On September 3, the total value locked in the decentralized exchange Uniswap approached a record $1.8 billion. However, by September 10, in a single day, the exchange had lost more than 70% of that amount. Funds migrated to a fork of Uniswap with the culinary name SushiSwap, which had launched just two weeks earlier.<\/p>\n
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Despite the short window, a number of events surrounded the new project, took<\/a> $14 million from the developers’ fund, and then returned<\/a> it with apologies.<\/p>\n ForkLog has delved into SushiSwap’s twists and turns and explained how the project poached liquidity providers from the leader of the DEX space.<\/p>\n Uniswap operates on a liquidity-pool model, which replaces order books. A user who locks up their coins in one of the exchange’s smart contracts becomes a liquidity provider. The locked tokens are pooled into liquidity pools. A pool with the new token can be opened by anyone.<\/p>\n Users can execute swaps between any tokens listed on the exchange. Each trade incurs a fixed 0.3% fee. It is distributed among liquidity providers in proportion to their share of the pool. A liquidity provider can withdraw all their funds from the pool, but then they will stop earning fees.<\/p>\n Despite the elegantly implemented system, Uniswap has repeatedly faced criticism for a lack of decentralisation, namely the absence of a decentralised governance system.<\/p>\n Since launch, the fee rate has remained unchanged, though the advent of yield farming has increased competition with other DeFi applications.<\/p>\n What is yield farming in DeFi and how do you earn from it<\/p>\n<\/blockquote>\nHow does SushiSwap differ from Uniswap?<\/h2>\n
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