- SushiSwap popularized fair launches, causing forks of nearly every significant DeFi protocol to emerge.
- Fair launches are a flawed concept and can severely erode development incentives in DeFi and crypto.
- Putting in a few weeks of work on a fork versus years of effort into building something new has a lopsided reward and risk.
- If DeFi investors pursue short-term opportunities and ignore long-term value accretion, the space could find itself in serious trouble.
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Fair launches are now the hottest trend in DeFi, but poorly aligned incentives may mean the industry trades true innovation with short-term gains.
Fair for Who?
But the greatest impact of SushiSwap was popularizing the concept of “fair launches.
Uniswap raising $11 million from eminent VC funds didn’t sit well with the community. Specific individuals believed in the spirit of decentralization, indicating that all protocols should adhere to a broad public distribution of tokens.
Community members were drawn to SushiSwap because 90% of all tokens would be given to liquidity providers (LPs). These same people harbored disdain for Uniswap because the team raised capital and put off a token launch.
Their reasoning was simple: Uniswap was being greedy by refusing to issue a token.
A token would allow DeFi community members to share in the protocol’s upside. Others argued that it would have been greedy to ask the team that built Uniswap from scratch and bootstrapped it into a potential Coinbase-killer to give up their share in the upside.
In the end, Uniswap was redeemed on two levels.