SushiSwap is the envious sibling of Uniswap. A DEX arms race ensued after Uniswap sparked interest in decentralized exchanges (DEXs). One of the entrants in the competition was a company called SushiSwap.
Why did SushiSwap explode in popularity, and how did it stack up against Uniswap? Also, do you think you have what it takes to be a Sushi “chef”? Read this to find out!
To grasp SushiSwap, one must first examine Uniswap. Both DEXs reveal their functions by their names. In November 2018, the Vitalik Buterin-proposed universal token swapping protocol Uniswap went live. Siemens engineer Hayden Adams implemented Uniswap.
Due to the public nature of the protocol, anyone could publish their own coins on Ethereum in the form of ERC-20 compatible tokens. With liquidity provided by users, token pairings might be traded without the need for a central bank or clearing house to provide funds.
What Is SushiSwap (SUSHI)?
The cryptocurrency SushiSwap (SUSHI) is a good illustration of an automated market maker (AMM). AMMs, or autonomous multilateral markets, are decentralized exchanges that use smart contracts to generate markets for any given pair of tokens and are gaining traction among cryptocurrency users.
In September of 2020, SushiSwap was released as a fork of Uniswap, the AMM that has come to represent the entire decentralized finance (DeFi) paradigm and the trading boom in DeFi tokens that has accompanied it.
SushiSwap’s goal is to promote competition in the AMM industry by introducing novel elements, such as enhanced rewards for network participants via its native currency, SUSHI.
Who Created SushiSwap?
Chef Nomi, a fictitious persona, is credited for creating SushiSwap. Chef Nomi’s backstory and the reasons for splitting out from Uniswap are a mystery.
Two additional fictitious entities, sushiswap and 0xMaki (or just Maki) are also credited with founding the initiative. They are responsible for running SushiSwap, including coding, product creation, and business management.
Sam Bankman-Fried, CEO of the derivatives exchange FTX, and the quantitative trading firm Alameda Research has lately taken effective control of SushiSwap.
Bankman-Fried is a frequent media interviewee and prominent voice in the cryptocurrency sector.
What Makes SushiSwap Unique?
A primary function of SushiSwap is an AMM, allowing for automated trading liquidity between any two cryptocurrencies.
DeFi traders and connected companies hoping to capitalize on the surge in project tokens and generate liquidity are its primary target demographic.
By eliminating the need for order books, AMMs can circumvent the limitations of decentralized markets, such as liquidity constraints.
SushiSwap’s goal is to enhance the features of its parent company, Uniswap, by giving its consumers a larger say in the company’s direction and operations.
Whenever a transaction occurs in one of the platform’s liquidity pools, the platform takes a 0.3% share and uses that money to pay out rewards to users in the form of its native token, SUSHI. Users of SUSHI are also granted voting privileges.
How Sushiswap Work
SushiSwap is an example of a decentralized trading platform that employs an automated market maker (AMM). With SushiSwap’s AMM, trading is conducted directly between buyers and sellers, eliminating the need for an order book or an intermediary.
Because trades are made with liquidity pools — money of a particular token deposited by users that leverage smart contracts to offer liquidity for trades — AMMs like the one utilized by SushiSwap don’t require an intermediary or order book.
Since SushiSwap’s debut in 2020, the project has refined and released additional DeFi capabilities, expanding the scope of the platform beyond its original focus on traders. The SushiSwap “menu” has grown to include the ability to farm for produce, stake, and lend/borrow money, all from the same platform.
Getting started with SushiSwap
You’ll need an Ethereum-based wallet to use SushiSwap. There are several kinds on the market, and some of the more popular ones include:
- Coinbase Wallet
- Trust Wallet
When ready, connect your wallet to the decentralized SushiSwap app (dapp). Though not essential to start, you could also get SUSHI tokens either utilizing the DEX or centralized exchanges like Binance, FTX, or Coinbase.
A look into SushiSwap’s potential in the future
SushiSwap may be absorbed by a larger initiative or fall further in the rankings if the decentralized exchange business consolidates.
Nonetheless, SushiSwap has the potential for development if its user base remains committed to its original vision of the service as a growing exchange that allows users to quickly and simply trade practically any cryptocurrency at a low, competitive rate.
What Is Decentralized Crypto Exchange?
Users of a DEX (decentralized exchange) can buy and sell cryptocurrency directly with one another, eliminating the requirement for a trusted third party or custodian.
These procedures become possible because of smart contracts, which are legally binding and automatically carry out the terms of their agreement. As far as decentralized exchanges go, Uniswap and SushiSwap are the two that have the most users.
So, how does SushiSwap vary from Uniswap?
SushiSwap is similar to Uniswap but has unique features and pricing. One example is Uniswap, which offers three different cost tiers 0.05%, 0.3%, and 1%.
A 0.05% fee is possible for stablecoin pairs, a 0.3% fee for popular pairs like ETH/USDT, and a 1% fee for pairs with newer tokens. However, on SushiSwap, all business teams pay only 0.3%, dish token holders get 0.05%, and liquidity providers get 0.25%.
However, SushiSwap now pays users additional Sushi tokens for staking newer tokens, but Uniswap no longer does so. According to data compiled by CoinMarketCap, SushiSwap is the nineteenth busiest cryptocurrency exchange. It’s far smaller than top DEX Uniswap, which handles more than ten times the daily trade volume.
What Is Ethereum?
Ethereum is a worldwide virtual machine driven by blockchain technology. Its native cryptocurrency, ether (or ETH for short), is its most well-known product. Ethereum network participants use ETH to pay for work done on the blockchain. Ethereum is built to be extensible, flexible, secure, and decentralized. To revolutionize a wide range of industries and our day-to-day lives, it is the blockchain of choice for the companies and individuals inventing the technology that uses it.
The Bottom Line
SushiSwap leaders, community members, and cryptocurrency market forces will decide the future of Sushi. Only time will tell if that means going “to the moon,” as crypto enthusiasts say, or plummeting.