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Is SushiSwap an Exit Scam? Crypto Community Decries DeFi’s Newest AMM

SushiSwap’s SUSHI token holders were left holding the bag this weekend after ‘Chef Nomi’, the project’s pseudonymous founder, suddenly sold $13 million worth of tokens. The apparent financial exodus from the project has led some to decry the automated market maker (AMM) as an exit scam.

The selloff contributed to a significant drop in the value of the tokens, which peaked at $11.27 on Tuesday and fell to $1.21 on Sunday, a decrease of roughly 90 percent. At the time when Chef Nomi sold his tokens, SUSHI immediately dopped from $4.44 to $1.21.

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At press time, the value of the tokens had recovered to $2.75, making the drop slightly less severe.

Despite Chef Nomi’s selloff, he has pledged to stick with the protocol and said that the decision to sell was well within his rights as the platform’s founder.

“People asked if I exited scam. I did not. I am still here. I will continue to participate in the discussion. I will help with the technical part. I will help ensure we have a successful migration,” he said, adding that Charlie Lee did a similar thing with Litecoin.

Additionally, Sushiswap used a technique called ‘Zombie mining’ to reward users with even more SUSHI token tokens in exchange for providing liquidity to the ETH/SUSHI pool on Uniswap. A promotional measure offered rewards up to ten times higher than they would typically be for a limited time.

All of this created a mad dash to collect as much SUSHI as possible: in fact, the protocol was so popular that its launch was blamed for the astronomical gas fees that took over the Ethereum network last week. Uniswap also saw an exponential rise in its ‘locked’ assets as a result.

Eventually, once enough SUSHI liquidity was generated, Chef Nomi planned on using token dispersals to ‘migrate’ the liquidity created on Uniswap through SushiSwap. The date was postponed from Friday to Sunday as SushiSwap’s popularity seemed to continuously grow.

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