Just this past weekend, an anonymous group of developers launched SushiSwap, a clone of Uniswap with some bells and whistles attached. While many in the Ethereum and DeFi community laughed off the project, it quickly became a DeFi giant. 72 hours after it launched, there was $1 billion worth of cryptocurrency locked in the protocol.
To the surprise of no one, the code of the project has been forked by other developers attempting to cash in on the success of SushiSwap.
Ethereum’s SushiSwap forked into a number of questionable protocols
SushiSwap’s code has been forked into a number of protocols, including Y U NO (YUNO), Kimchi, Pizza, and many other of these food-themed coins. All of these tokens have seen dozens of millions of dollars worth of capital staked, with BitMEX CEO Arthur Hayes and others in the industry dabbling in the most notable fork, Kimchi.
These projects provided no intrinsic value when compared to SushiSwap but still managed to draw in this capital through high returns on staking pools. These returns were obtained by heavily inflating the supply of each protocol’s native cryptocurrency.
While early adopters of these projects have made large sums of Ethereum putting capital into these pools, many have lost money on these SushiSwap forks.
Primarily, the losses have been incurred due to what is known as “impermanent loss.”
It’s a bit complicated to explain, but when coins listed on Uniswap drop heavily, to the tune of dozens of percent in a short period of time, those that hold liquidity in those pools are subject to lose their holdings.
There are reports on Twitter of users losing 80 to 90 percent of what they put into these pools due to impermanent loss.
Regardless, anonymous developers attempting to make a name for themselves and potentially some Ethereum have continued forking SushiSwap. As pointed out by Joe McCann, an engineer at Microsoft and crypto trader, SushiSwap is now the second-most popular repo on GitHub.
Gas cost surge as sketchy DeFi projects continued to gain traction
The cost of sending transactions on Ethereum — the gas cost — has surged as these sketchy DeFi projects have gained traction, attracting millions of dollars worth of capital through their staking pools and through decentralized exchanges.
According to GasNow, an Ethereum transaction fee tracker touted by Multicoin Capital‘s Tushar Jain, the cost of gas has reached an all-time high value of 700 Gwei.
This means that it costs around $7 to simply send ETH from address to address, $15 to send ERC-20 tokens, $60 to trade on Uniswap, and much more if you want to enact complex functions in the decentralized finance ecosystem.
These record transaction fees are likely to suppress the DeFi rally, analysts have said.
As Jacob Franek, a co-founder of blockchain data firm Coin Metrics, postulated:
“Not yet just saying it places a natural hard cap on how far this can run. Traders will only pay that much if they’re perfoming significantly well,” Franek concluded in a reply to someone who commented on his opinion.
The post WTF DeFi: Ethereum’s SushiSwap forked into “Kimchi,” “YUNO,” and other absurd projects appeared first on CryptoSlate.
Source: WTF DeFi: Ethereum’s SushiSwap forked into “Kimchi,” “YUNO,” and other absurd projects