Exchange-shy investors found a new partner with the release of Uniswap and the proliferation of automated market makers. Automated market maker programs provide the ability to directly swap different currencies through a trustless liquidity pool. Uniswap pioneered the system and established one of the largest and most efficient liquidity pools in the cryptocurrency space. Others saw their success and sought to emulate – or improve- upon it. While Uniswap offers interest for users that provide liquidity, it has yet to release a native token.
In contrast, Sushiswap offers the SUSHI token as a means of rewarding liquidity providers. Their network uses a concept known as “vampire liquidity” to sap the Uniswap liquidity pools. Now, SakeSwap seeks to add a third layer by drawing users away from both Uniswap and SushiSwap through a deflationary token. While copycat products are common in the cryptocurrency industry, few are as brazen as Uniswap’s descendants.
Brining Ease of Use to Decentralized Platforms
Cryptocurrency and blockchain platforms often suffer from a high learning curve. The complexities of centralized exchanges provide a barrier to more casual investors -for better or worse. Decentralized exchanges are a step beyond even that, requiring a high level of technical experience. Understandably, the more knowledge that a user possesses, the safer their funds.
Automated Market Making platforms make the decentralized aspect of a DEX available in a simpler format. It allows mid-tier investors to swap currencies without depending on the security of a centralized exchange. Given the continued trend of hot wallet hacks, this is a huge benefit for security across the industry.
Copycats in the Cryptoworld
SakeSwap is far from the first copycat platform to gain notoriety. The initial rush of the 2017 crypto-boom saw leagues of Bitcoin and Ethereum clones that offered little in the way of new technology. Similarly, the success of deflationary currency BOMB resulted in a dozen pretenders, all with their own ‘explosive’ names.
SakeSwap provides a deflationary native token, at the cost of further diluting the available liquidity pool for any individual AMM. While it is unlikely to damage Uniswap – unlike SushiSwap and their considerable momentum – SakeSwap does not add anything of substance to the AMM sector.
Article By: Adam Stone