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NFTX migrates from Uniswap to SushiSwap

Posted by
Ian Kane

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NFTX has migrated its liquidity from Uniswap to Sushiswap in order to qualify for its rewards program. The DAO treasury will now benefit from $SUSHI rewards. At the same time, the value of the NFTX token has steadily been increasing since it launched in early January, from 15 dollars to 44 dollars at the time of writing. 

The liquidity migration from UniSwap to SushiSwap was approved on NFTX last week. The migration of NFTX/ETH was successfully accomplished on Saturday 16th January with the next migration of PUNK/ETH taking place on Monday 18th January.

NFTX token holders do not need to worry as the move will have zero impact from that perspective. NFTX commented in a medium blog post that “While there’s nothing wrong with Uniswap, the team at Sushi approached us and were keen to make this happen.”

Source: CoinGecko

After a successful token release and the launch of CryptoPunk Indices on Uniswap and Balancer, the team made the decision to migrate over to SushiSwap in order to qualify for the rewards program. The move will bring additional finance into the DAO treasury through $SUSHI rewards.

Under the current configuration on Uniswap, 0.3% of all trading fees in any pool are proportionately distributed to the pool’s liquidity providers. Whilst In SushiSwap, 0.25% goes directly to the active liquidity providers, while the remaining 0.05% get converted back to SUSHI, through SushiSwap and distributed to the SUSHI token holders.

What is NFTX?

NFTX is a platform for making ERC20 tokens backed by NFT collectibles. These tokens are called funds, and (like all ERC20s) they are fungible and composable. With NFTX, it is possible to create and trade funds based on your favorite collectibles such as CryptoPunks, Axies, CryptoKitties, and Avastars, right from a DEX such as Uniswap.

These funds can eventually be redeemed or traded against the primary token NFTX which has potential market demand. Effectively turning traditionally illiquid NFTs into liquid ones, tradable on decentralized exchanges such as Uniswap. 

Uniswap Vs SushiSwap 

Over the summer of 2020, it was revealed that Uniswap had an $11M funding round. The project was at the center of the DeFi universe with many projects executing their Initial DEX offerings on the platform. 

SushiSwap forked Uniswap and added a governance token and higher rewards for liquidity providers. Prior to the launch, there have been a number of defi product launches based on a fork. Most notably YAM tried to stitch together smart contracts from multiple different projects. SushiSwap, on the other hand, kept the operational structure intact and simply added on top of it.

While most projects try to use governance token distribution as a way to build up liquidity, SushiSwap went a step forward. It went after the liquidity of the project it was forked from. 

There were a number of Uniswap pools launched which yielded Sushi rewards to providers. However, the key was that after SushiSwap launched, the assets in the pools would be migrated away to SushiSwap.

This has been described as a “vampire attack”, a name that implies if not malicious then at least hostile behavior. Uniswap being an open-source, decentralized project had no mechanism for defending itself against such a threat.

Source: DappRadar

The successful migration catapulted SushiSwap straight into the top ten DeFi Projects by Total Value Locked (TVL). At the time of writing, Uniswap is leading with over $3 billion in TVL in its smart contracts compared to Sushiswaps’ $1.8 billion. 

Regardless of the ultimate outcome for Uniswap, SushiSwap’s example will likely inspire startups to use a similar model to get base liquidity on their platforms. Open-source automated money market projects are highly susceptible to this attack.

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