What Is SushiSwap (SUSHI)?

SushiSwap is a decentralized exchange (DEX) equipped with its own custom automated market maker (AMM) smart contracts. Created by Chef Nomi, SushiSwap runs on the Ethereum blockchain.

Decentralized exchanges offer a space for peer-to-peer transactions of cryptocurrencies to take place securely without the need for an intermediary, and being equipped with its own AMM means that a pricing algorithm is used to price assets instead of using an order book like traditional exchanges.

SushiSwap is a community-run DeFi project that aims to better align incentives for network participants through revenue-sharing and community-driven network effects.

Vampire Sushi

SushiSwap emerged as a fork of Uniswap, another AMM DEX which rose to become one of the most popular DeFi projects by volume in 2020. Its code was open-source and SushiSwap developers noticed that there were a number of improvements they could add.

To jump start the project, SushiSwap siphoned out users and liquidity from UniSwap by offering enhanced incentives to liquidity providers (LPs) – a controversial process known as a “vampire attack”. It was a successful tactic though, and saw over 90% of the liquidity of some Uniswap pools transferred to SushiSwap.

How Does SushiSwap Work?

SushiSwap enables the buying and selling of different cryptocurrencies between users. 0.3% in fees is charged for facilitating each swap, with 0.25% going to liquidity providers and 0.05% being converted to SUSHI and distributed to users holding the SUSHI token.

Anyone can add liquidity to SushiSwap’s pools by connecting their Ethereum wallet to their SushiSwap account. Users then lock both the pool’s assets into a smart contract in a 1:1 ratio. For example, if they wanted to add 2 ETH worth of liquidity to the SUSHI-ETH pool, they would first have to convert 1 ETH of it into SUSHI via the Swap function.

Users can also choose to  supply liquidity for trading pairs that don’t yet exist by simply providing the cryptocurrencies for the new pools. As the first LP, they get to set the initial exchange ratio (price), which will most likely correct itself as others add tokens to the pools through arbitrage.

Users supplying cryptocurrencies to a liquidity pool will receive SushiSwap Liquidity Provider tokens (SLP), which represent a proportional share of the pooled assets and allow users to reclaim their funds and any crypto fees earned whenever they wish.

Who Are the Founders of SushiSwap? (History of SushiSwap)

The foundation of SushiSwap occurred in August 2020 by the pseudonymous Chef Nomi and 0xMaki. Few details are known about the pair except their Twitter handles. The project attracted a lot of users straight after its launch and received a Binance listing on 1 September 2020.

CEO of derivatives exchange FTX and quantitative trading firm Alameda Research, Sam Bankman-Fried, took de facto control of SushiSwap on 6 September and carried out the migration of tokens from Uniswap to the SushiSwap platform on 9 September.

After gaining a Physics degree from MIT, Bankman-Fried joined quantitative trading firm Jane Street Capital, where he first encountered cryptocurrencies. Sam Bankman-Fried is now a familiar name in the crypto space and he first got involved in SushiSwap through its SUSHI token listing on the FTX derivatives exchange.

Too Many Chefs Spoil the Sushi

To ensure project sustainability, a development fund was set up that would receive 10% of all the SUSHI that hit the market. There were no locks placed on these funds or any sort of vesting schedules. On 5 September 2020 Chef Nomi surprised many people, including his co-founder 0xMaki, by removing his entire SUSHI stake from the Dev Fund and selling it for almost 18,000 ETH, worth over $13 million at the time.

Although Chef Nomi initially tried to justify his actions as something positive for the project, many users accused him of pulling an exit scam, and the loss of trust in him among the community led him to walk away from the project. This is when Sam Bankman-Fried stepped in to try and keep the community going. Chef Nomi transferred control of the project to Bankman-Fried the following day, who placed it into a multi-signature wallet (with 9 signers voted for by SushiSwap users) that would make it decentralized.

That wasn’t quite the end of the saga though – two days after the migration, Chef Nomi returned the nearly $14 million to the Dev Fund account and apologized to SushiSwap users.

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What Makes SushiSwap Unique?

As an automated market maker (AMM), SushiSwap differentiates itself from traditional decentralized exchanges by getting rid of order books while still avoiding liquidity issues. Although there are many similarities to its parent AMM Uniswap and others, SushiSwap made some important changes to increase the impact network participants could have on its future.

Some of Uniswap’s users weren’t content with what they considered to be a low level of fees for liquidity providers. There was also criticism about the involvement of venture capitalists in the platform and the lack of decentralization in UniSwap’s governance.

SushiSwap’s main innovation was the introduction of the SUSHI token. LPs earn rewards in SUSHI, but unlike Uniswap, SUSHI tokens also entitle their holders to continue earning a portion of fees, even after they’ve stopped actively providing liquidity.

In addition to this, the token also solves Uniswap’s decentralization problem by providing governance rights to SUSHI holders. In the same spirit, SushiSwap adopted the “fair launch” approach to distribution, which meant there was no token allocation for venture capitalists.

What Gives SushiSwap Value?

The value of SUSHI comes from the access to governance rights and the perpetual rewards that it offers investors.

Anyone can submit a proposal to make changes to the SushiSwap ecosystem, but users must hold SUSHI if they want to be able to vote. Although voting contracts are currently non-binding on SushiSwap, users intend to transition its governance into a decentralized autonomous organization (DAO). This would make the votes binding and the result would be automatically executed by smart contracts.

Unlike some other DeFi projects such as yearn.finance, SUSHI was created with no max supply, meaning SushiSwap price and market cap weren’t propelled by scarcity. As the inflation of token supply dilutes the market, one would generally expect this to impact SUSHI price in a negative way. However, in order to distribute 0.05% of trading volume to SUSHI holders, SushiSwap must purchase the SUSHI in order to pay out the rewards. This creates buy pressure in the market that can counteract inflation and maintain SushiSwap price if the trading volume is high enough.

In September 2020, SUSHI holders voted to change the SUSHI emission schedule and impose a max supply. These changes and the ability to make other improvements, thereby affecting the future earning potential of the protocol itself, could ultimately stimulate demand for the token and drive up SUSHI price and market cap.

How Many SushiSwap (SUSHI) Coins Are in Circulation?

There was no premine for SUSHI – it started out with a supply of zero and began being minted at Ethereum block number 10,750,000. For the first 100,000 blocks (about 2 weeks), 1000 SUSHI were minted per block to incentivize early adopters of the protocol. For each subsequent block number after that period, 100 SUSHI were created.

As of March 2021, there is a circulating supply of around 140 million SUSHI and a total supply of around 205 million SUSHI, which will increase according to Ethereum’s block rate. In September 2020, Glassnode estimated that through this model SUSHI supply would increase by 650,000 each day, leading to a total supply of 326.6 million one year after launch and almost 600 million after two years.

Shortly after this, the SUSHI community voted to gradually reduce the amount of SUSHI minted each block until it reaches a max supply of 250 million SUSHI in 2023.

Other Technical Data

SushiSwap price hit an all time high of over $23 on 13 March 2021, with a market cap of more than $2.8 billion. Around this time SushiSwap also overtook Uniswap in terms of total value locked (TVL) in the project, reaching a TVL of over $4.5 billion.

How To Use SushiSwap

Anyone can swap cryptocurrency assets through SushiSwap by simply connecting their wallet to the exchange. Once connected, users can also provide liquidity to SushiSwap’s pools and withdraw their funds or earnings at any time with their SLP tokens – all while earning SUSHI for their participation.

Perhaps the most important use case of the SUSHI (other than the perpetual rewards it grants) is its function in governing the protocol. Users can post and discuss proposals in the forum and then vote on them through the SushiSwap Snapshot voting system.

How To Choose a SushiSwap Wallet

You’ll need an ERC-20 compliant wallet to store your SushiSwap tokens and there are plenty to choose from. The type you go for will likely depend on how much SUSHI you have and what you intend to do with it.

Hardware wallets (aka cold wallets) like Ledger or Trezor offer the most secure option with offline storage and backup. However, they tend to be more expensive and difficult to understand so are probably more suitable for experienced users with large amounts of SushiSwap tokens to store.

A simpler, and usually free, option is software wallets. These can be downloaded to your smartphone or computer and may be custodial or non-custodial. MetaMask and WalletConnect are examples of products which are supported by the SushiSwap platform. These are more convenient for making transactions but less secure than their hardware counterparts, meaning they’re better suited to inexperienced users with smaller amounts of SushiSwap tokens.

Finally, there are online wallets or exchanges, known as hot wallets, which can be accessed with a web browser. These are less secure than the alternatives and require users to place their trust in a platform to manage their SushiSwap tokens. These are best for users who are holding small amounts of SUSHI coins or making frequent trades. Just make sure to pick a service with strong security measures and a good reputation.

Kriptomat offers a secure storage solution, allowing you to both store and trade your SushiSwap tokens without hassle. Storing your SUSHI coins with Kriptomat provides you with enterprise-grade security and user-friendly functionality.

Buying and selling SUSHI, or exchanging them for any other cryptocurrency, is done in mere moments when you choose our secure platform as your storage solution.

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SushiSwap Staking

Users who want to earn more crypto on their SUSHI coins can stake them through the SushiBar application. They simply stake their chosen amount of SUSHI tokens into the SushiSwap smart contracts and receive xSUSHI tokens in exchange, which represent users’ staked SushiSwap tokens plus any yield gained while staking.

Conclusion

So to sum up, SushiSwap provides people with a quick and easy way for users to exchange cryptocurrency assets and earn fees by contributing crypto to a liquidity pool. It improves upon its predecessor by introducing the SushiSwap token, which allows users to continue earning SUSHI after they withdraw their crypto from the pools and have a say in how SushiSwap is run.

There were certainly flaws with SushiSwap at its foundation, like its uncapped inflation and the lack of protection for the dev funds which allowed Chef Nomi to withdraw a large chunk of them. However, the actions of Chef Nomi led SushiSwap to become more decentralized and SushiSwap users voted to cap total SUSHI supply, making SushiSwap much more secure for investors.

SushiSwap has certainly made waves in the DeFi sector, quickly overtaking many other more established DeFi projects in terms of total value locked. And with new products on the horizon such as lending and limit orders, SushiSwap’s meteoric rise could be far from over.

SushiSwap FAQ

Who Are the Signers of the Treasury Multisig Wallet?

Sam Bankman-Fried, Compound Finance Founder Robert Leshner, @0xMaki, The Block’s Director of Research Larry Cermak, CMS Holdings, Sino Global Capital CEO Matthew Graham, HiFi Finance Founder Mick Hagen, @JiroOno and @zippoxer. At least 6 out of 9 signatures are required for a transaction to be executed.

What Is the BentoBox?

A product that will be added to SushiSwap in the future. BentoBox will be an isolated pair lending solution.

What Is Menu of the Week?

Part of SushiSwap’s yield farming program, Menu of the Week is an initiative to bring in liquidity for new tokens to SushiSwap or increase liquidity in existing pools. Users can earn high yields by staking SLP tokens for up to 10 new pools for a period of approximately 7 days.

How To Buy SushiSwap

Exchanges offer a simple way to buy SUSHI. Buying SushiSwap tokens is as easy as visiting Kriptomat’s how to buy SushiSwap page and choosing your preferred method of payment.

How To Sell SushiSwap

If you already own SushiSwap tokens and hold them in a Kriptomat exchange wallet, you can easily sell them by navigating the interface and choosing your desired payment option.

SushiSwap Price

SushiSwap price is influenced by a lot of the traditional factors such as project news and development details, market sentiment, the flow of cryptocurrency on exchanges and the economy in general. In particular, SUSHI’s price and market cap saw an increase following its Binance listing and dropped dramatically after Chef Nomi walked away with much of the project’s crypto assets.

Unlike some other cryptocurrencies, SUSHI price is also affected by its emission schedule and therefore the Ethereum block rate. Additionally, the regular purchases of SUSHI tokens by SushiSwap in order to pay out rewards to its users creates buy pressure in the market and could ultimately drive up SushiSwap price and market cap.

The current SushiSwap price is loading EUR.

The 24-hour trading volume of SushiSwap is loading EUR. SushiSwap is currently ranked of all cryptocurrencies by total market cap, with a market cap of loading EUR. It has a circulating supply of loading SUSHI and a max supply of 250 million SUSHI.

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