SushiSwap was originally viewed as a “generic, tokenized fork” of Uniswap, born out of the food farming mania that was part and parcel of the DeFi summer of 2020. However, within months, the former was giving the latter a run for its money, with SushiSwap’s rising volumes adding to its market share increasing with each passing week.
Consider this: in December, Sushiswap handled an average of 25% of Uniswap’s weekly volume. However, by late January, the protocol was averaging 48 percent. At the time, Bankless analyst Lucas Campbell had noted,
“It’s nearly impossible to deny the trend: it’s up and to the right.”
With volumes, market cap, and market share skyrocketing, there was evidence to think so as well. However, fast forwards to April 2021, and it seems that much of the excitement surrounding SushiSwap has faded. Although Uniswap is still alive and well, other protocols, such as PancakeSwap, have arisen in the hotly contested vacuum.
This can be best highlighted by the fall in SushiSwap’s Total Value Locked. As a recent report pointed out, for Automated Market Makers (AMMs) such as Uniswap, SushiSwap, and PancakeSwap, “TVL is a direct representation of liquidity.” According to the same, while PancakeSwap’s TVL has recently increased exponentially at the expense of Uniswap, SushiSwap’s TVL has remained within a set range.
Furthermore, SushiSwap’s 24-hour volumes and daily number of user addresses have dropped significantly in recent months, as has the Daily Volume/User metric.
Source: Deribit Insights
The fact that SUSHI had sunk below other DeFi coins such as Terra, Avalanche, and Aave on CoinMarketCap at the time of publication was perhaps the easiest reflection of its condition. Furthermore, while UNI has risen by 69 percent since March 1st, SUSHI was selling well below its price level on that date at the time of publication.
What does this mean? Is there any cause for concern?
Source: SUSHI/USD on TradingView
The overall crypto-market is currently in a bearish process, with alts correcting left, right, and centre. Since this is supposed to be a short-term phenomenon, SUSHI would likely rise to the top of the rankings as well. This is despite the fact that it did not rebound along with the rest of the altcoin sector in early April. This claim can be supported by a few results and metrics.
For instance, consider the Network Profit Loss measure. It “calculates the average profit or loss of all coins that change addresses on a daily basis.” According to Santiment, NPL for SUSHI recently experienced the largest drop on the charts since November. This is worth highlighting, especially since the same was what flagged off the SUSHI rally towards the end of 2020 and the start of 2021.
Source: Santiment
Correspondingly, SUSHI’s active addresses are still keeping stable, with numbers somewhat higher than those seen in March. Finally, the overall balance of addresses carrying between 100K and 1M SUSHI has increased dramatically on the charts.
These results suggest that, considering its lukewarm market success on the indexes, SUSHI is still a viable altcoin. In reality, while the current market narrative favours the bears, there is good reason to expect SUSHI to rise in the near term as a result of a series of endogenous changes in its environment.
The introduction of Kashi lending and Margin Trading on SushiSwap’s BentoBox is one such reason. Kashi Lending is the first DApp built on top of the latter, with the same powered by isolated lending pairs similar to liquidity pools, but with “one side used purely as collateral for the other side, which is lent out.” Here, according to Messari’s Ryan Selkis,
“…. the riskiness of an asset as a collateral is completely contained within that pair.”
Both Kashi lending and BentoBox also have support for Binance Smart Chain and will be available on EVM-compatible networks, with one developer commenting,
“…. we imagine Sushi providing infrastructure for new projects to come market quick.”
What these new additions, plans, and improvements show is that actual production for SUSHI is taking place behind the scenes. With solid fundamentals behind it, the altcoin is expected to rebound and rally soon. With Uniswap recently launching a “business source licence” with an eye on SushiSwap, it appears that the rivalry is far from over.