NomiChef, an anonymous developer of SushiSwap, liquidated his tokens for more than USD 6.3 million. The SUSHI token loses 55% of its value, and there is questioning whether the project will continue on its way.
The founder of DeFi liquidity platform SushiSwap sold all of his SUSHI tokens in exchange for 17,971 ETH, equivalent to about USD 6.3 million.
In recent days, the anonymous founder of this platform released the information on his Twitter account, causing a stir that points to what happened as an exit scam.
Users can trade ERC-20 tokens and do yield farming on SushiSwap, which is a fork of Uniswap, in the middle of this DeFi ecosystem. However, SushiSwap distinguishes itself in that it provides fixed returns in the SUSHI token just for participating in the platform. On the contrary, Uniswap provides rewards according to the number of funds (contributed liquidity) used in this market.
Cinneamhain Ventures shareholder Adam Cochran, who was a SushiSwap investor, recently said that he decided to withdraw from the project upon detecting the risk of a vampire attack. Analysts recently explained that this type of attack would allow transferring other SUSHI-pegged tokens on Uniswap to the SushiSwap platform, leading to the bankruptcy of Uniswap.
Cochran withdrew from this project as no governance contract prevented SUSHI tokens belonging to their developers from being properly burned or withdrawn under consensus. Currently, it has become a reality that a developer would flee or depart from the project by liquidating huge amounts of the token.
The developer identified as NomiChef (represented by a sushi panda bear chef), announced to his followers on Twitter that he had converted all his SUSHI tokens into Ether.
He stated that he would remain close to the project, assisting in the technical aspect. However, his decision caused the price of SUSHI to decrease from USD 5.53 to USD 2.32 in a matter of a few hours, devaluing by 54%, according to Uniswap.
NomiChef says that what he has done is not very different from what Charlie Lee, founder of Litecoin, did in 2017. That year, he sold his positions in LTC, sowing doubts about the credibility of this cryptocurrency (one of the first created after Bitcoin).
However, some Internet users note that, unlike NomiChef, Lee spent years developing a cryptocurrency that relatively has credibility, a track record, purpose, and decentralization.
Independently on perceptions regarding Litecoin, the launch of SushiSwap occurred in the last few weeks, amid the excitement about new tokens taking their names from dishes or types of food, such as sushi, hot dogs, and pizza.
The aforementioned event is a perfect example of the ponzinomic economy in DeFi. A project takes an attractive brand design, issues its token, and does not stop promoting it to inflate its value to disproportionate levels. However, when there is no liquidity, or one of the pieces at the top of the pyramid is moved, the price falls faster than it rose.
By Alexander Salazar