SushiSwap is a Pseudo Exit Scam but can the community recover?
Today SushiSwap’s creator, NomiChef, made a set of unilateral decisions that show the folly in talking about community control when the community are not actually in control. Here’s what happened this morning.
With a burgeoning and increasingly healthy community, as well as $1.5bn of LP money watching, NomiChef did the following:
- Activated the proposal to migrate the SUSHI/ETH pool away from Uniswap. This gives 48 hours notice providers and followed a basic vote.
- Sold 19430 Ether worth of SUSHI from the SushiSwap dev pool with no notice, then deposited it with the matching SUSHI funds from the dev funds into the SUSHI/ETH pool.
https://etherscan.io/tx/0xc97cac6a9457f73febfd93ca90dd4dfbe128ad1658c3e48d01ad3d92d3efd07e - Bypassed all community incentive discussions
- Bypassed all community requests for proper tests such as a test pool migration
- Did this immediately before moving forward with a multisig to control contracts and the dev pool
The result is:
- Price crashed and continues to crash
- Massive loss of community and volunteer trust
- Massive lost of LP trust and (likely) LPs
- Claimed he deserved the money (and that he’s taking IL risk, lol).
I’ve been talking about SushiSwap a great deal for the last few days as it’s a stunning example of how open source projects can be community incentivised and owned. In this case, it was attempting to take customers away from Uniswap via a clever scheme allowing auto-migration.
I‘ve been helping out organisationally purely as a community member because I was around during the DAO fiasco (search my Medium) and could see warning signs. I had pushed hard to get a multisig agreed because of the extensive risks. That was agreed in principle yesterday morning but the damage has already been done.
And as I write this — Exit Scam. All be it a bizarre one as he wants and benefits from it continuing. Continuation Scam?
https://twitter.com/NomiChef/status/1302214296949026816?s=20
So now you all see why I was pushing so hard for a proper non developed controlled Multisig, and that was only one thing that needed doing to secure the project. There are never any acceptable excuses. Never never never.
Binance are also at fault here. Tokens go through a lot of hoops to be listed normally and their due diligence failed when they saw $$$. The minimum requirement on an anon community project should be clear, trustworthy multisig control of any funds and contracts, with timelocks and an audit. CoinGecko could do more too in future — perhaps a warning where this hasn’t been done.
However, SushiSwap generated a great community who could yet continue it. I hope they find a way to continue and be truly community owned. I’ll continue to hang there watching only but right now I’m a mixture of sad and angry at today’s shenanigans.
Don’t rush to the first Sushi clone. Wait for a well thought out one with a lot of good names and governance. The model is great, tho it could be less aggressive IMHO, and I’ll continue to explore it — but not with SushiSwap.
Just another day in crypto.
Watch this space.
