Eth is down from about $480 to now $350 in just days with it falling today significantly more than bitcoin.
That suggests there’s something specific to eth, meaning defi is the cause and in particular it may well be sushi.
How? Well, due to the liquidity balancing on Uniswap, while sushi’s price was increasing bots were converting sushis into eth.
Now that sushi’s price is falling, bots are doing the opposite. They are selling eth and buying sushis.
Let’s say for example 20 sushis at $5 each are worth 0.2 eth and that 0.2 eth is worth $100.
If you put down on the Uniswap pool 0.2 eth and 20 sushis, you’re basically telling the world you’re willing to sell 20 sushis at $5 each or 0.2 eth for $100.
So sushi’s price now goes to $10 while eth’s price doesn’t move. If you don’t balance it yourself by swapping some sushis for eth, then even tho the market price is $10, you’re still selling your sushi’s for five because there’s still 20 sushis there in exchange for the $100 0.2 eth.
Now that sushi’s price is going down, you need to sell eth for sushis to rebalance it, so bringing pressure on eth’s price.
Sushi’s market cap is not even $100 million now, and it was barely half a billion, so how is this having so much of an effect on a $40 billion eth market cap?
Well, the sushi/eth pool is just one of many in Uniswap with the price of most defi tokens like CRV or UMA down some 30% today.
So just like this was putting upwards pressure when their price was rising, now it’s putting downwards pressure, primarily because the stratospheric rise of sushi has given way to its crash.
That was to be expected. Everyone thought you farm sushis until Friday, then in anticipation of the migration you get out.
In this case there was some front-running on Thursday and even Wednesday, and since this is crypto, chef gave us all a reason to have a show by effectively saying f it in regards to re-assuring people about the migration.
Initially he said and did lock sushis and eths in uniswap to turn them into a token and so himself be part of the migration. But then he sold all the sushi and is now sitting on eth in his wallet.
Why? Well that’s the question of the day with only two answers. Either he is the stupidest person on earth who has decided that instead of nicely enjoying $13 million legally and within his full right, he instead is thinking of becoming so greedy he wants the whole $1 billion. Or, he concluded his re-assurance didn’t work, nobody was gone care, price was gone go down anyway, so he decided to have the eth in his own wallet and secure that amount.
He is attacking Venture Capitalists in a way and is challenging their business model, so a certain chorus is shouting exit scam. As of right now, he hasn’t quite excited in a meaningful way, and there has not been a scam in the proper meaning of that word.
His eth and sushi are his to do whatever he wants, the concern is of course about this migration of the tokens and eth on uniswap which are to be moved to sushiswap, and whether there’s some way he can take them.
He says there isn’t, but the migration contract hasn’t been published yet, that should be tomorrow.
Julien Bouteloup, a long time eth dev who now seems to be deep into defi as well as part of the Curve team, seems to be defending the chef.
We asked if he knows who he is and/or if he might exit scam, but have received no response.
There appear to be some extremely speculative rumors that the chef might be Chinese. If he exit scams, that would open a very different dimension.
So far, he hasn’t stolen anyone’s funds, so as it stands there hasn’t been any serious event, but speculation has intensified.