Much ado over DeFi: The saga of SushiSwap in the cryptocurrency Wild West
DeFi blockchain platforms allow for applications that run without a central administrator and have been popular lately; for many in the cryptocurrency community, they represent a new boom
A cryptocurrency project, SushiSwap, an exchange platform, had copied the code of another, syphoning away its users and millions of their funds — and that is just the beginning of that story.
Such projects usually have their own native cryptocurrency. They are sometimes sold as a means to raise funds to run the projects. Their values go up and down with the perceived success of their projects. Founders usually retain a stash of those coins. With SushiSwap’s success, its tokens went up in value.
SushiSwap, however, is a project barely a month old, with an anonymous founder known only as Chef Nomi. During the week, Nomi suddenly converted a large number of Sushi tokens, worth $13 million, to Ethereum’s Ether, the second-most valuable cryptocurrency, which is far more widely used.
Users, or investors, rather, suspected Nomi was running a scam, taking the money and running away while the price was high. Nomi later gave the money back and ceded control, but the damage was done.
With such drama, the price got rocked. Sushi’s coin went down by almost 80 per cent. That in turn triggered a dip across the estimated $15 billion DeFi token sector that Sushi is a part of.
DeFi blockchain platforms allow for applications that run without a central administrator and have been popular lately. For many in the cryptocurrency community, they represent the genesis of another boom, reminiscent of 2017.
But DeFi projects have also been risky.
Let’s not forget this happened in August: The viral decentralize-finance (DeFi) project Yam Finance's YAM token lost more than 90 per cent of its market capitalization within a few minutes as a "potential flaw" gets uncovered, the Block reports. Within a day, the upstart Yam had attracted more than $400 million to its platform, only for it all to disappear.
Price: Set to end the week where it started; failed to break below $10,000
Bitcoin is at $10,450 as of 10 a.m. Sunday, Eastern Time. According to CoinDesk, Bitcoin is poised to end the week roughly where it started. In multiple attempts over several days, the market has failed to break below the psychologically important $10,000 threshold.
News: EU prepares harsh regulatory case for digital currencies; China set to be first
The EU will set up a new college of supervisors, including national and European authorities, to oversee “significant” digital currencies including Facebook’s Libra, according to the European Commission’s cryptocurrency draft proposal seen by EURACTIV.
Meanwhile, Bloomberg writes China is likely to be the first major central bank to issue a digital version of its currency.