What is SushiSwap (SUSHI)

Sushiswap is a multichain decentralized exchange (DEX) that was originally launched on the Ethereum blockchain. On Sushiswap, users can swap the tokens they hold with other tokens on the DEX. For example, you can swap your USDT tokens for some Bitcoin (BTC) or Ether (ETH). 

Sushiswap also lets users, or "liquidity providers," deposit their assets into liquidity pools in exchange for rewards. The decentralized platform also supports other features such as lending and borrowing of assets, margin trading, and even features an NFT marketplace.

Sushiswap is also an automated market maker (AMM) protocol. This means that transactions on Sushiswap are carried out automatically and do not require a seller. So how does Sushiswap work exactly? Sushiswap "acts" as the seller and provides assets to buyers from its pool of funds, called a liquidity pool. This enables trades to be carried out instantly at any time, so long as there is sufficient liquidity in its pools.

What is Sushi: Key Points

1. Sushiswap is a decentralized exchange (DEX). It enables people to trade cryptocurrencies easily, quickly, and cheaply without an intermediary. 

1. Although initially launched on the Ethereum blockchain, Sushiswap has expanded to other blockchains. Sushiswap runs on fifteen different blockchains now, according to DefiLlama. 

1. The SUSHI token is the native token of the Sushiswap platform. It is used to pay out rewards to liquidity providers and stakers. It is also used in the governance of the platform. 

1. The founders of Sushiswap are anonymous but the project is now run by nine individuals who were voted in by the Sushiswap community.

Sushiswap Lead Team (Image source: beincrypto)

Where is SUSHI Used?

One of the most distinctive features of Sushiswap is its native SUSHI token. The SUSHI token is an integral part of the entire Sushiswap eco-system. When Sushiswap launched, the big difference between it and other decentralized exchanges was that it had its own unique token named SUSHI. The SUSHI token has a variety of uses and is very important to the functioning of the Sushiswap platform.

Here’s everything you need to know about SUSHI -  SUSHI is an Ethereum token built on the ERC-20 token standard. The maximum supply of SUSHI tokens is capped at 250 million. At the time of writing this, there are about 127 million SUSHI tokens in circulation, slightly more than half of the maximum amount. Here are ways in which SUSHI can be used:

Earning Interest 

You can earn passive income on your SUSHI tokens in the form of interest with OKX Earn. OKX Earn is an investment service that lets you put your SUSHI tokens and other cryptocurrency assets to work without losing ownership or access to them.

Providing Liquidity With SUSHI

Sushiswap allows users to deposit their cryptocurrency assets into a liquidity pool to earn rewards passively. When you provide liquidity to Sushiswap, you receive SLP (Sushiswap liquidity pool) tokens representing your share in the liquidity pool. These SLP tokens can be used to earn SUSHI tokens in a process known as "farming". To farm SUSHI, you can simply head over to the farms on Sushiswap, choose one of the farms, and deposit your SLP tokens to begin earning rewards in SUSHI. 

You can then further stake your SUSHI to earn xSUSHI, a different asset that lets users generate yield even without providing any liquidity.

Voting With SUSHI

xSUSHI also enables holders to participate in the governance of the Sushiswap platform. One of the most significant developments on Sushiswap, when it was launched, was that the SUSHI token holders got to decide the future of the platform. This model was originally one of the reasons why Sushiswap quickly became very popular. A lot of decentralized exchanges now give tokens that represent voting rights and let token holders decide the future of the platform.

Anyone can put forward a proposal for a development on Sushiswap. These proposals are known as Sushiswap Improvement Proposals (SIP). However, only xSUSHI holders can vote on these proposals, and only the proposals that win a majority of votes are implemented. Proposals need at least 5 million votes in order to pass.

A good example of a project that was implemented after voting is the Shoyu NFT marketplace, which was proposed by a member of the Sushiswap developer team known as LevX. 

What is Sushiswap: History

Sushiswap was launched in August 2020 by two anonymous developers known as Chef Nomi and OxMaki. Sushiswap was established as a fork of Uniswap, which was one of the first decentralized exchanges on Ethereum and the biggest at the time, according to Bloomberg. A fork occurs when developers take the code of an existing project and tweak it a little to create a new, similar project. 

On its launch, Sushiswap performed what is now known as a "vampire attack" on Uniswap to drain funds and move them to Sushiswap. The vampire attack was successful, and within days there was $810 million in total funds on Sushiswap, which meant that Sushiswap did not have to raise money from investors at launch.

The project ran into some stormy waters early on when one of the anonymous co-founders known as Chef Nomi moved $14 million worth of tokens out of the project. This caused many people to lose trust in Sushiswap and could have been the end of the Sushiswap project. 

However, Chef Nomi soon returned the funds, issued an apology to the Sushiswap community, and handed over control of the project to Sam Bankman-Fried. Chef Nomi’s actions restored faith in the project and enabled it to keep growing following his departure.

SUSHI Tokenomics

SUSHI has a supply cap of 250 million tokens. When the supply of SUSHI reaches 250 million, liquidity mining will cease and no new SUSHI tokens will be created. 

Staking SUSHI takes it out of circulation. As more people stake their SUSHI tokens to get the rewards of holding xSUSHI, by design, the amount of SUSHI in circulation decreases. 

Secondly, 10% of all the SUSHI tokens created go to the development team for the maintenance of the Sushiswap project. This is used to compensate the developers, designers, and other professionals who work on building Sushiswap and its various products. More information about SUSHI's tokenomics can be found here.

How is SUSHI Created?

The SUSHI token is created through a process known as liquidity mining. Liquidity mining refers to the process of providing liquidity to a liquidity pool in exchange for rewards. In the case of Sushiswap, the rewards are paid out in SUSHI tokens, and new SUSHI tokens are created according to how much funds are locked up in Sushiswap’s liquidity pools.

To unlock or mine SUSHI, you have to own some liquidity provider tokens from providing liquidity to one of the pools on Sushiswap. Those liquidity provider tokens (known as SLP) can then be used to farm or mine SUSHI tokens by depositing them in one of the farms on Sushiswap. Once deposited, rewards are paid out in SUSHI depending on the percentage of liquidity provided.

Sushiswap’s Competitors

Sushiswap’s biggest competitor is Uniswap, and as of now, Uniswap is the bigger of the two decentralized exchanges when compared by their Total Value Locked (TVL). The TVL indicates the total value of assets locked up in a protocol. At the time of writing, according to Defillama, which tracks the TVL of several DeFi platforms, Uniswap has a TVL of $5.9 billion, compared to Sushiswap’s TVL of $948 million. 

Sushiswap, however, has plans to get bigger in the future. Since its inception, it has gone on to add more services and has slowly become much more than just a decentralized exchange. Right now, Sushiswap supports activities such as lending, borrowing, margin trading, and more. Even an NFT platform, Shoyu, is now operational on the platform.

Sushiswap’s Product Offerings (Image Source: Sushi.com)

Sushiswap is also in the process of extending its services on other blockchains. The Sushiswap team recently announced that Sushiswap’s services will soon be available on the Optimism blockchain as well. This is the latest in a series of rollouts that have seen the Sushiswap DEX being integrated on nine blockchains, including Harmony, Avalanche, and Gnosis.

As it expands its services and deploys on more blockchains, Sushiswap now faces much more competition than just Uniswap. The expansion of its offerings to lending and borrowing means that it has to now compete with DeFi services like Aave and Compound. In addition to this, its recent expansion to the NFT space pits it against the likes of OpenSea and Rarible. 

Sushiswap's Partners and Investors

Unlike a lot of projects in the cryptocurrency space, Sushiswap did not raise any funding from investors in order to launch, and they didn’t have any subsequent fundraising either. 

At launch, Sushiswap executed a vampire attack on Uniswap in order to acquire some of its users. The protocol basically offered huge rewards to the first set of people to provide their Uniswap LP tokens on the Sushiswap exchange.

This ensured that there were adequate funds in the Sushiswap exchange from the start. And as 10% of all SUSHI tokens are allocated to the development team for the maintenance of Sushiswap, there has been no need to raise additional funding. 

Nevertheless, Sushiswap has announced partnerships with some of the most popular players in the crypto space. These partnerships are aimed at enabling Sushiswap to integrate with other projects, a move that could potentially expand Sushiswap’s user base and lead to greater adoption of the platform. The most popular partnerships involve Sushiswap launching on other blockchains. Sushiswap's partners include blockchains like Harmony and Kava, as well as other DeFi services like Aave and Yearn.finance.

Image source: Coin98insights

Sushiswap and Yearn.finance announced that they would be going through with a merger in December 2020. The merger saw Sushiswap and Yearn.finance integrate their products on each other's platforms.

Sushiswap’s SWOT Analysis

Strengths

According to DefiLlama, Sushiswap is one of the largest decentralized exchanges (DEXes) in the world. It has carved out a sizable user base for itself with several innovative features. Sushiswap also intends to further expand its offerings to include some highly sought-after ones like margin trading.

Image source: Block49 Capital on Twitter

Opportunities

So far, one of Sushiswap’s main strategies has been to expand its services to different blockchains, such as Fantom, Polygon, and others, as aggressively as possible to capture underserved markets. The expansion to multiple blockchain networks offers Sushiswap the opportunity to grow its userbase even further. Sushiswap has also been expanding its offerings beyond just a DEX, to include services such as lending and an NFT marketplace.

Image source: Block49 Capital on Twitter

Weaknesses

One of Sushiswap's greatest weaknesses is its high fees, a problem that virtually all DeFi protocols built on the Ethereum blockchain face. It has also been criticized for having security issues, which have once led it to suffer a $3 million hack, as well as governance issues.

Threats

The threats to Sushiswap, like those to other decentralized exchanges, are mostly external. DeFi protocols tend to be linked with one another, and failure of one platform can have devastating effects on others. The recent collapse of Terra is a good example of this. Other threats include unfavorable legislative policies and attacks from hackers.

Sushiswap’s Roadmap

Since its launch, Sushiswap has continued to develop, innovate, and launch products at a rapid pace. This is all in a bid to retain its status as an innovative leader in DeFi. Some of the most recent updates include the launch of BentoBox, and the incorporation of cross-chain swaps as Sushiswap expands to the likes of THORchain and Moonbeam. More innovations in that direction are expected to follow.

Sushiswap Community Updates, News, and Highlights

Governance issues and Infighting

Sushiswap has been undergoing a shakeup recently due to disagreements within the leadership team as to the future of the project. The infighting eventually led to the resignation of the CTO, Joseph Delong, as well as several developers and other staff.

Following the departures, the leaders still in place have announced that they are focused on moving the project forward as transparently as possible. This includes the formation of a Sushi decentralized autonomous organization, or DAO, which will oversee legal affairs, and the creation of a committee to oversee financial accountability efforts such as fair compensation for employees.

The new plans will give the Sushiswap community more oversight and control over the project and enable it to remain as decentralized as ever while pursuing its goals. The move has also been welcomed by the Sushiswap community. 

Donation to No Kid Hungry

In April 2021, Sushiswap made a fifty thousand dollar donation to charity organization No Kid Hungry, in bitcoin, ether, and a variety of other cryptocurrencies through the donation platform, The Giving Block. The move was said to further promote cryptocurrency use as a means of making donations.

Daniel Sestagalli's announcement

In December 2021, prominent Avalanche developer, Daniel Sestagalli, who has built several successful decentralized platforms of his own, took to the Sushiswap governance forum to express his desire to join Suhiswap's core development team and lay out his vision for the platform. SUSHI reacted positively to the news, jumping as high as 10% shortly after.

About Sushiswap - Products and Services

Since its launch as a decentralized exchange on the Ethereum blockchain, Sushiswap has always been keen on expanding its services. The last two years have seen the rollout of four notable products, which are Bentobox, Kashi, Onsen, and MISO. 

Onsen helps new projects in the Sushiswap ecosystem get off the ground by offering SUSHI tokens to the project's users as an extra incentive for using the project. So, when you provide liquidity to a project listed on Onsen, you earn rewards from that project as well as SUSHI tokens.

MISO is a platform for projects looking to design their own token on the Sushiswap platform. MISO is a set of smart contracts that can help project developers create their new token and offer it to the public seamlessly. 

Bentobox is a token vault that can support decentralized applications. Essentially, Bentobox is like a decentralized version of an app store like Google Play. Tokens can be deposited into Bentobox, and the applications built on Bentobox can then use those tokens to carry out trading strategies and generate profits for the Bentobox liquidity providers. 

Kashi is the first decentralized application built on Bentobox. It is a lending and borrowing platform that allows for low-risk trades by isolating the markets. What this means is that instead of treating all the liquidity on Kashi as one big market, individual trading pairs are isolated as their own specific market. So, for example, the USDT–ETH pool is one market, and the USDC–ETH pool is another market. Since both markets are isolated, risks in one market do not affect the other. 

Where to buy SUSHI

You can buy SUSHI on a popular centralized exchange like OKX with your local currency and preferred payment method among several options, such as credit or debit card, or bank transfer. You can also choose to trade other cryptocurrencies you already own for SUSHI on OKX.

How to Store SUSHI

To store your SUSHI tokens, you need a wallet. There are different types of wallets, from those provided by centralized exchanges to hardware wallets, that you can use to store your SUSHI tokens.

On a centralized exchange

To store your SUSHI on a centralized exchange such as OKX, all you need to do is set up an OKX account and you are good to go. Besides SUSHI, you can also store a wide range of other cryptocurrencies with only one OKX wallet, a feature that makes it very convenient. 

In a software wallet

Software wallets similarly require just a setup to start running and also offer the ability to store different cryptocurrencies. However, they can only store currencies compatible with the blockchain for which the wallet was built. So you can only store your SUSHI in Ethereum-compatible wallets like Metsmask and Trust wallet, for example.

In a hardware wallet

Hardware wallets like Ledger are physical devices that enable you to store cryptocurrencies. They are often considered the safest type of wallet but do not offer the convenience that platforms like OKX and software wallets like Metamask do.

How to Stake SUSHI

Sushiswaps SLP tokens can be staked to earn SUSHI. SLP holders can stake their tokens in the Sushiswap farm and receive SUSHI tokens in return for as long as their SLP tokens remain in the farm. To earn SUSHI, just head over to the Farm page on the Sushiswap website and deposit some SLP tokens into any farm of your choice. You will automatically begin earning SUSHI tokens, which you can then sell for a profit or further stake to earn a different token, xSUSHI.

Sushiswap Farms (Image source: Sushi.com)

So what is xSUSHI? And how does it work?

When you stake your SUSHI tokens, you do so in the SushiBar, and then get some xSUSHI tokens in return. xSUSHI tokens come with their own unique perks. People who hold xSUSHI tokens receive a part of the fees collected from every trade or exchange carried out on Sushiswap. 0.05% of all the fees collected are distributed to xSUSHI token holders in proportion to how much xSUSHI they own. 

Image source:  Coin98insights

FAQs

Where can I buy xSUSHI tokens?

Just like you can buy SUSHI tokens, you can also buy xSUSHI tokens. However, unlike SUSHI tokens, xSUSHI can only be purchased on a decentralized exchange like Sushiswap. Just like buying SUSHI, all you need to do is to fund your wallet with a cryptocurrency of your choice. You can then connect it to a decentralized exchange and proceed to swap your tokens for some xSUSHI tokens. 

Are there any requirements for providing liquidity and earning on Sushiswap?

No. One of the core tenets of the decentralized world is that everything is permissionless. This means that you can start providing liquidity or staking SUSHI tokens without having to pass any checks. There is no verification process, and you don't need to provide any personal data. All you need is a wallet and some cryptocurrency, and you are good to go. 

Can I mine SUSHI?

Yes, you can. The mining process is referred to as "farming" and involves depositing your liquidity provider tokens into a SUSHI farm. Once deposited, you will continue to earn SUSHI for as long as your tokens are in the farm.

Do I have to provide liquidity to earn interest with xSUSHI?

No, you don’t. One interesting thing about Sushiswap is that you don’t necessarily have to provide liquidity to earn interest. All xSUSHI holders earn interest whether they provide liquidity or not.

Can I sell my xSUSHI for a profit?

Yes, you can. You do not have to hold on to your xSUSHI tokens if you do not want to. If you wish, you can sell them for a profit just like SUSHI tokens.