Sushi Labs Acquires Shipyard Software to Regain Lost Ground After Protracted TVL Decline

The acquisition seeks to address several common challenges facing DEXs, such as SushiSwap. They include “mitigating impermanent loss, optimizing liquidity provisioning

Decentralized exchange (DEX) SushiSwap is set to integrate new products into its platform following the acquisition of cryptocurrency trading software developer Shipyard Software.

The acquisition aims to address common challenges faced by DEXs, including SushiSwap, such as minimizing impermanent loss, optimizing liquidity provisioning, and improving multichain trading efficiency, Sushi Labs said in a statement on Jan. 28.

The deal comes amid SushiSwap’s efforts to recover from a significant decline in total value locked (TVL) since 2021. The DEX is also facing increasing competition from DEXs on Solana and emerging chains like Hyperliquid, which specializes in trading.

Sushi’s TVL has seen a sharp decrease since 2021. Source: DefiLlama

Shipyard’s products include Blade, an automated market maker (AMM) using a request for quote (RFQ) system to avoid impermanent loss, and Kubo, a system for attracting liquidity into decentralized perpetual futures, or “perps,” exchanges.

Sushi will integrate Kubo as a new Sushi-branded perps product, it said. Impermanent loss refers to the loss of value to liquidity providers on DEXs due to the changing relative values of cryptocurrencies in a liquidity pool.

Sushi Labs develops SushiSwap, a popular DEX that operates across more than 35 blockchain networks and boasts roughly $230 million in TVL, according to data from DefiLlama.

Launched in 2020, SushiSwap was once among the most popular DEXs, with a peak TVL of more than $8 billion in 2021 before internal conflicts, exploits and legal challenges led to a prolonged decline in the DEX’s usage.

It now ranks 13th among DEXs by TVL, significantly lagging behind leaders like Uniswap and Raydium, which sport TVLs of around $5.6 billion and $2.7 billion, respectively, according to DefiLlama.

DeFi TVLs are rising close to past highs. Source: DefiLlama

Rising DeFi TVLIn decentralized finance (DeFi), TVL is approaching highs not seen since 2021, according to data from DefiLlama.

The TVL spike has been driven by the adoption of liquid restaking tokens (LRTs) and the growth of Bitcoin-native layer-2 networks (L2s), the data shows. Rising cryptocurrency prices due to 2024’s bull market also drove TVL higher.

As of Jan. 28, aggregate DeFi TVL stands at upward of $119 billion, marking a more than 100% increase year-over-year, according to DefiLlama. It still lags 2021’s highs of $170 billion, the data shows.