What is SushiSwap and How Does it Work?
19th November 2020
Lately, DeFi projects have become one of the hottest trends of the whole year. Previously, they were represented by such projects as MakerDAO, Salt and 0x.
Now there’s a new wave of projects coming, and they get a lot of attention from crypto investors. Currently, there’s almost $11 billion locked in various DeFi applications, according to DeFi pulse.
One of the most discussed among them is SushiSwap. What’s the deal with it, is it worth the hype around it?
SushiSwap or the so-called yield farming platform
The idea is very simple – you provide liquidity and the platform rewards you with its tokens for it. Providing liquidity means locking your funds on the platform and adding them to a pool of cryptocurrency.
This pool is used then for exchanging cryptocurrencies as it happens on regular crypto exchanges.
The real innovation here was the profit that liquidity providers were getting because previously all crypto that investors had was kept in wallets without any real use.
Yield farming makes it similar to traditional deposits, making your money work for you.
For many investors, it’s like one step towards the world where the traditional financial services work on blockchain without any intermediate parties.
SushiSwap was the fork of another successful project Uniswap, with some alterations.
While Uniswap is sharing its profits from its fees with liquidity providers, SushiSwap gives them a lot more. For every pair on the platform SushiSwap has its own reward SUSHI rate, and some of these rates climb to 100%.
So the steps here are simple:
- Select the pair you want to provide liquidity for
- Connect your wallet to SushiSwap
- Wait and receive rewards
The only problem here is the SUSHI issuance. Some people are concerned by the fact that SUSHI printing is endless and its supply continuously increases. However, it’s not a problem while the demand for these tokens is very high.
Every year has its own hype, ICOs in 2017, airdrops in 2018, stablecoins in 2019, and now it’s yield platforms. DeFi yield platforms are on the rise and SushiSwap is one of the most popular on the market. The 100% rate looks fantastic for all crypto investors.
The project is still in the active phase of the development. Its initial developer, who forked Uniswap, an anonymous founder, called Master Nomi, recently sold all his SUSHI tokens, crashing the price in the process, and handed over the exchange to a new owner, FTX CEO Sam Bankman-Fried.
Soon after the selloff Master Nomi returned $14 million in Ethereum to the community pool. Recently the new team updated the exchange rolling out the new interface for its users.
Of course, this trend will also go away, but blockchain development will always be relevant. If you ever need a blockchain node of any popular network, you can go to GetBlock.io and rent a node for yourself. The process is pretty fast and easy, has a well-documented API and your nodes can be accessed anytime you want.