Forking Protocol Emerges as the Biggest Winner? Sushi Climbs to Second Place in DeFi Rankings, Threatening Curve's Position

Since its inception, the DeFi sector has evolved from liquidity mining and governance token issuance models to recent phenomena of protocol code replication and extracting liquidity from other projects. Surprisingly, these replicated protocols have so far achieved better results than the original versions.

SushiSwap Lockup Surges to Become DeFi's Second-Largest Protocol

After a massive liquidity migration starting on September 9th, Uniswap's originally locked assets worth about $1.4 billion plummeted to $540 million within a day, losing nearly 70% of its liquidity.

On the migration day, SushiSwap's locked assets surged to $1.14 billion and had reached $1.32 billion before the deadline, surpassing Maker to become the second-largest DeFi protocol.

SushiSwap Deep Dive Testing

The Block's Research Director, Larry Cermak, has been advocating for Uniswap since the emergence of SushiSwap, believing that it was essentially robbed. Therefore, after the liquidity migration, he voluntarily conducted in-depth testing for both protocols. The results showed that SushiSwap has lower slippage rates in many trading pairs compared to Uniswap. Larry stated:

The purpose of the test is to understand which protocol can provide the best prices at the moment. However, please remember that it is still too early to draw any conclusions now. Liquidity can easily return to Uniswap. The key lies in the next few weeks to see if SushiSwap can retain liquidity providers with its rent-seeking model.

Larry has some conflicting views on the act of open-source code being copied. While acknowledging that protocol replication may reduce developers' motivation to seek rent-seeking models and slow down development, he also believes that resisting "forked protocols" is foolish because it will inevitably happen sooner or later.

Regardless, Larry once again expresses confidence in Uniswap, pointing out that before SushiSwap went live, Uniswap had only about $300 million in locked value, which has now increased to $500 million. Therefore, Uniswap still gains $200 million in liquidity depth in this experiment and has the potential to emerge victorious in the long-term liquidity battle.