What is SushiSwap
It is a decentralized exchange (DEX) that works under the automated market maker (AMM) mechanism, used by many DEX platforms. SushiSwap is the first decentralized exchange that modifies the tools used, using a new incentive scheme. The idea of changing these mechanisms is to gain a media presence and thus attract investors.
The basis for media presence is the SUSHI token used for various platform solutions. Among the uses is to offer governance capabilities to the users of the platform, giving them the ability to vote. However, some of the most interesting for the user is obtaining rewards through yield farming and liquidity mining.
ShushiSwap has made yield farming and liquidity mining a significant media impact and has gained so much market presence after its launch. This has allowed DEX to become one of the most prominent segments. It should be noted that SushiSwap has been involved in several controversies. Initially, it was affected by the high centralization in control when it was initially launched and the greed it initially promoted.
Origin of SushiSwap
The creator of this decentralized exchange is Chef Nomi, an anonymous user about whom little is known. Officially Nomi published on August 24, 2020, the following message on Twitter:
"1/ Introducing #SushiSwap🍣, an evolution of #Uniswap with $SUSHI tokenomics. SushiSwap protocol better aligns incentives for network participants by introducing revenue-sharing & network effects to the existing AMM model. "
It marks the official launch of the DEX SushiSwap, which is based on the WTFPL license. Nomi states that this platform is "a project for everyone and not just for elites." The idea is that this platform would be straightforward to use and thus differentiate itself from other decentralized exchanges. A launch that has not been without controversy. Many point out, with great wisdom, that SushiSwap is nothing more than a copy of Uniswap, but changing the native token of this second DEX, for the native token of the new SUSHI platform.
Controversy in its development
Many people noticed that SushiSwap used Uniswap's code, which is freely available. In principle, there is "nothing" wrong with this, but it is not something the community likes since they like innovation. Chef Nomi explained that this was so; it was not hidden. Many detractors relied on SushiSwap, offered no improvements, and labeled the project a "Ponzi scheme." This DEX suppressed some exciting things that were not understood at first. For example, SushiSwap proposes incentivizing investment through the SUSHI token and creating a decentralized governance system. This disarmed the initial accusations and helped it differentiate itself from the rest of DEX.
After explaining these differential aspects, the perception of SushiSwap changed and began to receive support. By September 1, the SUSHI token went from being worth nothing to being priced at $10.3 per token. In addition, the platform went on to have a total market cap of $1.3 billion.
And more controversy
Again the project took a turn when Chef Nomi, creator of DEX, decided to take the funds valued at $14 million and withdraw. Nomi's project was transferred to the FTX company. Not surprisingly, both moves were used by the platform's detractors to attack it. The accusation of scamming was reiterated. As a result of this move, the price plummeted to $1.00, and DEX's capitalization dropped to $280 million.
FTX modified the SushiSwap protocol to establish a multi-signature wallet in the development funds. But not only that, after emptying the DEX development wallet, Chef Nomi decided to return the $14 million he had taken. Nomi states that he no longer has any control over SushiSwap and that what happened was "a mistake on his part." However, he took the opportunity to highlight "the development of SushiSwap and all its potential."
Although all this made us think that the project's days could be numbered, in the end, this has not been the case. The community has been very supportive of the platform, and it seems that the controversies have been left far behind. Even Yearn Finance has decided to choose SushiSwap to be natively integrated into its protocol.
What features does SushiSwap have?
This decentralized exchange was born in what has been called "Defi summer," when platforms of this type appeared. As we already know, it was delivered to boost the creation of liquidity pools in decentralized exchange platforms. SushiSwap was born in the Ethereum blockchain, although it has also been implemented in other blockchains. It is currently integrated into the Binance Smart Chain (BSC) and Polygon. But it is possible that in the future, it will also be deployed in other blockchains and projects.
For a long time, the Ethereum blockchain has been the platform of choice for users to deploy their solutions. But this period of the hegemony of this platform is long gone. The AMM has been deployed on the BSC, xDAI, Fantom, and other blockchains. This makes SushiSwap a liquidity center for any blockchain. That it has entered Polygon is a good thing for Ethereum users. Polygon's blockchain is a side chain of Ethereum that allows it to extend the capabilities of the blockchain. Something that will enable users to go to the Polygon network to make transactions faster and cheaper and then transfer the tokens back to the Ethereum blockchain.
What is SushiBar
It is a decentralized platform profit-sharing system. Users bet their SUSHI tokens, and in return, within SushiBar, they get Sushi. These tokens represent the wagered positions and the accrued revenue from transaction fees. Those holders of xSUSHI get part of the commissions accrued within the DEX ecosystem.
SushiBar includes commissions earned on other blockchains, such as Polygon, BSC, and other chains. Holders of xSUSHI also have rights to the governance of the SushiSwap platform. It differs from other Defi platforms in that users do not have to dispose of SUSHI tokens to participate in government. In addition, it allows users to participate in the governance of the forum.
There are three types of farming on the platform, and therefore, we will get three types of performance. SUSHI is a token that has expanded beyond DEX and mining farms and has added the service of leverage for demand (Kashi). Thus we have three different types of mechanisms to get yield from our tokens, with SushiSwap being the only platform that allows this.
The yields that we will obtain according to the mechanism are:
Liquidity Pool: A commission is charged when a user performs a transaction within the DEX SushiSwap. The 0.25% commission is distributed among the liquidity providers. The 0.05% is distributed among all the accumulated by the holders in xSUSHI tokens. Thus, the total commission charged per transaction is 0.3% of the entire transaction.
Yield Farming: KMP tokens and SLP tokens generate rewards. These rewards optimize impermanent gains (returns obtained through volume and volatility).
Loans: We can understand it as an interest rate charged by Kashi lenders. Demand for leverage in the markets drives the number of loans being made.
What is Shoyu NFT
It is an NFT creation and exchange platform within SushiSwap. This platform called Shoyu (Japanese for soy sauce) offers a new solution within DEX. The Shoyu solution has not yet been deployed but is expected to be deployed by August.
This development started in the spring when Levi, one of the leading developers of Sushi, proposed that DEX should offer nonfungible tokens (NFT). The community appreciated the idea, and a community member suggested the name Shoyu.
Shoyu will be a "Gas-optimized NFT trading platform." Additionally, it will offer customized royalty payments, support for social tokens, and many other solutions. Shoyu will join BentoBox and Kasha in generating revenue within the platform, establishing that 2.5% of each transaction will go to xSUSHI holders.
What is Onsen
It is a platform that has been developed to help DeFi projects get off the ground with an injection of liquidity. It allows projects to have the opportunity to fund themselves through a SUSHI token initially. This way, project developers do not need to create and distribute native tokens to attract users. Instead, SushiSwap does it for them. So new projects can be presented in Onsen to attract new participants and receive SUSHI.