This article was first published on Stories by OAX on Medium
When Linus Torvalds released version 0.12 of the Linux kernel in 1992, he couldn’t have known that nearly 30 years later his creation would be used by 32 million people — and power the most-used mobile operating system, Android, which runs 1.7 billion phones. He wasn’t the first, but Torvalds’ decision to enable a broad community of developers to adapt and improve his code is arguably the single most important factor in its growth.
But widespread market penetration like Linux’s isn’t the only possible outcome of releasing open source code. Many variations of open-sourcing have emerged, ranging from strictly defined models governed by the Free Software Foundation and the Open Source Initiative to the mutually beneficial co-operative approach seen more and more commonly with the appification of internet-based services.
But the recent SushiSwap saga showed a potential consequence of reliance on open-source protocols. Uniswap, an automated on-chain market-maker (AMM) which creates liquidity for ETH-based DeFi applications, recently became the largest U.S.-based cryptocurrency exchange. AMMs are rapidly becoming a key component of DeFi applications, especially DEXs, as they automate liquidity provision using a smart contract that drives the exchange of ERC-20 tokens.
Participants contribute their tokens to the AMM pool and receive rewards in the form of liquidity provider (LP) tokens for building liquidity which can be redeemed for ETH. The AMM’s smart contracts swap various pairs of tokens, facilitating faster trading and tighter pricing for participants — and easy fungibility of different cryptoassets.
In late August, new entrant SushiSwap, using Uniswap’s open-source protocols, created a fork which established a new AMM it positioned as an “improved and community-friendly” version of Uniswap. It incentivized Uniswap depositors to redeem their Uniswap tokens for its own Sushi tokens by offering 1,000 Sushi per block for LPs’ commitment in advance. Once SushiSwap was live, this incentive ...
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Stories by OAX on Medium