Analyzing the Decrease in SushiSwap's TVL & UAW

In this article, we take a deep dive into the data reported by Santiment on SushiSwap's Total Value Locked (TVL) and Unique Active Wallets (UAW). We discuss the wider DeFi context and investigate the implications of the findings on the industry.

CandleFocus DeFi-SushiSwap-TVL-UAW-Ethereum

An analytics firm has recently reported that long-term holders of SushiSwap (SUSHI), an Ethereum (ETH)-based decentralized finance (DeFi) altcoin, are taking a step back from their investments. According to Santiment, there has been a 93% decrease in the Total Value Locked (TVL) of SUSHI since November 2021. Furthermore, the number of unique active wallets interacting with SushiSwap is seeing little to no growth; on the other hand, the number of Unique Active Wallets (UAW) transacting with Uniswap (UNI), a competitor to SushiSwap, has been steadily increasing. Santiment has also identified a sudden surge in “previous dormant coins” associated with SUSHI, indicating that long-term investors are liquidating their tokens.

In order to understand the significance of these findings, it is important to first appreciate the broader DeFi context. Decentralized finance has proven to be one of the most promising sectors of the cryptocurrency industry, since its entry into the landscape in 2021. Many of the exchanges, lending services, and other products within DeFi have been delivered through Ethereum-oriented blockchain networks. This is in part due to the fact that Ethereum’s decentralized ledger is large enough to support a wide range of digital assets, as well as due to its capacity for smart contracts that facilitate automated transactions. This environment has been an ideal playground for DeFi entrepreneurs to launch various innovative tokens and applications.

The altcoin analyzed in this piece, SushiSwap, is one of the most important protocols in the space, competing alongside leading players like Uniswap, Aave, and Compound. Since rapid growth in the industry has been correlated with higher prices for associated tokens, Santiment’s findings ought to be taken under consideration. It would appear that investors are shifting their positions away from SUSHI, with the resultant declines in TVL, UAW, and dormant coin circulation signalling their apathy towards the asset.

In conclusion, the report from Santiment confirms the doubts many have had regarding SushiSwap’s efficacy as a competitor in the DeFi space. It is up to the founders and innovators of the project to measure its value accurately and take the necessary steps to improve upon the token’s operations. Moreover, this is also a wake-up call for the wider industry to reconsider the democratizing functions of blockchain technologies, as well as their implications for asset pricing.