Sushiswap is a decentralized platform that was created as a fork of the well-known Uniswap. As a result, we recognize many similarities with Uniswap such as, for example, the way automatic market makers (AMMs) are used to keep prices in proportion.
Users can farm a yield in several other ways besides being rewarded for providing liquidity. Sushiswap offers the option to strike one’s own Sushi token, go out and borrow tokens, or participate in various yield farming programs.
We will take a closer look at the project with the aim of understanding SushiSwap’s ambitions. This article is not intended for promotion.
How is the Sushiswap protocol structured?
Sushiswap allows its users to trade through a peer-to-peer system, where one will use liquidity provided by other users. In this way, anyone who wants to trade or launch a new project can easily find liquidity.
Like many other decentralized protocols, Sushiswap consists of several liquidity pools managed by automated market makers (AMMs). This formula allows the ratio between the two tokens to be maintained. Users using the exchange will also trade with these AMMs.
To attract liquidity in the startup phase, Sushiswap conducted a controversial “vampire attack. The video below shows what this vampire attack is exactly.
The governance token, Sushi was launched in August 2020 and has several purposes.
The Sushi token will serve as;
Reward: In the form of incentives, liquidity providers will be lured into different Sushi pools. Payouts for sushi liquidity pool (SLP) token holders will be made in Sushi tokens.
Voting Rights: The number of Sushi a person owns will determine how much voting rights they have on ballots or proposals. These relate to e.g.; payout of LPs to future decisions of the platform.
The Sushi token has a hardcap of 250 million tokens that will be reached in November 2023. Currently, approximately 20 Sushi tokens are created per block.
The Sushiswap team consists of several anonymous avatars who maintain the platform behind the scenes. While major structural changes are voted on by the community, daily activities and overall strategies are ultimately decided by team lead 0xMaki and his core team.
For a detailed explanation of how the Sushiswap protocol works, please refer to the sushi.com information page.
Sushiswap users earn income in the following ways.
Yield Farming LP: Users who provide liquidity receive a portion of the profit that results from each transaction within the liquidity pool. The more volume, the more profit for LPs. Payout happens according to the share of liquidity you provide.
SLP/SUSHI Strike: Users can lock their Suhsi liquidity pool tokens in exchange for additional rewards. The same can be done with Sushi tokens.
Lending: By making tokens available to other users, one can earn an interest that will vary by token.
oSUSHI: Like Curve’s veCRV, Sushiswap is going to encourage its token holders to lock in Sushi for a certain amount of time. Doing so will remove Sushi tokens from circulation and earn users an additional APY boost.
In development and not live yet!
Sushiswap allows you to swap tokens in a decentralized way. This means that no one needs to create an account and the coins will never be fixed on the platform. Everyone who swaps will trade with smart contracts and will pay a small fee.
This fee will be divided proportionally among the users who provide liquidity to the pool.
If one wants to provide liquidity one will have to provide an equal amount of tokens. In the pool of ETH/SUSHI users will provide half ETH and half SUSHI.
In return, they will receive Sushiswap liquidity pool tokens (SLP). This token will serve as evidence of the liquidity provided and their share of the pool.
Sushiswap offers a yield to users who stake their Sushi tokens in the SushiBar. When one stakes Sushi they will receive xSUSHI in return, which entitles them to a portion of the platform’s 0.05% swap fees.
2/3rds of the rewards coming from xSUSHI will be locked in for 6 months. This period will be necessary to ensure that the SushiBar is not abused by whales, who seek a quick return with large amounts of Sushi.
xSUSHI holders are able to be doubly rewarded when they redeem their tokens for MEOWSHI. The value of this is equivalent to 100K MEOW tokens for each xSUSHI token.
The exchanged xSUSHI will be automatically reinvested in the BentoBox and will generate a return for the user.
Onsen is the liquidity provider reward system that awards Sushi tokens to users who deploy their Sushi Liquidity Pool tokens (SLP). By giving additional rewards, the platform can encourage users to provide liquidity to newer projects. These will be selected based on supply and demand.
Projects will be able to find liquidity faster due to the additional rewards that Sushiswap can provide. In addition, the increase in trading volume will cause the value of xSUSHI to rise and consequently xSUSHI token holders will earn more.
The BentoBox is the basis of several Sushiswap products, of which for now only the loan market Kashi. The other products are still under development.
It is a kind of digital vault that pays out a return with users’ deposited funds. The BentoBox will follow automatic strategies to create returns at low risk. Some examples are Sushi strike, use flashloans etc,….
Kashi is Sushiswap’s proprietary lending platform. It allows users to lend and borrow various DeFi tokens, coins and cryptocurrencies based on one’s own collateral.
Because the lending markets on Kashi are separate from each other, one could open loans with borrowed money, which in effect amounts to leverage. In addition, the failure of high risk tokens would not cause the entire protocol to be compromised.
Minimal initial Sushiwap offering or MISO is the token launchpad of Sushiswap. MISO is a place where developers and communities can find each other. Developers of a project only need to choose from several ‘ingredients’ and MISO does the rest.
Tokens: What type of token, supply standard,….
Market: How should the token be launched (Crowdsale, Dutch & Batch auction)?
Liquidity: How does one want to attract liquidity for the project?
The total locked value that is fixed on the Sushi platform hovers around $4 billion. Sushiswap is present on almost every blockchain and has deployed on Ethereum, Polygon, Fantom, OKEx, HECO, BSC, xDai, Harmony, Avalanche, Celo, Palm. We can only conclude that Sushiswap is settling deeper and deeper into the DeFi world.
In addition to providing a decentralized exchange, Sushiswap proves itself by winning outside the SMP space. It does this with its wide range of financial products including its latest product, MISO, which serves as a token launch platform. All of these innovative changes could potentially upgrade Sushi token.
Also, the support of the cryptocurrency community like that of the popular SBF is a reason to assume that the platform is resistant to the dangers and risks of DeFi.
Sushiswap is a decentralized platform that offers various earning models such as yield farming, token strike, loan markets, margin trading and its innovative token launchpad. The ways one can earn passive income with Sushiswap are endless, as are the ambitions of the platform.
Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.