On September 5, 2020, Chef Nomi, the pseudonymous creator of SushiSwap, shocked the community by removing his significant share of SUSHI/ETH liquidity and converting it to ETH.
The action, commonly referred to as a “rug pull,” resulted in Chef Nomi gaining approximately $14 million worth of ETH – leaving the SushiSwap community disappointed and feeling betrayed.
Dashed Potential
At the time, SushiSwap was positioned to become a strong decentralized competitor to Uniswap. It had successfully executed a “vampire attack” by attracting liquidity providers and migrating their funds from Uniswap to SushiSwap.
Users had moved around $1 billion in Uniswap liquidity tokens to SushiSwap, signaling a significant shift in the DeFi landscape.
Community Outrage
Chef Nomi defended his decision to cash out on Twitter, claiming he wanted to concentrate on the development of the protocol. He compared his actions to those of Charlie Lee, who sold his Litecoin at the peak of the 2017 bull market.
However, the move had already enraged the community, leading many to declare the project dead due to a loss of trust. The timing of Nomi’s actions raised doubts about whether he truly intended to follow through on plans to hand over the developer-owned contracts to a community-owned multisig wallet.
From the beginning, many industry leaders were skeptical about the Uniswap clone. With the SUSHI token halving in value within a single day, it seemed like a dramatic end for a project that had quickly accumulated over $1 billion in liquidity.
Despite these doubts, discussions about transferring control to the community continued, though with less enthusiasm.
Nomi Returns Funds, Apologizes
Chef Nomi ultimately responded to the continued accusations of an exit scam by returning over $14 million worth of Ethereum taken from the developer allocation.
In a series of tweets, he apologized to the DeFi community, acknowledged his mistake, and relinquished control of the project to other developers, including FTX CEO Sam Bankman-Fried.
What Has Happened To SushiSwap Since?
Despite a somewhat successful recovery following the community takeover from Chef Nomi, SushiSwap has continued to have its share of ups and downs.
After a long period of internal conflict, SushiSwap implemented a major governance overhaul at the end of 2021. This introduced a hierarchical structure to improve management and address past issues.
In October 2022, the community elected Jared Gray as the new “head chef” (CEO) and the Sushi DAO community approved a reorganization proposal to create three legal entities to interface the management of the project with its real-world processes.
The project cut dead weight in the form of its Kashi Lending and Miso Launch Pad, looking to focus on its DEX to regain some market traction.
Sushi Total Value Locked (TVL) | Source: Defillama.com
Sushi peaked with a TVL of over $8 billion on Ethereum, however today it only holds around $258 million in user funds on the network.
The protocol is widely deployed, however, currently operating on 30+ blockchains.
2024 Rebrand To Sushi Labs
In 2024, SushiSwap rebranded to Sushi Labs. It now aims to introduce cross-chain features along with a more agile governance model, using a council for day-to-day decisions while retaining Sushi DAO for more significant decisions.
Sushi Announces its Rebrand to Sushi Labs | Source: Sushi.com Blog
This rebranding has included the launch of Susa, a new derivatives exchange for US-based traders and efforts to regain market volume and inflows.
