SushiSwap's liquidity grab actually made Uniswap stronger

SushiSwap is widely thought to have syphoned liquidity from Uniswap but new data from Flipside Crypto, a cryptocurrency on-chain analytics resource, suggests that the decentralized exchange's launch mechanism actually benefited Uniswap by bringing new money into its liquidity pools.

In order to facilitate this transaction, users who provided liquidity to certain Uniswap pools received SUSHI as a reward if they chose to migrate to the platform on Sept. 8.

By Sept. 9, more than $800 million in liquidity was migrated to SushiSwap, leaving Uniswap with just over $400 million in total value locked.

While SushiSwap earned a bad reputation from its launch strategy and other mishaps like its lead developer Chef Nomi liquidating $14 million worth of Sushi tokens on the spot market, the project seems to have actually been beneficial to Uniswap's bottomline.

The schism between the two exchanges eventually brought in new liquidity and forced the project to launch its own token in order to remain competitive.

According to Flipside Crypto, much of the liquidity that entered Uniswap during the SushiSwap launch appears to have come from new users and additional funds deposited into the liquidity pools in order to receive SUSHI rewards.

Initially, liquidity providers who elected to migrate were probably impressed with the strong performance of SUSHI token but Chef Nomi's unexpected rug pull negatively impacted the price.

A few weeks later Uniswap's UNI token was launched and all this new liquidity was captured by the exchange.

Since UNI's launch on September 16, liquidity on Uniswap grew significantly.

Uniswap's suprise airdrop distributed 400 tokens to users that provided liquidity before Sept. 1 most recipients likely exchanged the tokens for Ether or used the funds to provide liquidity to other asset pools listed on Uniswap.