CryptoTicker DeFi-Update: All About The Newest Developments in DeFi

Rarely anything else in crypto is witnessing such a dramatic development as DeFi is. New projects pop up almost daily, drastically changing the crypto landscape. Therefore, CryptoTicker will introduce a new format, showcasing the most recent developments in Decentralized Finance.

In today’s update: Sushi Swap, Uniswap interest analysis, Ethereum gas price

What is Sushiswap?

Sushiswap is a new Japan based Ethereum project, that largely copied the Uniswap code. The only difference is, that Sushiswap has a native token, the SUSHI token. The interesting thing is, you can mine SUSHI by staking Uniswap LP-tokens in the Sushiswap contract. Since block number 1,750,000, 100 new SUSHIs are mined per Ethereum block, equally divided among the pools. Each pool then has its SUSHIs divided proportionally to its liquidity providers. So whoever stakes more Uniswap LP-tokens with respect to others, obtains more SUSHI. For the first 100,000 blocks (approximately 2 weeks), 10 times more SUSHI will be mined than normal, i.e. 1000 SUSHI per block, to attract early investors and get the project going.

In order to incentivize trading SUSHI, twice as many SUSHI will be mined by the SUSHI/ETH Uniswap LP-token. The Uniswap SUSHI/ETH LP-token is obtained by providing liquidity to the SUSHI/ETH pool on Uniswap. This parasitary approach shouldn’t come as good news to the Uniswap developer team.

After the first 100,000 blocks, so at block height 10,850,000 that is estimated to be mined on September the 14th, the Uniswap LP-tokens will be removed, to migrate liquidity away from Uniswap to Sushiswap.

The Sushiswap tokenomics are a bit different that Uniswap. Traders pay the same 0.3% fee, however only 0.25% of these go to the liquidity providers. The remaining 0.05% will go to the SUSHI token holders. This means that making fees is also possible without providing liquidity. So besides price fluctuations of the SUSHI token, there would be no risks here.

The Smart Contracts still have to undergo auditing, Sushiswap has made a public offer for this.

The concept might succeed, causing a bleed out of Uniswap. The pools can be seen on this page, other pools can be added later by community voting. In total, 72% of all Uniswap LP-tokens have been staked so far. Uniswap V2 might see a fall from grace just as spectacular as its rise to the top was. Uniswap however still has a trump card, its liquidity providers profit from higher fees on Uniswap when they don’t hold any SUSHI tokens. This could eventually mean that non-SUSHI-holders will keep their liquidity in Uniswap, or migrate back later. Also noteworthy, Sushiswap already has a forked version attracting attention: Kimchi, with $500 Million already locked in its contracts. The coming weeks will be exciting for these projects.

Uniswap interest analysis

Interest on Uniswap can reach enormous level right now. The largest trading volume of the past 24 hours was generated by the SUSHI/ETH trading pair. Approximately $145 Million are in the pools. The trading fees flowing into these pools in the past 24 hours reached around $590,000. This means that the interest for liquidity providers of this trading pair are close to 0.4% at the moment, or approximately 146% per year!

Other trading pairs with high interest rates

  • ETH/USDT: 0.14 % daily or 51.1% yearly
  • USDC/ETH: 0.1 % daily or 36% yearly
  • KIMCHI/ETH: 1.2 % daily or 441% yearly

Are these interest rates sustainable?

Probably not. The high interest rates attract more liquidity providers. With more liquidity in a given pool, the interest rate drops. These arbitrage opportunities are usually quickly exploited by the market.

The Ethereum gas price

The Ethereum gas price exploded to new all time highs over night. The average cost of a transaction reached about $18 according to Blockchair. The culprit is probably the hype around SUSHI, KIMCHI, etc… The high gas prices are a problem. Whales and people with big resources can handle the higher fees, as their larger bets and trades can bring large amounts of profit that make up for the gas. Smaller players are watching from the sides. It will be exciting to see whether Ethereum can be used by the masses soon again. Once the hype around SUSHI and co. calms down, the network might get some time to relax again. Ethereum has been repeatedly suffering from performance bottlenecks due to the current DeFi hype.

DeFi farming
DeFi farming© Cryptoticker
scroll to top