SushiSwap Is 3 Years Of DAOs
Beyond the drama surrounding the Uniswap fork, I think it's a great hint at how much progress was made since 2017 when it comes to online coordination practices.
A few days ago, most were yield farming on SushiSwap. Today, Crypto Twitter is spreading wise gospel about not chasing money and how evil the SushiSwap founder is. Cool.
Let’s not pay attention to short term details and focus on SushiSwap’s:
Almost perfect fork execution and social engineering
Use of many organizational techniques that DAO culture has nurtured since the 2017 ICO boom
There are frictions to successfully forking a project or in that case a DeFi protocol. Some of them can be of a technical, psychological or regulatory nature (cool post on this by @ianjohnlee here).
At a high level, the "attacker" (here SushiSwap) has to lower switching costs in order to capture the user base of the incumbent (here Uniswap). The SushiSwap team successfully eliminated those frictions with a combination of smart tricks:
Bull Market Psychology and Perceived Switching Costs
Bull markets invite a special type of crowd to the table. When euphoric, people have a mercenary mindset. They are 100% here for the money. Let’s admit it, even respectable crypto Twitter figure lost it in August.
And it is much easier to convince people who are running high on dopamine. DeFi degens haven't had any problem with spending in $$$ in fees, time and efforts in moving their assets and shilling SushiSwap.
Two additional bits brought switching costs even lower and made switching psychologically affordable. Vampire Mining, a smart incentivization scheme rewarding those who jump ship early. And the "Fair" Launch marketing trick, adding a flavor of justice and good intentions to the newly launched SushiSwap exchange.
Community Infra and Lock-In: Uniswap vs. Sushiswap
If SushiSwap's early success is about smart tricks to bring switching costs down, diving deeper into the social aspects of the experiment, it is clear that SushiSwap is not only a meaningless scam. More of a sneak peek into the future of internet organizations => A community-led project which can scale at lightspeed and self-organize in a matter of days.
Something more traditional VC backed projects should definitely learn from, as these kinds of attacks and projects will only get better, meaner, leaner.
If you want to succeed on the internet in 2020+ you'll have to be good at the following:
Social infrastructure: Twitter metrics and Discord
Uniswap joined in April 2018,
50k. Sushiswap joined in August 2020,
Project leads: Hayden joined Feb 2016,
17.7k, Nomichef joined August 2020,
Discord metrics on 05/09/2020
Uniswap: 1866 online, 12345 members total
SushiSwap: 2470 online, 12651 members total
SushiSwap’s Discord Organization
Uniswap’s Discord Organization
SushiSwap has been crushing it on herding a community thanks to the DeFi euphoria. Getting better numbers than Uniswap in a matter of days.
Zooming in on the organization and activity of respective discords, SushiSwap has higher activity, an international community and regular voluntary contributions on governance and marketing stuff. It also has a pool of DeFi OGs who have been granting legitimacy to the project.
Checking out each project's blogs and social accounts, the Sushi team has been relentlessly communicating and engaging through Twitter and blogs since the beginning of the experiment.
Governance and Aligned Incentives
You want your users to be involved with the life of the project. So that in times of crises they are great supporters of the project and still see things long term. For that they need a sense of belonging, ownership and control. That's why you need to hand governing power to your community in one way or another.
If the community can voice their concerns and create votes or signal preferences, they might prefer doing that than jumping to an unknown protocol with an anonymous team like SuishSwap.
You also need that token to get incentives better aligned. As all these things will just increase the community lock-in and make your project much more defensible.
SushiSwap = Experiment, Uniswap = Project
SushiSwap is an awesome organizational experiment. It has implemented the most advanced principles of community alignment and DAO style coordination, at scale.
Now, imo it is still too early for these community-led projects to hold together long term. While we can see a huge improvement on coordination and cooperation compared to 2017 ICOs, we still have some things to figure out before we get the full DAO recipee, especially when it comes to accountability of the development team.
On the longer term, Uniswap will win because they have:
A better team
Higher quality community members
A better network
A long-term oriention
They are now hiring a community manager ;-)
While I wouldn’t bet on SushiSwap long term, this new milestone for online organizing makes me optimistic about DAOs and their sheer power.
I am back and I have lots of thoughts to share and execute on in the following weeks! powpowpow
Jump in if you want to discuss about this issue or related things, join my Discord! Just created it for now but will pimp it soon.
I have cool readings, tools and community organization techniques to work and write on. I'm also wanting to grow the community around this newsletter and the number of things we tackle and address together.
Amazing article! I checked the metrics of UniSwap and SushiSwap to see their evolution and you were of course right.
What you said about what’s needed to succeed on the 2020+ internet was very insightful but I have a little issue with the social infrastructure parts, especially Discord
From what I’ve seen until now, most of my potential community members never used it and I’m afraid it becomes an obstacle to the growth of the project.. Do you think it’s a necessity? Or as long as we have a similar tool directly built in the project, it could be okay?