SUSHI Down 45%: What’s Driving the Decline?

Dalmas Ngetich

2 years ago

2 mins read

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The price of SUSHI, the native token of SushiSwap, a decentralized exchange, is down 45% from February 2023, when prices peaked at $1.63, the highest level in six months.

SushiSwap Token Redesign

This contraction is despite the successful implementation of a proposal to redesign SUSHI’s tokenomics, making SUSHI, a governance token, more deflationary.

The proposal was first made in December 2022 by Chief Chef Jeremy Grey and was voted on and agreed on by the community early this year.

The proposal passed with a majority vote and will seek to reduce the SUSHI supply over the years. At the same time, it will increase the rewards for liquidity providers while encouraging users to stake SUSHI for longer.

Grey argued that this implementation would promote decentralization while making the protocol have “more equitable governance with sustainable economics.” Eventually, by redesigning SUSHI’s tokenomics, the goal will be to keep annual inflation between 1% to 3%.

The latest data from MoneyPrinter shows that SUSHI’s annual inflation stands at 1.23%, aligning with SushiSwap’s tokenomics redesign. If anything, this inflation rate is lower than Bitcoin, which has an annual issuance rate of 1.82%. SUSHI’s inflation is also lower than Cardano, which has an annual emission of 1.79%.

While analysts expect low inflation to support prices in the long haul, the performance of SUSHI in the first half of 2023 has been dismal. SUSHI is down 45% from 2023 highs and 99% from 2021 peaks when the token changed hands at around $22.

Blame The Winter, Hack, And Regulators

While the markets have recovered, some, including SUSHI, could still be reeling from the effects of the crypto winter.

Last year, Bitcoin, the largest coin by market cap, crashed by over 70% after peaking at over $69,000 in November 2021. The collapse of BTC dragged the altcoin market with it, forcing the more volatile assets even lower, adversely affecting SUSHI.

As an illustration, SUSHI is trending at 2022 lows at around $0.89, retesting a critical multi-month support level.

SushiSwap Price On May 17| Source: SUSHIUSDT On Binance, TradingView

Prices are also capped as investor confidence took a hit following SushiSwap’s RouterProcessor2 contract exploit in early April 2023. Hackers ended up with $3.3 million. Although the flaw has since been patched, the reputational damage associated with the vulnerability dents investor confidence.

It remains to be seen how SushiSwap will navigate potential new regulations, particularly those from the United States. Some policymakers have taken a negative stance towards cryptocurrency, causing users in the country to hesitate to engage with DeFi protocols due to potential legal consequences.

Feature Image From Canva, Chart From TradingView

Dalmas Ngetich

Dalmas, a seasoned crypto reporter, brings a unique perspective to the industry. His specialization in NFTs, blockchain, DeFi, and blockchain news for NewsBTC, combined with a background in mechanical engineering and over a decade of experience in journalism, has allowed him to craft over 10,000 news and feature articles over the past eight years. His diverse range of topics, including technology, Forex, and finance, reflects his comprehensive understanding of the crypto landscape.

His technical expertise and analytical skills have been recognized and featured by leading news outlets such as Investing.com, CoinTelegraph, Entrepreneur, Forbes, and other authority sites. Notably, he broke key news, including the Ripple and MoneyGram partnership, cementing his position as a thought leader in crypto.
The news exploded. Over 100,000 people devoured this meticulously crafted report, from seasoned investors to curious newcomers. His analysis wasn't just dry facts and figures; it crackled with insight, dissecting the implications of the partnership and its potential impact on the future of finance.

His deep understanding of the financial markets, technological advancements, and blockchain developments has made him a respected voice in the industry.

Dalmas is also the founder of BTC-Pulse, a crypto news site, further demonstrating his commitment to the field. He firmly believes that DeFi and NFTs are here to stay and will continue to drive financial inclusion.

Coming from Nairobi, Kenya, it is easy to see the source of his inspiration: Across Africa, millions lack access to traditional banks. Remote villages, limited documentation, and high minimum balances create insurmountable barriers.

DeFi, not just Maker or Aave, for example, but think of Bitcoin and USDT, cuts out the middleman. Forget banks with their limitations.
Even so, DeFi isn't a magic solution. The continent still struggles with reliable internet access, and educational campaigns highlighting the benefits of this wonderful solution are insufficient. Moreover, even for those interested, understanding DeFi can look like learning a new language.

Dalmas is here to help make the tech easy to understand and digestible, even for beginners.
The story of DeFi in Africa is still being written. Challenges abound, but the promise of a more inclusive financial future is a powerful motivator. With innovation and collaboration, Dalmas firmly believes that DeFi could become the key to unlocking Africa's full economic potential.
This possibility and its immense value motivate Dalmas to continue breaking key DeFi innovations and more across the globe. His engineering background further enhances his ability to deliver well-thought-out pieces that blend technical insight with clear, impactful reporting.

Beyond his professional achievements, Dalmas is deeply passionate about technology and politics. Policies drive adoption, and being at the forefront and keeping up with how they evolve is crucial for the sphere to mature.

When Dalmas is not closely monitoring the latest crypto events, he can be found in nature, exploring the picturesque countryside, and traveling with his family and friends. His love for adventure and discovery perfectly complements his investigative and reporting skills.
You can connect with Dalmas on X: @Dalmas_Ngetich, or contact him on Telegram @Dalmas_Ngetich.

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