Thursday, November 26, 2020
Home The Capital What Is SushiSwap and How to Buy It?

What Is SushiSwap and How to Buy It?

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.

  • 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;
  • 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.
  • 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;
  • No audits as of yet. As of September 2020, SushiSwap remains unaudited. The team has written an open invitation to Trail of Bits, PeckShield, OpenZeppelin, Consensys, Certik, and Quantstamp to audit the contracts, but received no response;
  • 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.

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.

SUSHI is created through the process of liquidity farming: tokens are granted to users who provide financing to SushiSwap through certain Uniswap pools.

  1. Users purchase SUSHI for ETH through an exchange platform of their choice (Uniswap, SwapSpace, Binance, and Huobi work best).
  2. 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 with LP Tokens.
  3. 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.
  4. After this, users can transfer their LP tokens into the SushiSwap staking contracts to start mining SUSHI.

SUSHI is an ERC-20 token and can be stored on any wallet that is compatible with these tokens.

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.

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