There is no way you would perform a good fundamental analysis of a coin without consuming a lot of information about it. Unfortunately, most times you would have to read through or consume a lot of content to get the required information you need. If you are looking for a resource that explains all you need to know about Sushi swap crypto and its use cases simply, this post is your best bet. At the end of the post, you will be able to make an informed decision on whether to invest in the Sushi token or not.
What is in this guide?
What is Sushi swap?
Sushi Swap is an Ethereum-based decentralized exchange. It runs as an automated market maker exchange. An automated market maker Amm is a type of decentralized exchange (DEX) that enables users to take part in supplying liquidity for the exchange platform. In other words, AMMs allow users to make money by serving as lenders who fulfill order demands from traders on the platform via buying tokenized assets from users who want to sell them and selling them to users who want to buy them.
To facilitate these transactions without a single controlling body, Sushi swap uses liquidity pools. These pools allow users (liquidity providers) to lock up their assets in smart contracts that other traders can use to buy or sell assets. Users can buy and sell across 11,700 cryptocurrency pairs and trade tokens across ten crypto networks (and counting) via the newly launched cross-chain swap (SushiXSwap).
Sushiwap and Uniswap are nearly identical in source code, except for notable community-oriented features like staking rewards and a governance token added by Sushi swap. This is because pseudonymous developer Chef Nomi started it as a direct clone of Uniswap. However, Uniswap eventually released its own governance token, UNI, and implemented similar community-centric features to regain some of the trading volume it initially lost to Sushi swap.
Chef Nomi eventually exited the Sushi swap project in 2020 after selling the majority of the Sushi tokens he had acquired. However, Chef Nomi’s departure from the project appears to have acted as a stimulus for even more of a community-driven approach. because the project has been actively run by the members of the community since then.
What is Sushi swap crypto (Sushi)?
Sushi swap (Sushi) is an Ethereum-based token that powers Sushi swap. Its token owners can take part in community governance by voting on significant protocol changes and also stake their tokens to share in Sushi swap’s transaction fees. You could either buy the token on centralized and decentralized exchanges or earn them as rewards.
Sushi has a maximum supply of 250 million tokens. The supply of Sushi is dependent on the block rate of the Ethereum network. As of January 2023, its market cap is $286,751,968 and it has a circulating supply of 222,257,372 Sushi coins which has reached approximately 88% of the maximum supply.
Sushiswap’s price hit an all-time high of over $23.28 on 13 March 2021, with a market cap of more than $2.8 billion. Around this time Sushi swap also overtook Uniswap in terms of total value locked (TVL) in the project, reaching a TVL of over $4.5 billion. A year later, it dropped by over -90%.
Sushi swap crypto use case: Staking
Staking is a popular aspect of decentralized finance defi that allows you to generate income passively. In the previous version of the Sushi swap exchange, you could stake your Sushi tokens into the SushiBar and receive xSushi. In return, you would be able to stake your xSushi in the Sushi pool.
0.05% of the 0.3% transaction fee charged on every trade on the Sushi swap platform was also distributed to Sushi stakers on the SushiBar pool as LP tokens. Later, all of the LP tokens are sold for $Sushi on the Sushi swap Exchange. Then each xSushi holder in the poo would receive a share of the newly bought Sushi tokens according to how many tokens were staked.
But the current version of the platform as of January 2023 doesn’t support that feature anymore.
However, you can still stake your Sushi tokens on platforms like Binance, Youhodler, Compound, OKX, and Huobi in exchange for more Sushi tokens. The APRs on these platforms vary from 1% to 7.24%.
Sushi swap crypto use case: Yield farm rewards for Liquidity Providers
Liquidity providers are rewarded with Sushi swap Liquidity Provider (SLP) tokens for staking their assets like USDT and ETH in liquidity pools. They can in turn stake their SLP rewards in the “farm” and earn rewards in Sushi tokens. Out of the 0.3% trading fee charged to traders, 0.25% is added to the liquidity pool balance, so that when liquidity providers withdraw their tokens, they are worth more than when they were deposited.
The Sushi farm feature on Sushi swap allows users to earn Sushi as rewards with each new block based on staked SLP tokens they received from providing liquidity.
Your “Sushi Earned” balance will update every block but won’t be visible on the liquidity pool page but on the farm page. You can click “Harvest” at any time to withdraw your Sushi rewards.
Kindly note that the APR amount you see is not a fixed return, it is not a promised return. It is based on ETH returns in the pool.
In addition, on December 30, 2022, the CEO of Sushi swap exchange introduced a new tokenomics model after realizing a $30 million loss on LP rewards for the last 12 months. The proposed model would allocate 0.05% of swap fees earnings to liquidity providers (LPs), with higher volume pools receiving the largest share You can read more about this here. Ultimately, the new tokenomics aims to increase liquidity and decentralization in the Sushi swap platform.
Sushi swap crypto use case: Governance Voting
On Sushi swap, anyone can submit a Sushi swap Improvement Proposal (SIP), which other voters can decide on. These can be minor or even major changes to the Sushi swap protocol. This shows that the advancement of Sushi swap is in the hands of its community members.
A strong community can be a powerful asset for any token project, but this is especially true for Sushi swap. MISO, or Minimal Initial Sushi swap Offering, for instance, is a product that was voted for via a governance proposal. MISO is a token launchpad that allows individuals and communities to launch their new project tokens through Sushi swap.
Any member of the community who wants to post a proposal on Sushi swap forums must follow the set guidelines so that the proposals can be easily read through by prospective voters.
The proposal can gain enough traction to be brought up for voting on the Snapshot voting platform by the core team, where the community will vote with SushiPOWAH to decide the outcome.
SushiPOWAH is the voting metric for a new proposal on Sushi swap, and is decided as follows:
Each $Sushi in the Sushi-ETH liquidity pool is worth 2 SushiPOWAH
Each $Sushi held via xSushi tokens is worth 1 SushiPOWAH
For a vote to become finalized, it must gain a quorum of at least 5 million SushiPOWAH.
To be an eligible voter for any proposal on the Snapshot, you must have 3 SushiPOWAH from any or all of the above options at the time of the voting process. This makes it impossible to quickly buy $Sushi tokens to vote on an already ongoing vote.
FAQs on Sushi swap crypto
Is Sushi swap a good crypto?
It’s difficult to say. A lot will depend on the network’s ability to expand as well as how the market as a whole does.
It is crucial to conduct your own research on a coin or token to see if it is a good fit for your investment portfolio in the very volatile world of cryptocurrencies. Among other things, your risk tolerance and the amount you plan to spend will determine if sushi is a good investment for you.
Where do you buy Sushi swap?
Buying sushi swap crypto is quite easy. You can buy Sushi swap through an exchange like Binance, Coinbase, Kucoin, and other top centralized and decentralized exchanges like Sushishwap itself (or Uniswap.
What Is A Decentralized Crypto Exchange?
A decentralized cryptocurrency exchange, also known as a DEX, is a peer-to-peer market where users can trade cryptocurrencies without the assistance of a middleman or custodian. These operations are made possible by smart contracts, which use programmable self-executing code. Uniswap and Sushi swap are the two most popular decentralized exchanges.
If you want to get early info on the biggest crypto projects, join the Crypto University membership today.