Can SushiSwap and ZetaChain Revitalize the DEX?
SushiSwap, a decentralized exchange (DEX), has recently partnered with ZetaChain, an interoperability platform, to test Bitcoin-native DeFi swaps. The goal of this partnership is to enable Bitcoin swaps across 30 different blockchain networks without the need for wrapping or bridging assets through ZetaChain’s Ethereum Virtual Machine (EVM).
The integration will involve incorporating Sushi’s v2 and v3 automated market makers, as well as its cross-chain swap feature, SushiXSwap. Ankur Nandwani, a core contributor to ZetaChain, believes that this partnership could greatly expand Bitcoin’s presence in the DeFi sector by providing a more native approach to Bitcoin integration. This challenges the notion that bridging BTC without wrapping on another chain is impractical.
Jared Grey, Sushi’s head chef, also sees this development as a “transformative milestone” for the DeFi industry, especially considering the potential of natively swapping Bitcoin. The integration process will occur in two phases. Initially, Sushi will launch a DEX on ZetaChain’s testnet to facilitate basic asset swaps and liquidity provision. This phase will also include beta testing and incentives for application testing. Subsequently, Sushi will become one of ZetaChain’s launch partners with the deployment of its mainnet, which is expected to bring full functionality for Bitcoin interoperability.
While the SushiSwap ZetaChain partnership aims to optimize the use of Bitcoin in the DeFi space, the question remains whether it can help SushiSwap recover from its recent decline. SushiSwap has experienced a significant drop in total value locked (TVL) since the crypto market downturn in late 2021, with its TVL reaching $300 million on Nov. 17, a decrease of over 96% from its peak of $8 billion in two years.
TVL is an important metric that indicates the liquidity available on a DeFi platform. A rising TVL suggests increasing user trust and interest in the platform, while a declining TVL may indicate the opposite. Currently, SushiSwap holds only 0.4% of the DeFi market and ranks 30th among DEXs, with a daily trading volume of under $18 million. Despite offering a wide range of coins (356 coins throughout 498 pairs), the DEX has struggled to gain traction.
In addition, the price of SushiSwap’s native coin has dropped by 15% on Nov. 17, falling 95% below its all-time high in November 2021. Given the current state of SUSHI price and on-chain metrics, it is unlikely that the SushiSwap ZetaChain partnership alone will revive the decentralized exchange. However, the introduction of Bitcoin swaps could potentially boost the platform’s popularity.