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SushiSwap Review: The Best Way to Swap Tokens and Earn Yield?
SushiSwap Pros & Cons
Potential for extremely high returns
Exchange, lend, borrow, provide liquidity
History of drama behind the scenes
Lower % fees earned than on Uniswap
Danger of impermanent loss
- Max Supply: 250,000,000 SUSHI
Reason: SushiSwap is available on multiple blockchains, so network speed depends on which blockchain you are accessing it from. If you are accessing it from Ethereum then the speeds are slower and transactions cost more. Conversely if you are accessing it from the Binance Smart Chain, Solana, or any of the other blockchains SushiSwap has contracts for, the speeds are better, and transactions are cheaper.
Reason: There are no addresses other than exchanges or the contracts on the platform with more than 1% of the circulating supply. The main issue is that 9 people control governance on the project, with only 5 of those then being responsible for making changes to the smart contracts. This makes the control of the project fairly centralized.
Reason: While the code is a copy from Uniswap, the SushiSwap team continues to add new features and compatibility with multiple blockchains that Uniswap does not offer. After the departure of Chef Nomi (creator), control was handed over to former FTX CEO Sam Bankman-Fried, and the project continues to be developed with regularity.
Reason: Not a top 50 asset but remains in the top 75. Has good daily trading volume and is available on all major centralized exchanges in addition to being available on almost all decentralized exchanges.
History of SushiSwap
SushiSwap has a somewhat sordid past, as it is literally a copy of Uniswap, which irked UNI creator Hayden Adam. SushiSwap started as an idea to pull liquidity from Uniswap, which has been referred to as vampire mining. Chef Nomi and a few developers copied Uniswap’s model but added an incentive that led to over $1 billion dollars in liquidity being moved from Uniswap to SushiSwap.
This was just Uniswap users moving their own funds to a new platform because of the SUSHI being given away as incentive. Eventually, Chef Nomi liquidated $14 million worth of SUSHI for his personal gain once the platform had taken off enough, crippling to Decentralized Finance space for a day. He did return the funds, but the damage had been done and he had to step away from the project, giving control to former FTX Exchange CEO Sam Bankman-Fried.
The platform continues to operate and has added new feature such as lending and borrowing, neither of which are options on Uniswap at the moment.
Advantages of SushiSwap
The main advantages to SushiSwap are the ability to yield farm and earn a high yearly interest rate, lend and borrow assets against collateral with either interest received or a small amount of interest owed, and make swaps of hundreds of available digital assets that have pools on SushiSwap.
The yield farming is what draws in most users to AMM/DEX platforms like SushiSwap, Uniswap, and PancakeSwap, as it provides users with extremely high returns on their investment. However, the SUSHI staking option on SushiSwap provides users with a stable return with no risk of impermanent loss, and this is currently not available on Uniswap.
Disadvantages of SushiSwap
The only real disadvantages to SushiSwap at this point are impermanent loss and if you are less bullish on SUSHI than ETH, because it you use SushiSwap, 0.05% of the 0.3% fees you receive will be in SUSHI, whereas on Uniswap the entirety of the 0.3% fee portion you receive is in ETH. Otherwise, the platforms are essentially the same in terms of security and asset availability.
Impermanent loss happens with all liquidity pools and is the trade off for receiving the fees, as long as the fees you receive outweigh the lost profit on your supplied assets, the trade off is worthwhile.
SushiSwap Frequently Asked Questions
Whether SushiSwap is better than Uniswap depends on what you are looking to do. Both provide liquidity pools, though Uniswap gives you 0.05% more fees (you get that 0.05% in SUSHI pools, rather than ETH). SushiSwap is available via more blockchains and has comparable yields so it could be argued it is better.
While this is just speculation, it is fun and easy to remember, making it appeal to a broader audience than if it were given a name that was more technically named.
The primary use case of the SushiSwap platform is as an automated market maker that acts as a decentralized exchange, whereby users provide liquidity to pools allowing for swaps with no Know Your Customer process. The primary use case of the SUSHI token is as a reward mechanism on the SushiSwap Platform that can be staked for other rewards such as new assets.
Chef Nomi is the anonymous creator of SushiSwap. He is the one who copied Uniswap’s code and got help from a few developers to create SUSHI. He left the company amongst a scandal where he took a ton of funds out of the protocol, effectively tanking prices temporarily. He later returned the funds and subsequently handed control over to former FTX Exchange CEO Sam Bankman-Fried.
No, SushiSwap has never been hacked.
In order to yield farm on SushiSwap (or any other AMM), you need to provide liquidity to a pool. In order to do this, you must have two accepted assets, in an equal ratio, which you deposit into the exchange. In return you get Liquidity Pool tokens (LP Tokens), which you can stake in the corresponding farm. Over time you then receive a portion of the fees generated by the pool, though you will experience impermanent loss of your assets over time in exchange.