Before we begin
We’ve been closely following the events involving SushiSwap and its founder “Chef Nomi”. This article will not be making any comments or conclusions on Chef Nomi’s actions or how SushiSwap is or should be run. This article is simply an explainer on what SushiSwap is and how to use the platform. As with all yield farming projects, SushiSwap involves a huge amount of risk. Anyone intending to participate in yield farming should do full research and consider carefully the risks involved beforehand.
What is SushiSwap ($SUSHI)?
SushiSwap is the newest decentralised finance (DeFi) liquidity pool platform. With SushiSwap, people can add their tokens into the liquidity pools and earn. In this article, we’ll have a look at the Sushi Swap platform and how to participate in the liquidity pool. Anyone can participate.
Sounds interesting? Let’s dive into it.
- SushiSwap is a platform that allows anyone to provide liquidity. In return, the person gets rewarded with token(s) and SUSHI tokens.
- As of September 4, 2020, there are 1 billion dollars of locked liquidity.
- Possibility of very high APY (up to 1,000%) on some liquidity pools. You can check the current yields on SushiBoard.
Why is SushiSwap so popular?
Sushi Swap markets itself as an “improved and community-friendly” Uniswap. Unlike a traditional exchange like Binance where they employ market makers, SushiSwap is a community-oriented platform where users provide liquidity. In return, they get rewarded. Indeed, the users are the market makers.
SUSHI tokens are given as rewards for liquidity mining. The token allows its holders to participate in the governance of the platform and entitles them to a portion of the fees paid to the protocol by traders. For the governance of the platform, SUSHI holders can submit a SushiSwap Improvement Proposal (SIP) which token holders can vote on with their tokens.
Advantages of SushiSwap
There is no KYC (Know Your Customer) policy. This means anyone can trade and contribute to the liquidity pools. The platform is permissionless, meaning anyone can contribute millions of dollars without asking for permission.
Earn tokens from Sushi Swap. SUSHI is Sushi Swap’s native token. When you contribute to the liquidity pool, you earn sushi tokens. You can exchange SUSHI for ETH.
Sushi Swap model: 0.25% go directly to the active liquidity providers and 0.05% get converted back to SUSHI and is rewarded to sushi holders.
Sounds interesting? Let’s visit Sushi Swap’s home page.
SushiSwap beginners guide
When you first arrive on Sushi Swap’s home page, you’ll see this:
Click on “Unlock Wallet” or “See The Menu”, either way you will need to connect your ETH wallet in order to this platform.
Sushi Swap has the option to use MetaMask, WalletConnect or many other non-custodial wallets. Pick the one of your choice.
Give permission for Meta Mask or Wallet Connect to connect to Sushi Swap. Once you’re connected, you’re ready to add your tokens into the liquidity pools.
You’re presented with various liquidity pools (LPs). Each liquidity pool has a different annual percentage yield (APY).
In this example, I’ll contribute to the ETH-USDT pool. I add my USDT into the liquidity pool. In return, I’ll get a percentage of USDT and SUSHI tokens. Think of Sushi Swap as a “community revenue share” model.
To contribute to the liquidity pool, click “Approve USDT-ETH UNI-V2 LP” and give your Meta Mask permission to move your tokens into the liquidity pool.
Now what? You wait. The “SUSHI earned” box should populate with your earned SUSHI. You can withdraw your SUSHI token anytime by clicking on “Harvest”.
2020 roundup and new roadmap!
Many things have happened within the Sushiswap ecosystem in the last months: it is now time for a quick recap and to look at what the future will bring to this project!
The number of all the partnerships finalized by the protocol is countless, but one of the most important ones, if not the most important, is certainly the merger with Yearn. The news also sparked controversies: Sushiswap was still considered a sort of “copycat” of Uniswap by some, and when Andre Cronje (Yearn’s father) wrote an article on how it is difficult to build in Defi and how conversely it is easy for anyone to just copy other people’s code, this wasn’t seen as really coherent. The collaboration was born to allow the two teams to cooperate on Deriswap.
Nevertheless, Sushiswap has been evolving so much that, according to Mira Christanto (one of Messari’s data analysts) they have “put their past behind” and, not being backed by Venture Capitals, they can move faster than competitors. January has seen a real growth in Sushiswap’s TVL (now at $2.1 billion), mostly at the expense of Uniswap’s.
Among the important milestones in 2020, we find Onsen, the new Sushiswap liquidity mining incentivization program which replaces the old Menu of the week. It brings communities together into the ecosystem and allows voted tokens to become accredited and participate in the mining program. The website also has a new layout of and a lite version.
As the new year has already begun, it is also interesting to have a look at what Sushiswap is working on for 2021. The team released a long and detailed roadmap in early January. Notable upgrades are the following:
- Mirin will be the new upgraded version of Sushiswap’s V3 protocol. It will include many new features like franchised pools, double yield, dynamic yield rebalancing, and many more as you can read here.
- Bentobox (which should have launched in January) was born in the team’s mind as a new Lending Platform. While they were was working on its code though, it became something more. In simple terms, it will be a single vault that holds all tokens for any protocols and future extensions. It will support several oracles and it will also benefit all the $SUSHI holders.
- Miso (Minimal Initial Sushi Offering) will be a sort of token launchpad, designed to drive new projects’ launches on the platform. It will include crowd sale options, IDOs (Initial Dex Offering), auctions, and more. We could think of it as something similar to Binance’s launchpad.
- As Ethereum fees are and will keep growing in the next future until ETH2 will be a reality, most platforms are studying alternative solutions for their users such as Layer 2 possibilities. Unlike Uniswap, which is working on Optimistic Rollups, Sushiswap decided to move in sync with the greater Yearn ecosystem and thus will probably offer Zk-rollups options.
Together with all these big news, Sushiswap is also planning to move to a new domain as the old one, in their view, is not enough to describe the diversity of the platform anymore. A transition to a fully decentralized governance structure is also planned by the end of 2021. Last but not least, Sushiswap has created a proposal page for people to express their ideas on what they would like to see on the platform. Everyone can be a chef is the place where you can voice your opinion if you like to suggest new ideas.
The pool could get hacked if the code isn’t audited. There have been cases of hackers draining funds from smart contracts. It helps if the code is audited by a reputable firm. In the case of SushiSwap, it has been given a “security review” (not an audit) by Quantstamp. 10 issues were identified but they do not appear to be fatal. Subsequently, Peckshield had completed an audit on SushiSwap. They found no critical or high severity issues relating to business logistics but 2 high severity opsec issues that need to be fixed through extra care with deployment.
0.25% go directly to the active liquidity providers and 0.05% gets converted back to sushi and is distributed to active SUSHI holders.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as Reef.finance ($REEF) and Polkadot ($DOT)
The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency
Tutorials and guides for the ESSENTIAL DEFI TOOLS:
- MetaMask Guide: How to set up an account? PLUS tips and hacks for advanced users
- Uniswap review and tutorial: Beginners guide and advanced tips and tricks
- Serum DEX guide and review
- SushiSwap ($SUSHI) explained
- 1inch Exchange, Mooniswap and Chi GasToken: The ultimate review and guide
For in-depth information other specific DeFi projects, check out our DeFi token guides. Here’s some of our most POPULAR guides:
- AAVE ($LEND)
- Ampleforth ($AMPL) review: The essential guide to this DeFi protocol
- ChainLink ($LINK) guide: A key link in the DeFi space
- Cream Finance ($CREAM): What is it?
- Curve Finance ($CRV) guide
- DODOEx ($DODO): A Revolutionary On-Chain Liquidity Provider
- Linear Finance ($LINA): The future of synthetic exchange platforms?
- Polkadot ($DOT): Everything you need to know about the DeFi darling of China
- RAMP DeFi: How does it unlock the value of staked assets?
- Reef Finance ($REEF): The All-In-One Defi Platform
- Solana ($SOL) explained
- The Graph ($GRT)- The next level of decentralized apps
- Trustswap ($SWAP) explained- Next generation of DeFi transactions
- Yearn.Finance merging the DeFi Ecosystem
- Wing Finance ($WING) – A Credit-based DeFi Lending Platform
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel and (for now) FREE weekly newsletter so you can be notified as soon as they come out!
The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur.