improved token distribution system by bringing ” Yield Farming ” into the arena . In the process, the platform gained liquidity.
How Does the Liquidity War Actually Work?
Liquidity in the form of ETH is available to many Uniswap pools. Each user’s liquidity share is represented by ‘Uniswap-LP-Pool-Tokens’. The stock is deposited into a Sushiswap contract to generate proportionally provided SUSHI tokens.
User liquidity is directly linked to the platform via SUSHI tokens. Smart contracts are staked and converted to SUSHI, thereby converting to Uniswap pooled assets. Thus, Uniswap liquidity is gradually transferred to Sushiswap.
“Uniswap-LP-Pool-Token” worth about $ 2 billion has become part of Sushiswap. Later, the SUSHI rewards for developers were surprising, as staking on Sushiswap provided 1000 percent APY. As a result, SUSHI token prices skyrocketed when their market value reached $ 300 million.
Sushiswap Out of the Shadows: Not a Clone anymore
With a thriving user base, Sushiswap has become a full-fledged ecosystem. There is a lot of integration and collaboration ahead as it looks like it will expand the helpline. Uniswap’s issuance of the UNI governance token shows that the market leader sees Sushiswap as a legitimate threat. This is the second step in a war.
DeFi wars are taking shape just like in the early days of Bitcoin, Ethereum, and Bitcoin Cash. However, in this case, applications can be called forks. As superior products emerge from established players, DeFi battles are likely to bring more benefits to investors.