The ongoing evolution of decentralized finance has been rather remarkable. Projects such as SushiSwap seem to peter out, come back, generate headlines, and start to drop off again. The recently announced SUSHI token buyback triggered a price drop, instead of having the opposite effect.
Buying Back SUSHI From the Market
About two weeks ago, it seemed as if SushiSwap was doomed to fail completely. Its anonymous developer – Chef Nomi – converted several million SUSHI tokens to Ethereum, reducing overall platform liquidity by quite a margin. For many projects, this would be a death blow, but SushiSwap managed to bounce back, up to a certain degree.
Following a successful takeover, and airdropping 2 million SUSHI to liquidity providers during the migration, a new chapter was created. The community seems ecstatic, although some of the initial optimism is ebbing away very quickly. The ongoing SUSHI price decline is not helping matters much in this regard.
Even the proposed buyback has not made any real difference. Following Chef Nomi returning $14 million in Ether, the new team decides to use it to buy back SUSHI from the open market. A valiant effort, but one that has the opposite effect. Buying back tokens often triggers market stabilization or even a small uptrend.
For SUSHI, it continues to drive the price down even further. Another 4.2% decline is in the books, indicating the market sentiment remains sour.
Many investors are now preparing to bail on the project altogether. There is a growing lack of confidence in the new team, and the high circulating SUSHI supply isn’t helping either. While the inflation is cut by 90%, the price simply isn’t recovering.
Is SushiSwap Losing Traction?
The native SushiSwap platform is not in the best shape either. Overall liquidity on the platform has dropped by over $500 million in the past few days. Moreover, the trading volume keeps trending lower every single day. This latter aspect shows not too many people are interested in using this platform over Uniswap or other forks.
Turning the ship around will always remain a possibility, How this will be done, remains anyone’s guess. Anything the team undertakes has no positive effect other than short-term excitement. Competing in the world of DEXes is a challenge. When a project has seen so many strange incidents in a short amount of time, the uphill battle becomes significantly steeper.