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Why SushiSwap will be as successful as Uniswap

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How can a project succeed by copying other projects? The secret lies in the cultural differences between the development teams and the users they target.

Original title: "How Cultural Differences Drive User Adoption in DeFi (In the DeFi world, how cultural differences drive user habits)"

Original author: Partner of Multicoin Capital, Mable Jiang

Original compilation: QLY

When DeFi became popular last year, forked projects became popular, and there were not many projects that succeeded in the end, and SushiSwap was one of the best. To this day, SushiSwap still maintains a strong development momentum. What is the reason? According to Mable Jiang, a partner at Multicoin Capital, although SushiSwap and Uniswap look very similar, they actually adopt completely different methods to meet the needs of crypto investors, and behind this is the cultural difference between China and the West. .

The following is published by Mable Jiang on Coindesk The original text was translated by Rhythm BlockBeats:

At the end of 2020, I wrote an article about Articles on cultural differences in the encryption community, when 2021 comes, I want to explain from the perspective of cultural differences why SushiSwap and Uniswap, two almost identical products, can eventually succeed.

At the end of August 2020, when SushiSwap was first launched, it caused many people to speculate about the intention of this forked project. Some people believe that this is a blow to the liquidity pool without a moat (moat), but others believe that this is actually SushiSwap's wit and preemption before Uniswap launched its tokens. At that time, the entire encrypted Twitter field also basically revolved around the "community-supported project" narrative. This concept first appeared when Yearn and YAM were launched. This concept is great, and it also meets the motivation of users. The term "fair distribution" began to gain a firm foothold. After the release of YFI, anti-venture rhetoric has increased.

I worked for an American investment company and spent a lot of time understanding the differences between Eastern and Western cultures. In my opinion, the two projects SushiSwap and Uniswap are manifestations of cultural differences in the field of cryptocurrency between Eastern and Western countries. This angle explains why both projects eventually found their respective product markets, even though they took very different approaches to market.

Uniswap and SushiSwap

Uniswap is the first automated market maker (AMM) to shine, a tool that allows users to trade cryptoassets without counterparties or order books. Uniswap has received extensive attention during its growth and has received multiple rounds of financing from investors including Paradigm, a16z’s encryption fund, USV, Version One, Variant, Parafi Capital, SV Angel, and A.Capital, totaling $11 million. Known for its innovation, venture capital legitimacy, and high liquidity, Uniswap has attracted the attention of many early adopters in the DeFi field.

There are many similarities between Uniswap and Coinbase - I will mention this many times in this article, Coinbase can be considered the pioneer of crypto exchanges in the US prioritizing user experience (UX) and making compliant investments.

SushiSwap was forked from the open source code of Uniswap, and then developed rapidly, through various Incentive sensation, its value has reached hundreds of millions of dollars. Despite Uniswap’s dominance, SushiSwap now also has a large market share. This reminds me of Binance, which also didn't enter the market early, but now has a considerable market share.

How can a project succeed by copying other projects? The secret lies in the cultural differences between the development teams and the users they target.

Different products are suitable for different regions

Uniswap is known for its focus. Compared with other DeFi pioneers, it has sufficient capital support and research background, but the team chooses to focus on becoming an innovative automatic market maker (AMM). It advocates minimalism, the simple front-end system strengthens its brand characteristics, and establishes an efficient and simple trading platform, which is similar to the Google homepage that focuses users' attention on one action. Coinbase has taken a similar approach, with a clear and friendly design, clearly designed for the average US user.

SushiSwap has chosen a completely different approach from Uniswap. It first divides Uniswap into two parts, the front end and the back end, and there is only one difference in the other parts: liquidity farming. If SushiSwap stops innovating, it may disappear due to lack of differentiation. However, since its inception, SushiSwap has gradually transformed from a pure AMM to a complete protocol system. Now, it is an independent DeFi network.

After users enter the SushiSwap website, they can see the AMM and "Quick Switch" on the sidebar, and they can also see To Onsen, this is a rotational reward program that allows people to vote for new liquidity pools. The team also plans to launch BentoBox, which will support users in margin trading. The trading method in Western countries is another model: create a complete set of trading tools, encourage users to stay in an ecosystem, and then use the tokens on the platform to cultivate user loyalty and obtain value as much as possible.

American users will find Binance’s front-end interface too crowded, while Asian users prefer a more compact interface with more options type page. These seemingly insignificant design trade-offs actually send different signals to different user groups, and are what differentiate SushiSwap from its competitors, catering to power users who want more functionality at the touch of a button.

Refined production and rapid iteration

When Uniswap launched in 2018, it focused on optimizing the system (such as lower gas fees and open source mobile front-end, etc.). In May 2020, it released the second version, adding more ERC20 token trading pairs, TWAP oracle, and flash swap.

The Uniswap team is building the network with great care and few people understand its roadmap. Similarly, after years of product iterations, Coinbase has also formed a similar construction model. It does not update the system or launch new tokens frequently, but once it does, the effect will be very significant.

SushiSwap takes a completely different approach. It is a community-initiated project, and many decisions need to be made by public vote, such as whether to hire a developer and how much to pay him. Therefore, the core members of SushiSwap are very active in obtaining information from the community and replying on discord in a timely manner.

This also has many similarities with Binance. The person in charge of the trading platform in charge of the Chinese market will often chat in the group Communicate with users in the middle, so the product can be quickly adjusted according to the feedback of the community. The cultural characteristics of transparency, community initiative and rapid iteration are reflected here. Both Binance and SushiSwap want to give as much as possible what users want, even if it is requested by a small number of people.

Brand or business expansion

In 2019 and 2020, many DeFi tokens emerged, and DEX and AMMs quickly developed into the initial launch platform for new tokens. Uniswap, as the leader in this field, naturally attracted a large number of tokens. With simplicity and first-mover advantages, it is easy for projects to choose to launch liquidity pools on Uniswap. As a fast-growing latecomer, SushiSwap does not have such an advantage. It chooses to promote in a targeted manner and compete with Uniswap on an asset-by-asset basis.

The SushiSwap team has adopted a strong business development model: the core team and partners jointly expand the liquidity pool and provide Better incentive mechanism, support for the launch of new tokens and support for existing projects to migrate liquidity. If Uniswap meets the basic on-chain trading needs of the general public, then SushiSwap will optimize solutions for specific market segments, including more mature traders and token issuers.

As mentioned above, Chinese users value cooperation and trust more than American users because they have higher requirement. I think SushiSwap will attract Chinese users by collecting feedback from community users and signaling through strategic relationships.

Binance is also known for promoting cooperation and building trust, and most of its regional products and communities are efficient A direct result of the partnership.

Uniswap and SushiSwap have the same code, but they attracted different users and evolved into very different solutions plan. This divergence will continue to develop in the future as user behavior and patterns will continue to influence the direction and roadmap of each project.

DeFi is a global trend, and so is liquidity, but obviously, when it comes to projects Regional and cultural differences still play a very important role in success or failure. When investors are evaluating the future prospects of tokens, they should pay special attention to the impact of cultural differences and strategies on the project.