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:

1. Almost perfect fork execution and social engineering

2. Use of many organizational techniques that DAO culture has nurtured since the 2017 ICO boom

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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:

Al Bert @albiverse

SushiSwap took advantage of: • Mercenary drive of DeFi speculators🤑 • Vampire mining to facilitate exit📤 • Fair launch marketing bait✨ • Weak ties between Uniswap and its community (i.e. no token, minimal marketing and community building) 🔗

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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.

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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

• Governance

• Aligned incentives

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Social infrastructure: Twitter metrics and Discord

Twitter

• Uniswap joined in April 2018, follower count: 50k. Sushiswap joined in August 2020, follower count:12k

• Project leads: Hayden joined Feb 2016, follower count: 17.7k, Nomichef joined August 2020, follower count: 10k

Sid Powell 🥞 @sidbpowell

Every CEO in DeFi needs to be as focused on building community as building great product. Needs to be as much Malcolm X as Steve Jobs.

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.

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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.

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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.

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I'm back

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.