Sushiswap is a decentralized exchange, a fork of Uniswap with SUSHI token, which functions as a protocol token that allows the control rights and portion of fees paid to the protocol.
As a decentralized exchange, it processes token swap and yield farming via an Automated Market Maker (AMM) smart contract. It runs on to attract liquidity providers to deposit tokens to the platform by rewarding them with fees. The reward given to the providers is generated from the fees other traders pay for swapping tokens.
In this review, we will discuss the investment and earning potentials of Sushiswap. This will serve as a guide to help you decide if you will invest or not.
What We Will Cover in This Review
- What is Sushiswap?
- How to Invest in Sushiswap
- Difference Between Sushiswap and Uniswap
- How to Use Sushiswap
- How to Trade on Sushiswap
- How to Add Liquidity to Sushiswap Pool
- How to Stake Sushiswap LP (SLP) tokens
- How to Stake SUSHI: SUSHI Staking
- How SUSHI Rewards Are Distributed
- What Are Sushiswap Fees?
- Benefits of Using Sushiswap
- What Are the Issues With Sushiswap?
- Conclusion
- Frequently Asked Questions
What is Sushiswap?
Pros: It is a high yielding investment platform
Cons: Investing on the platform is not for newbies.
Sushiswap is an automated market maker operating as a decentralized exchange (DEX). It was designed to improve upon Ethereum popular Dapp, Uniswap. It introduced a community model attracting a lot of the market’s liquidity by offering Defi features, like yield farming.
It popularity stems from its large selection of liquidity pools and community models. Its liquidity size places it above many other decentralized exchanges, to compete favorably with the centralized trading platforms. Its team of developers is always intensifying efforts to create the best features that can make the platform stay above the competition.
How to Trade on Sushiswap
Sushiswap core features are token swapping and yield farming. Traders swap tokens and yield farms to earn rewards on already existing assets.
It provides a menu that changes every week for yield farmers to search for LP opportunities. This involves switching back and forth various platforms to farm on profitable opportunities. Each pool profitability changes as new members are added, sometimes the team could decide to choose the ‘menu of the week.’ The governance participant can vote on which LPs to feature every week, it helps to change token offering.
The community will approve the Onsen sub-section to replace the weekly menus. There are differences in lasting longer and featuring more pairs at a time. The LPs on Onsen can last for 60 days and feature 58 liquidity pairs.
How to Use Sushiswap Platform
The platform is user-friendly, you can do a lot of things like token swapping, depositing to liquidity pools, and staking to earn fees. To start using this exchange you will need to go through the following steps:
Step 1
You need to have some ETH in your wallet, if you don’t already have, no problem, there are many ways to go about it. The best way is fiat on-ramp, you just need to head over to a centralized exchange like Binance, that supports fiat currency, and register an account. Note, you may need an ID for verification.
Step 2
Fund your account with fiat currency and convert it to ETH, and you are good to go.
Step 3
Head over to Sushiswap and connect your wallet, there is a ‘connect wallet’ button, click on it to link up your wallet. You will be redirected to your wallet, type in your password, and your wallet is linked. You need a Metamask wallet or other mobile wallets to access Sushiswap.
Step 4
After connecting your wallet, the next thing is to choose a liquidity pool. You may need to do some research about crypto assets before making a choice. Once you choose the right crypto asset, you are ready for the next step.
Step 5
Now, with your wallet funded and linked, you are ready to add your crypto asset to the liquidity pool that matches your investment plan. As you stake your tokens, you will receive SLP tokens, which appreciate as the project’s liquidity pool increases. You can earn more rewards by farming those tokens you have earned.
Difference Between Sushiswap and Uniswap
If you have used the Uniswap platform, you will have no difficulty using Sushiswap. These two platforms are similar in many ways yet different in others since Sushiswap is an upgrade of Uniswap.
Sushiswap operates a community-run platform that is secure and more user-driven, allowing users to influence protocol’s future changes. Changes to the Uniswap protocol are made by the development team.
You may not be a liquidity provider to earn from the liquidity pool. All you need is to buy SUSHI tokens and stake them on the platform to earn trading fees. You can even earn a reward in SUSHI by staking your SLP.
As a liquidity provider, you can earn higher on Sushiswap. While liquidity providers earn 0.3% trading fees on Uniswap, 0.25% of the fee goes to liquidity providers on Sushiswap. SUSHI holders earn up to 0.05% when they stake their SUSHI tokens and get xSUSHI in return.
There are more ways to earn on Sushiswap than Uniswap. SUSHI token holders can mint xSUSHI by staking SUSHI tokens on Sushiswap and start earning swap fees.
Follow These Steps to Trade on Sushiswap Platform
Trading on Sushiswap is super easy. Earlier in this review, we discussed how you can link your wallet to this platform. Check that, before you move on to trading, following the steps below.
Step 1:
To make a swap, first, go to the swap section, choose the token you want to swap and the token you want to receive.
Step 2
Enter the amount of token you want to swap, this will be calculated automatically.
Step 3
Set the spillage tolerance and transaction deadline in the setting area.
Step 4
Approve the token so you will be able to make a swap
Step 5
Click on the “Approve X” button and confirm the transaction on MetaMask wallet.
Step 6
Go on and swap by confirming the transaction on your wallet.
How to Add Liquidity to Sushiswap Pool
Adding liquidity to Sushiswap is the same on Uniswap. First, you need to deposit an equal value of each token. Let’s say you want to add $100 worth of SUSHI to SUSHI/ETH pair, you will need to have $100 worth of ETH.
Step1: Go to the “pairs” page and check out the liquidity volume of pairs.
Step 2: Check the daily SUSHI reward for each pool on the “farm” page.
Step 3: Go to Sushiswap and click on “Liquidity”
Step 4: Check the base to make sure it is ETH
Step 5: Click on the select token and choose SUSHi
Step 6: Enter the amount of ETH and SUSHI you want to add to the pool.
Step7: Add the liquidity to the pool
How to Stake SUSHI LP (SLP) Tokens
Now, you are done with adding liquidity to a Sushiswap pool, the good news is that you will receive Sushiswap LP (SLP) tokens. You can stake these on the “farm” page and earn rewards in SUSHI tokens.
To stake your SLP tokens, click on the “Approve Staking” button. By doing this you have allowed Sushiswap to spend your SLP token, now you can stake them.
A percentage of the SUSHI reward is subject to six months of vesting. If you earn 100 SUSHI tokens, you can harvest 33.4 percent SUSHI immediately and the remaining 66.6% six months later.
How to Stake SUSHI: SUSHI Staking
Staking your SUSHI in Sushiswap is no hassle. You can stake your SUSHI for xSUSHI and convert it back to SUSHI on the “stake” page. The first thing you need to do is allow the platform to spend your SUSHI by approving the token. After that, you can get SUSHI for xSUSHI.
Note that Sushiswap does not distribute all 0.3% swap fees to liquidity providers. A 0.05% is for SUSHI holders who stake SUSHI tokens for xSUSHI, the rest is for providers.
You can also stake the SUSHI tokens you have earned by providing liquidity to the Sushiswap pool and staking LP tokens.
How Are Tokens Distributed on Sushiswap?
Tokens are distributed through liquidity mining, to those who provide liquidity to specific pools. The liquidity providers can deposit their LP tokens in the Sushiswap staking contract to start earning SUSHI.
Sushiswap platform requires that users pay 0.3% trading fees for every swap. This will be distributed among the liquidity pools, providers get 0.25%, the remaining 0.05% are converted to SUSHI token and distributed among SUSHI token holders. This distribution model allows token holders to get additional tokens even when they are no more liquidity holders.
This system of reward distribution enables liquidity providers to earn more on Sushiswap than other platforms.
How Much Fee Can Traders Pay on Sushiswap?
Sushiswap fees are far lesser than what is charged on centralized exchanges. When you swap tokens on Sushiswap, you will pay a 0.3% trading fee. When approving tokens, you will need to pay an additional transaction fee once for each token.
Prices fluctuate sometimes, so before making a trade, check the price impact, also ensure there is enough liquidity, especially when making large trades.
What Are the Benefits of Investing or Trading on Sushiswap?
The community model run by Sushiswap gives users voting power to vote on all important upgrades and protocol changes.
The platform is growing rapidly and gaining popularity with users and market support, which means higher earnings for investors.
The network is endorsed by so many Defi platforms, many large centralized exchanges added SUSHI token on their platforms.
Users end up getting back the fees they paid as rewards. It provides passive income to liquidity providers who receive large rewards for their contributions.
It is the first AMM platform to give back all profits to the community that maintains it.
Some pools like SUSHI/ETH pay double rewards to users.
Users trade directly with liquidity pools via non-custodial wallets and are allowed a random selection of coins.
It allows users control over AMM
What Are the Issues With Sushiswap?
According to a report by a blockchain security firm, Quantstamp, an error has been identified that can cause the system to fail in preventing duplication in adding liquidity providers.
This could lead to malfunctioning of reward variables and loss of tokens.
Conclusion
It is natural for traders to invest more in high-yielding projects like Sushiswap, which explains its rapid growth and popularity in a very short period.
However, it is as well important to exercise caution in every kind of investment in crypto considering its high volatility. A better approach would be to monitor trends in the industry and be constantly updated.
Frequently Asked Questions
- Is it safe to invest in Sushiswap?
From all indications, Sushiswap could be considered safe, it has not recorded any hack since it was launched in September 2020.
- How can I invest in Sushiswap?
SUSHI token is added on so many popular exchange platforms. All you need is to register an account on any of them, buy a coin with fiat, and trade SUSHI.
- What is the SUSHI coin used for?
SUSHI is an ERC-20 token. It is used to reward users with a portion of the exchange fees.
- What is xSUSHI?
xSUSHI is a special token in the network that users receive in exchange for staking SUSHI tokens.
- What is SLP Token?
SLP is a short form for “Sushiswap Liquidity Provider” tokens. Users receive SLP tokens when they provide liquidity to Sushiswap pools.
fees. You can even earn a reward in SUSHI by staking your SLP.
As a liquidity provider, you can earn higher on Sushiswap. While liquidity providers earn 0.3% trading fees on Uniswap, 0.25% of the fee goes to liquidity providers on Sushiswap. SUSHI holders earn up to 0.05% when they stake their SUSHI tokens and get xSUSHI in return.
There are more ways to earn on Sushiswap than Uniswap. SUSHI token holders can mint xSUSHI by staking SUSHI tokens on Sushiswap and start earning swap fees.
How to Trade on Sushiswap Platform
Trading on Sushiswap is super easy. Earlier in this review, we discussed how you can link your wallet to this platform. Check that, before you move on to trading, following the steps below.
Step 1:
To make a swap, first, go to the swap section, choose the token you want to swap and the token you want to receive.
Step 2
Enter the amount of token you want to swap, this will be calculated automatically.
Step 3
Set the spillage tolerance and transaction deadline in the setting area.
Step 4
Approve the token so you will be able to make a swap
Step 5
Click on the “Approve X” button and confirm the transaction on MetaMask wallet.
Step 6
Go on and swap by confirming the transaction on your wallet.
How to Add Liquidity to Sushiswap Pool
Adding liquidity to Sushiswap is the same on Uniswap. First, you need to deposit an equal value of each token. Let’s say you want to add $100 worth of SUSHI to SUSHI/ETH pair, you will need to have $100 worth of ETH.
Step1: Go to the “pairs” page and check out the liquidity volume of pairs.
Step 2: Check the daily SUSHI reward for each pool on the “farm” page.
Step 3: Go to Sushiswap and click on “Liquidity”
Step 4: Check the base to make sure it is ETH
Step 5: Click on the select token and choose SUSHi
Step 6: Enter the amount of ETH and SUSHI you want to add to the pool.
Step7: Add the liquidity to the pool
How to Stake SUSHI LP (SLP) Tokens
Now, you are done with adding liquidity to a Sushiswap pool, the good news is that you will receive Sushiswap LP (SLP) tokens. You can stake these on the “farm” page and earn rewards in SUSHI tokens.
To stake your SLP tokens, click on the “Approve Staking” button. By doing this you have allowed Sushiswap to spend your SLP token, now you can stake them.
A percentage of the SUSHI reward is subject to six months of vesting. If you earn 100 SUSHI tokens, you can harvest 33.4 percent SUSHI immediately and the remaining 66.6% six months later.
How to Stake SUSHI: SUSHI Staking
Staking your SUSHI in Sushiswap is no hassle. You can stake your SUSHI for xSUSHI and convert it back to SUSHI on the “stake” page. The first thing you need to do is allow the platform to spend your SUSHI by approving the token. After that, you can get SUSHI for xSUSHI.
Note that Sushiswap does not distribute all 0.3% swap fees to liquidity providers. A 0.05% is for SUSHI holders who stake SUSHI tokens for xSUSHI, the rest is for providers.
You can also stake the SUSHI tokens you have earned by providing liquidity to the Sushiswap pool and staking LP tokens.
How Are Tokens Distributed on Sushiswap?
Tokens are distributed through liquidity mining, to those who provide liquidity to specific pools. The liquidity providers can deposit their LP tokens in the Sushiswap staking contract to start earning SUSHI.
Sushiswap platform requires that users pay 0.3% trading fees for every swap. This will be distributed among the liquidity pools, providers get 0.25%, the remaining 0.05% are converted to SUSHI token and distributed among SUSHI token holders. This distribution model allows token holders to get additional tokens even when they are no more liquidity holders.
This system of reward distribution enables liquidity providers to earn more on Sushiswap than other platforms.
How Much Fee Can Traders Pay on Sushiswap?
Sushiswap fees are far lesser than what is charged on centralized exchanges. When you swap tokens on Sushiswap, you will pay a 0.3% trading fee. When approving tokens, you will need to pay an additional transaction fee once for each token.
Prices fluctuate sometimes, so before making a trade, check the price impact, also ensure there is enough liquidity, especially when making large trades.
What Are the Benefits of Investing or Trading on Sushiswap?
The community model run by Sushiswap gives users voting power to vote on all important upgrades and protocol changes.
The platform is growing rapidly and gaining popularity with users and market support, which means higher earnings for investors.
The network is endorsed by so many Defi platforms, many large centralized exchanges added SUSHI token on their platforms.
Users end up getting back the fees they paid as rewards. It provides passive income to liquidity providers who receive large rewards for their contributions.
It is the first AMM platform to give back all profits to the community that maintains it.
Some pools like SUSHI/ETH pay double rewards to users.
Users trade directly with liquidity pools via non-custodial wallets and are allowed a random selection of coins.
It allows users control over AMM
What Are the Issues With Sushiswap?
According to a report by a blockchain security firm, Quantstamp, an error has been identified that can cause the system to fail in preventing duplication in adding liquidity providers.
This could lead to malfunctioning of reward variables and loss of tokens.
Conclusion
It is natural for traders to invest more in high-yielding projects like Sushiswap, which explains its rapid growth and popularity in a very short period.
However, it is as well important to exercise caution in every kind of investment in crypto considering its high volatility. A better approach would be to monitor trends in the industry and be constantly updated.
Frequently Asked Questions
- Is it safe to invest in Sushiswap?
From all indications, Sushiswap could be considered safe, it has not recorded any hack since it was launched in September 2020.
- How can I invest in Sushiswap?
SUSHI token is added on so many popular exchange platforms. All you need is to register an account on any of them, buy a coin with fiat, and trade SUSHI.
- What is the SUSHI coin used for?
SUSHI is an ERC-20 token. It is used to reward users with a portion of the exchange fees.
- What is xSUSHI?
xSUSHI is a special token in the network that users receive in exchange for staking SUSHI tokens.
- What is SLP Token?
SLP is a short form for “Sushiswap Liquidity Provider” tokens. Users receive SLP tokens when they provide liquidity to Sushiswap pools.
2 Comments
Your article helped me a lot, is there any more related content? Thanks!
Yes, we just published a new one on best investment tools, please check