What Is SushiSwap (SUSHI)?
The SushiSwap protocol is a hard fork of Uniswap, one of the most popular peer-to-peer trading apps for Ethereum coins in the decentralized finance (DeFi) sector. With a daily average trade volume of over $575 million, Uniswap was and still is Ethereum's prevailing crypto swapping dApp. SushiSwap was founded by an anonymous developer named Chef Nomi. The idea that fueled the hard fork was to further build on Uniswap’s core design while adding community-oriented features and benefits to the users and developers involved in building the platform. The governance token of SushiSwap is called “SUSHI”, this idea carries on the tradition of another meme crypto, Dogecoin.
Advantages of SUSHI
- Wide support from major exchanges. Since the launch of SushiSwap, its token has been widely endorsed by some major DeFi names: Binance and Huobi listed the token within days of its launch;
- Has been audited. While the project's first audit revealed some issues, steps were promptly taken to fix them;
- Perks for loyal users. SUSHI supporters are paid a share of SushiSwap’s trading fees. The platform’s liquidity providers (LPs) are awarded free SUSHI for their support;
- Fair playing field. The decentralized, community-ruled, and anonymous platform offers a potentially fair playing field for yield farmers and traders.
Disadvantages of SUSHI
- Questionable ethics. SushiSwap’s move of cloning Uniswap and building their project into a solid competitor for the original platform left their former teammates understandably frustrated. The decision to copy Uniswap in its entirety was in no way illegal but did affect SushiSwap’s reputation in more ways than one;
- Anonymous development team. With SushiSwap run by anonymous developers whilst being unaudited, depositing funds into their smart contract may prove to be a significant risk;
- Controversy. In early September 2020, Chef Nomi cashed out a fourth of the project's developer funding pool – over $13 million – without any prior notice. Understandably, the news shook the crypto community and resulted in scam allegations and a notable drop in the price of SUSHI. Several days later, Chef Nomi forwarded the keys to the project to fellow SushiSwap stakeholder Sam Bankman-Fried who is in charge of the project to date.
How Does SushiSwap work?
The main difference between SushiSwap and its predecessor is that the former sends all profits back to the community that maintains and services it, while the latter sends its proceeds to a select group of investors instead. SushiSwap's proposed objective is to be fully community-regulated, with all power situated in the hands of SUSHI owners who contribute to the liquidity of the various SUSHI pools. As previously mentioned, SUSHI liquidity providers are paid a portion of the platform’s fees derived from trading. SushiSwap’s LPs are given tokens as payment for their support of the initiative. LPs are paid bigger shares of SUSHI in hopes of luring them away from Uniswap while raising enough liquidity to contend with the original project. An additional portion of freshly-issued SUSHI is set aside for growing the project. The community then votes on the grants they want to approve and the amounts they would like to transfer to volunteering developers. However, SushiSwap's leadership still makes most of the final judgments and is responsible for the biggest share of the work.
How to Farm SUSHI Token?
SUSHI is created through the process of liquidity farming: tokens are granted to users who provide financing to SushiSwap through certain Uniswap pools.
4 Steps to Farm SUSHI
- Users purchase SUSHI for ETH through an exchange platform of their choice (Uniswap, SwapSpace, Binance, and Huobi work best).
- Users can then use their crypto to provide liquidity to the SUSHI/ETH. This is done by supplying an amount of SUSHI along with an equivalent volume of ETH to the pool. The user is then granted LP Tokens.
- To encourage the process, the SUSHI/ETH pool dishes out double rewards with more pools in the works to be added to the distribution list through community voting.
- After this, users can transfer their LP tokens into the SushiSwap staking contracts to start mining SUSHI.
The user can choose to harvest new SUSHI or remove their LP tokens off the platform at any point in time.
How to Store SUSHI?
SUSHI is an ERC-20 token and can be stored on any wallet that is compatible with these tokens. Consider using a hardware wallet to store your SUSHI: a hardware wallet is a cryptocurrency wallet that will keep your private keys (a critical piece to authorizing outgoing transactions) on a secure hardware device. These are considered to be safer than online or app wallets and are reliable enough to use even with devices that you don’t necessarily trust. And if you want to get rid of your SUSHI in exchange for another crypto — our cryptocurrency exchange aggregator is here for you.
Conclusion
If nothing else, SushiSwap is an impressive and ambitious experiment that builds on an already widely successful DeFi protocol – Uniswap. The added community governance, high rewards, and perks for supporters are what sets it apart from the project it originally stemmed from.
On the other hand, the developer of SUSHI had implicated himself in serious controversy by selling off all of his SUSHI tokens for ETH before jumping ship. Users can never feel fully safe investing in and supporting an uncontrolled and volatile project. Are SUSHI farmers in it for a fast profit? Will the project garner significant solvency to outgrow Uniswap? Only time will tell whether or not the SUSHI experiment is a success.
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