What is SushiSwap (SUSHI)?

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by Daria Rud · 5 min read
What is SushiSwap (SUSHI)?
Photo: Unsplash

The guide deals with a novel liquidity pool platform SushiSwap, which is an Ethereum-based decentralized exchange (DEX) with an Automated Market Making system (AMM).

As the Decentralized Finance (or DeFi) space evolves, more and more novel financial platforms continue to emerge. One of the DeFi liquidity pool platforms worth talking about is SushiSwap (SUSHI).

What is SushiSwap?

Sushiswap is a relatively new DeFi protocol. In essence, SushiSwap is an Ethereum-based decentralized exchange (DEX) with an Automated Market Making system (AMM). Just like regular market makers add liquidity to both sellers and buyers, an AMM adds liquidity from several digital assets in smart contracts called liquidity pools.

You can compare SushiSwap to Uniswap, usually referred to as the pioneer of the DeFi space. However, there are some differences. At first, UniSwap was created as an open-source protocol that allowed external developers to hard-fork the code. Then, SushiSwap came in as a hard-fork from UniSwap. It took UniSwap’s core system and redesigned it to be more community-oriented, with a greater overall performance in contrast with UniSwap. with improved functions and introducing the Sushi Token.

To sum up, SushiSwap is a community-oriented system where all SUSHI token holders are allowed to participate in decision making in all aspects of the project.

SushiSwap Team

SushiSwap is run by Chef Nomi, and it is unclear whether it is a person or a group of developers, similar to Satoshi Nakamoto’s case. Other people involved in SushiSwap are known as “SushiSwap” and “0xMaki”. They currently run the protocol and all business operations.

The only identified person behind SushiSwap is Sam Bankman-Fried, a famous crypto whale and the founder of quant trading firm Alameda Research, exchange FTX and DeFi protocol Serum.

What is SUSHI Token?

SUSHI is the native token of SushiSwap. You can buy SUSHI on almost any exchange, like Binance or Huobi. These tokens are rewarded for liquidity mining. Once you receive a certain number of tokens, you receive a vote per every token you hold and have governance in the platform. Besides, you’re entitled to a certain percentage of the protocol’s trading fees.

SushiSwap’s Core Products

The main products of SushiSwap aim to enhance the DeFi space with redesigned products for all DeFi users. They include:

  • SushiSwap Exchange. This is where users come to trade DeFi tokens or cryptocurrencies.
  • Sushibar. Here you can stake your SUSHI for xSUSHI and then use it in the xSushi pool, with fees of 0.3%, and a 0.05% of that fee is added to the SushiBar pool.
  • SushiSwap Farms. Once you become a liquidity provider and obtain your SLP tokens, you can use SushiSwap Farms – staking pools where you can stake your tokens to earn additional rewards. Once you choose the pool you want to use, you need to approve your SLP token to continue the process.
  • SushiSwap Liquidity Pools. SushiSwap offers seven available pools for traders. Trading pairs can change if the community wants them to through voting. These pairs started in the 10,750,000 block of Ethereum, and are reduced after 100,000 blocks, or every two weeks.  If you want to deposit your UniSwap LP tokens of these pairs in SushiSwap contracts, then you’ll have the options below.
  • Centralized Finance (CeF) Stablecoins. Include USDT/ETH, USDC/ETH.
  • DeFi Stablecoins. Include DAI/ETH, sUSD/ETH.
  • Lending Protocols. Include COMP/ETH, LEND/ETH.
  • Mixed Assets (Synthetic assets). Include SNX/ETH, UMA/ETH.
  • Oracles. Include LINK/ETH, BAND/ETH.
  • Ponzinomics (Ponzi multi-marketing mechanisms used in DeFi). Include AMPL/ETH, YFI/ETH.
  • Delicacy Pool. Include SUSHI/ETH. Notably, this supply pool has twice the reward amount.

SushiSwap vs UniSwap

SushiSwap has enhanced several features from UniSwap making the protocol better for DeFi users. Here are some aspects to compare in SushiSwap and UniSwap:

  • Liquidity. Like most DeFi protocols today, the UniSwap system rewards its providers with trading fees when they stake their tokens. This occurs when they are actively providing liquidity to that pool. But once they withdrew their percent, they do not earn rewards. Meanwhile, in SushiSwap, you can become a Liquidity Provider, which means you own a certain percent of that pool, similar to an aliquot part of a trust. Any provider can withdraw s tokens to sell them.
  • Protocol’s fees. SushiSwap allows users to continue to earn the protocol’s fee, accrued in SUSHI. Even if a liquidity provider decides to retire from the provision, he can still earn rewards from the SushiSwap’s protocol. This why SushiSwap had an outstanding DeFi boom on the first day, becoming one of the hottest investments for DeFi users. In addition, it provided a better overall performance in comparison with UniSwap.
  • Reward System. UniSwap distributes 0.3% of all trading fees to Liquidity Providers, while SushiSwap distributes 0.25% to all active providers and a 0.05% gets converted into SUSHI via SushiSwap and distributed to token holders.

SushiSwap Risks and Rewards

With SushiSwap, users can earn rewards being both active liquidity providers and token holder. Holding SUSHI, they can control the protocol and decide on its future. Further, SushiSwap does not require a Know Your Customer (KYC) procedure. Therefore, anyone can trade in the liquidity pools without having to show their credentials to the protocol.

Despite the benefits of SushiSwap, there are some risks coming with the project. First of all, SushiSwap has been criticized for absence of audit. Besides, the anonymous team behind the project does not provide security for most users. Most DeFi projects have suffered flash loan attacks and other kinds of hacks. Even the most secured and audited DeFi protocols have been subject to these types of exploitations.

Anyway, SushiSwap has become a role model for other DeFi protocols that will continue to appear in the future. Although they could dilute the liquidity and the value offered by protocols, they could also improve their tokens and the governance models to give more power to the community.

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FAQ

What is SushiSwap?

Sushiswap can be defined as a relatively new DeFi protocol. In essence, SushiSwap is an Ethereum-based decentralized exchange (DEX) with an Automated Market Making system (AMM). Just like regular market makers add liquidity to both sellers and buyers, an AMM adds liquidity from several digital assets in smart contracts called liquidity pools.

You can compare SushiSwap to Uniswap, usually referred to as the pioneer of the DeFi space. However, there are some differences. At first, UniSwap was created as an open-source protocol that allowed external developers to hard-fork the code. Then, SushiSwap came in as a hard-fork from UniSwap. It took UniSwap’s core system and redesigned it to be more community-oriented, with a greater overall performance in contrast with UniSwap. with improved functions and introducing the Sushi Token.

To sum up, SushiSwap is a community-oriented system where all SUSHI token holders are allowed to participate in decision making in all aspects of the project. 

Who created SushiSwap?

SushiSwap is run by Chef Nomi, and it is unclear whether it is a person or a group of developers, similar to Satoshi Nakamoto’s case. Other people involved in SushiSwap are known as “SushiSwap” and “0xMaki”. They currently run the protocol and all business operations.

The only identified person behind SushiSwap is Sam Bankman-Fried, a famous crypto whale and the founder of quant trading firm Alameda Research, exchange FTX and DeFi protocol Serum.

What is SUSHI token?

SUSHI is the native token of SushiSwap. You can buy SUSHI on almost any exchange, like Binance or Huobi. These tokens are rewarded for liquidity mining. Once you receive a certain number of tokens, you’re entitled to a vote per every token you hold and have governance in the platform. Besides, you’re entitled to a certain percentage of the protocol’s trading fees.

What are the SushiSwap Liquidity Pools?

In SushiSwap, you can become a Liquidity Provider and own a percent of a liquidity pool, similar to an aliquot part of a trust. Any provider can withdraw tokens to sell them.

SushiSwap offers seven available pools for traders. Trading pairs can change if the community wants them to through voting. These pairs started in the 10,750,000 block of Ethereum, and are reduced after 100,000 blocks, or every two weeks.  If you want to deposit your UniSwap LP tokens of these pairs in SushiSwap contracts, then you’ll have the options below. 

  • Centralised Finance (CeF) Stablecoins. Include USDT/ETH, USDC/ETH.
  • DeFi Stablecoins. Include DAI/ETH, sUSD/ETH.
  • Lending Protocols. IncludeCOMP/ETH, LEND/ETH.
  • Mixed Assets (Synthetic assets). SNX/ETH, UMA/ETH.
  • Oracles. LINK/ETH, BAND/ETH
  • Ponzinomics (Ponzi multi-marketing mechanisms used in DeFi) AMPL/ETH, YFI/ETH.
  • Delicacy Pool. SUSHI/ETH. Notably, this supply pool has twice the reward amount.

What is the Difference Between SushiSwap and Uniswap?

The key difference between SushiSwap and UniSwap is the creation of the SUSHI token, the rest is a redesign and improvement of UniSwap’s functions, like token distribution, reward system, and a community-oriented protocol, where users have control over it.

What is Special About SushiSwap?

SushiSwap has enhanced several features from UniSwap making the protocol better for DeFi users. Here are some aspects to compare in SushiSwap and UniSwap:

  • Liquidity. Like most DeFi protocols today, the UniSwap system rewards its providers with trading fees when they stake their tokens. This occurs when they are actively providing liquidity to that pool. But once they withdrew their percent, they do not earn rewards. Meanwhile, in SushiSwap, you can become a Liquidity Provider, which means you own a certain percent of that pool, similar to an aliquot part of a trust. Any provider can withdraw s tokens to sell them.
  • Protocol’s fees. SushiSwap allows users to continue to earn the protocol’s fee, accrued in SUSHI. Even if a liquidity provider decides to retire from the provision, he can still earn rewards from the SushiSwap’s protocol. This why SushiSwap had an outstanding DeFi boom on the first day, becoming one of the hottest investments for DeFi users. In addition, it provided a better overall performance in comparison with UniSwap.
  • Reward System. UniSwap distributes 0.3% of all trading fees to Liquidity Providers, while SushiSwap distributes 0.25% to all active providers and a 0.05% gets converted into SUSHI via SushiSwap and distributed to token holders.
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