Wondering about Sushi, SushiSwap and DeFi


In the DeFi field, new projects are emerging every day. The last of these is SushiSwap. SushiSwap, also a management token called SUSHI, experienced explosive growth in locked value within a few days. In parallel with this, the price of SUSHI broke a record after record. What is SushiSwap and what does SUSHI do? We answer these questions.

In the decentralized finance (DeFi) world, another project emerges every day and the tokens associated with that project experience dramatic price increases from time to time. Such a period was with ICOs in 2017 and the first half of 2018. Now a similar one is experienced with DeFi. Whether the end of the madness in DeFi will resemble ICOs is also expected. Before getting to the answer to what is SushiSwap, it may be helpful to learn what the DeFi concept is. Those looking for an answer to this question can take a look at our article titled What is DeFi.

What is SushiSwap?

SushiSwap is a replica of UniSwap with a few added features. UniSwap, on the other hand, is a protocol that provides automatic token exchange in Ethereum, decentralized exchange. It was launched in November 2018 and describes itself as “a simple smart contract interface for the exchange of ERC20 tokens.”

When the UniSwap project is investigated, it becomes clear why SushiSwap, which includes anonymous developers like “Chef Nomi”, wants to copy UniSwap. UniSwap, a decentralized exchange with 100,000 transactions every day, has become a powerhouse that facilitates asset transfers as much as a mid-sized centralized exchange.

The main difference between Uniswap and Sushiswap is that the first one has no crypto and the other one. SUSHI was created to enable liquidity to move from UniSwap to SushiSwap. SUSHI also gives its each investor a 0.05 percent share of the trades made on the stock exchange.

To convey the purpose of this bifurcation, the SushiSwap team wrote the following note:

“We designed SushiSwap as the next step from the UniSwap protocol: an evolution. We added UniSwap’s cleverly crafted core design to community-oriented, participatory features that we thought would help develop the protocol. ”

The developers also added a management functionality to SushiSwap, unlike UniSwap, which is currently centrally controlled by a company and its investors.

What is sushi?

After answering the question of what is SushiSwap, let’s move on to Sushi. Sushi (SUSHI) is SushiSwap’s management token, and this is one of the things that differentiates SushiSwap from UniSwap. As it is known, UniSwap does not have a management token yet and gives the collected transaction fees to liquidity providers. On the other hand, SushiSwap will start issuing SUSHIs to liquidity providers when the mainnet of the protocol is activated within 2 weeks.

Uniswap currently rewards liquidity providers 0.30 percent of all transaction fees, regardless of which pool they are in. In SushiSwap, besides 0.25 percent, 0.05 percent is converted to SUSHI and the awards are distributed in this way. As a result, users who provide the most liquidity have the most SUSHI tokens.

Locked value exceeded $ 1.3 billion

Recent data show that locked funds in SushiSwap outperformed $ 1 billion 300 million. These funds mainly consist of SUSHI, ETH, USDT, DAI, UMA, BAND and LINK. Those who provide liquidity by locking funds in the protocol are rewarded.

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What did they say about SushiSwap?

SushiSwap and its management token Sushi has experienced dramatic growth in recent days. Over the past three days, Sushi has seen a similar explosive increase in value of locked-in funds on SushiSwap as it gained more than 1500 percent in value. This move at SushiSwap seems to have daunted the leading names in the DeFi world.

Brendan Forster, co-founder of the lending protocol Dharma Labs, said with ambitious foresight that he expected the SushiSwap experiment to crash. “The liquidity fork will make the swap prices more harmful to all users and further increase the temporary loss for all liquidity providers. “The only cut that will benefit from this is the founders of Sushi.”

Will Warren, co-founder of the decentralized exchange protocol 0x, said it would be terrible for SushiSwap to win this war. “It is in the Ethereum community’s interest to reward the creators. The liquidity fork will only lead to worse swap prices.” He spoke in the form.

On the other hand, Binance CEO Changpeng Zhao also seems to be worried about these high returns in the DeFi world. Zhao said, “Right now I see too many bubbles in DeFi. I believe that the basic concept of “staking coins in order to provide liquidity and gain returns” will be permanent. But these super high returns will not be subsidized by new tokens. Super high risk. Be careful!” used the expressions.

Is SushiSwap safe?

This is one of the questions on everyone’s mind. Especially, these question marks started to form more after the incident that occurred at the DeFi experiment YAM last month. For those who don’t know, Yam.Finance, a two-day DeFi project, quickly became popular, lost more than 99 percent of value after the code error that occurred in the project, and many people suffered great losses. Prior to the announcement, Yam.Finance’s market value reached $ 500 million. Yam.Finance was a ‘yield farming’, or ‘revenue harvest’ protocol, in which the supply of tokens was reduced to protect the dollar parity.

The codes for SushiSwap have not yet been audited. First of all, smart contracts need to be professionally audited to be able to trust the protocol. SushiSwap team; Trail of Bits invited PeckShield, OpenZeppelin, Consensys, Certik and Quantstamp to audit contracts and promised to pay 5 ETH. It is stated that soon Blockchain security company Quantstamp will audit SushiSwap.

However, anyone using SushiSwap needs to proceed with caution at this stage. There are still many unknowns about the project. You can follow SushiSwap on Twitter for developments regarding inspection.

Using SushiSwap

At the protocol and smart contract level, SushiSwap shares the same interface with Uniswap. This means that if your protocol is currently Uniswap compatible, integrating with SushiSwap will be relatively straightforward. “We will be working with various DeFi and other ecosystem tools to start integrating SushiSwap,” the team said. says.

You can start depositing LP tokens to the MasterChef contract using the interface at https://app.sushiswap.org. Users will start earning SUSHI from block number 107500000.

For more information, follow SushiSwap Discord channel or Twitter account.


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