We know that in the world of DeFi, financial services are done through blockchain networks and smart coracts instead of ceralized institutions like banks. Deceralized exchanges are esseial compones of the DeFi space, and UniSwap is the largest and most famous deceralized exchange in the world. However, after UniSwap, other options such as Sushi Swap were released. But what is Sushi Swap? What is sushi digital currency? What competitive advaages does it have?
Deceralized exchange Sushi Swap also has its own native token called Sushi (SUSHI). Using Sushi Token, users can use various facilities such as trading digital currencies, participating in importa decisions and earning profit. In this article, we teach zero to hundred sushi swap protocol and its digital currency, SUSHI.
What is Sushi Swap digital currency?
SushiSwap is a deceralized exchange protocol where traders can make their transactions directly without the need for any ceralized eity. SUSHI digital currency is the main currency of Sushi Swap exchange and this exchange is managed by Sushi token holders. Holders of Sushi Token can participate in related voting and have a role in its decisions.
These votes are done through smart coracts and no ceralized eity is involved in them. These coracts automatically calculate voting results. Finally, the accepted decisions are implemeed by the core team of Sushi developers. This team is responsible for the developme and maienance of Sushi and implemes voting decisions in a way that is in line with Sushi’s goals. Sushi tokens can be obtained in two ways:
- Buying from the digital currency market
- Carrying out collaborative activities such as providing liquidity for liquidity pools
Collaborative activities, also referred to as “farming”, allow users to earn Sushi Tokens by providing liquidity to Sushi’s liquidity pools. This system provides an economic inceive to operate on the Sushi platform and helps the growth of the DiFi ecosystem.
Read more: What is a smart coract?
What is Sushi Swap?
SushiSwap is an Ethereum-based deceralized exchange that uses the Automated Market Maker Model (AMM). AMM is an efficie trading mechanism that allows miners to trade their tokens using liquidity pools. Previously, this model was iroduced by the Uniswap deceralized exchange to provide liquidity.
Read more: What is the Ethereum currency?
SushiSwap has also served other DeFi solutions in the past, but now focuses on developing, maiaining and optimizing its own deceralized exchange. To buy and sell differe virtual currencies, you can exchange more than 11,000 currency pairs by connecting a digital currency wallet like MetaMask to the deceralized Sushi Swap platform.
History of Sushi Swap
Sushi Swap was launched in August 2020 by an unknown founder with the nickname Chef Nomi. This person took the open source code of the UniSwap protocol and modified it to create SushiSwap. SushiSwap is similar to UniSwap, but with new features.
Also read: What is UniSwap?
SushiSwap initially gave users who deposited their liquidity io liquidity pools, Sushi Tokens. This caused many people to come to this exchange; Because they could get new tokens by providing liquidity. At that time, UniSwap had not released its token yet, and Sushi waed to take advaage of this opportunity to attract users.
Initially, SushiSwap was able to increase its total locked-up assets more than UniSwap by offering Sushi Rewards. But UniSwap also quickly released its own token, which made many users return to UniSwap.
In September 2020, the founder of Sushi Swap sold some of his Sushi tokens worth $12-14 million. This caused many people to worry that this project is a scam. Eveually, he bought back his sold tokens and handed over corol of the platform to Sam Bankman-Fried, CEO of the FTX exchange. In 2022, Jared Gray was iroduced as the manager of Sushi.
How does Sushi Swap work?
Sushi Swap exchange has three main functions, which are:
- Digital currency exchange
- Providing liquidity
- Receive rewards
Sushi Swap offers each of these services with solutions that we will review below.
Providing liquidity and receiving rewards based on AMM
As we said, SushiSwap is a deceralized exchange that uses AMM. AMM is a digital asset exchange mechanism that works based on smart coracts. For example, to provide liquidity in the Ethereum/DAI (ETH/DAI) currency pair liquidity pool, Liquidity Providers (LPs) must lock an equivale value of both ETH and DAI io the pool. In other words, one dollar worth of ETH for every dollar of DAI.
In exchange for providing liquidity, liquidity providers receive LP tokens represeing their coribution to the pool. These tokens can be used to receive a portion of transaction fees.
Traders can exchange their ETH for DAI or vice versa in the pool. The value of the pools is calculated using a mathematical formula that tries to maiain balance in the pool. Traders help keep the pool balanced by participating in trades. This makes the amou of both tokens in the pool always equal.
Liquidity providers are remunerated by fees charged to traders for transactions. In addition, they can also enjoy other bonuses that are specific to each pool. Also, these people can participate in a farm with their LP staking tokens and earn rewards.
Read more: What is staking?
Platform Sushi X Swap (SushiXSwap)
Sushi provides the possibility of exchanging digital currencies through SushiSwap and SushiXSwap. SushiSwap is a deceralized AMM-based exchange launched in 2019. SushiXSwap is also a deceralized AMM based exchange launched in 2022.
SushiXSwap enables cross-chain transactions using the Stargate protocol. Before this, SushiSwap only allowed transactions within a chain. For example, users could exchange Ethereum for Dai on the Ethereum chain and could not transfer Ethereum tokens from one Ethereum chain to another.
But with the iroduction of the Stragate protocol, this exchange now also provides the possibility of cross-chain transactions. For example, users can transfer Ethereum tokens from the Ethereum chain to the Arbiterum chain, or Dai from the Phaom chain to the Polygon chain.
Read more: What is Phaom?
Furo platform
Furo helps DAOs reward their coributors tokens over time. Foro does this regularly and automatically, which improves efficiency. In addition, Foro helps to automatically corol the token vesting period. The vesting period is the length of time that participas’ locked tokens are released over time.
To corol the vesting period, Foro assigns a non-fungible token (NFT) to each coributor’s position. This NFT comes with an expiration date. Coributors can only sell their tokens after the NFT expires.
Read more: What is an NFT?
What is the difference between Sushi Swap and Uni Swap?
Although SushiSwap is a copy of UniSwap, it differs from it in its fee structure and other aspects. The most importa differences between uni swap and sushi swap are:
- UniSwap has three levels of fees with perceages of 0.05%, 0.3% and 1%;
- Stablecoin pairs may have a fee of 0.05%;
- Common currency pairs like ETH/USDT may charge a fee of 0.3%;
- Pairs with new tokens may have a 1% fee;
- SushiSwap charges a flat fee of 0.3% from all trading teams;
- DISH token holders pay a fee equal to 0.05%;
- Liquidity providers must pay a fee of 0.25%.
UniSwap will not offer additional rewards uil the new token is released. But Sushi provides additional Sushi tokens for staking new tokens. Of course, it should be noted that from the poi of view of the volume of transactions, UniSwap is authoritatively ahead of Sushi Swap. The trading volume of UniSwap is about 10 times that of Sushi Swap.
Benefits of Sushi Swap
- Deceralization: SushiSwap is a deceralized exchange, in the sense that it is not under the corol of any ceer and the full corol of the assets is in the hands of the users;
- Benefit from Automated Market Maker (AMM): Sushi Swap uses the Automated Market Maker (AMM) mechanism that facilitates fast and efficie transactions without the need for an order book;
- Low fees: SushiSwap has relatively low exchange fees compared to ceralized exchanges. In addition, it does not charge any deposit or withdrawal fees;
- sovereigy: Sushi Swap has iernal governance mechanisms. The protocol allows Sushi token holders to vote on protocol upgrades and changes. This allows the project community to provide input on the project’s goals and help ensure its long-term success.
Learning how to work with Sushi Swap exchange
To use Sushi Swap, the first condition is to have some tokens of the tokens traded in this exchange (such as Ether) in one of the supported wallets and connect the desired wallet to the exchange. Follow the steps below:
Step 1. Run the Sushi app
Assuming you already have a digital currency wallet, you can access the Sushi Swap ierface by simply going to Sushi Swap’s address (sushi.com).
Then click on the ‘Eer App’ option to be redirected to the SushiSwap page where you can connect your wallet.
Step 2. Connect your wallet to Sushi Swap
This page is where you can exchange tokens. Click on the “Connect Wallet” option at the top right.
Step 3. Choose a wallet
Select your personal wallet from the list of supported wallets.
Note that WalletConnect supports a number of wallets, including TrustWallet. In this example, we will use the Metamask wallet; Because this wallet is the most popular browser-based wallet and most Dapps support it.
Read more: complete tutorial of MetaMask wallet; Installation and use steps
Assuming you’ve already created your Metamask accou on the browser, a window will pop up asking for permission to connect your wallet to Sushi.
Note that there are two notifications coming from Metamask. You need to click Connect to connect to Sushi.
After that, your wallet will be connected to Sushi Exchange.
Note that you need to separate your wallet from the DApp as well. You can do this through your wallet. If you use Metamask, go to the three-dot menu below your accou picture and select Connected Accous.
How to become a Liquidity Provider (LP) on Sushi Swap?
To add liquidity to Sushi Swap, you can do the following steps:
Step 1. Choosing currency pairs to provide liquidity
The first thing you need to do is decide which tokens you wa to offer as cash. They may be tokens that you already have in your wallet that you wa to use to earn rewards. Note that when providing liquidity for a DEX, you must provide the same value of two differe tokens.
On the other hand, you should keep in mind that inceive pools are in the DEX farm option. Most DEXs, including SushiSwap, have a list of inceive pools where users can deposit LP tokens generated from cash deposits. This process is called “yield farming”.
But there are still other things to consider. Not all tokens offered by DEX are trustworthy. The truth is that anyone can list their newly created token on a DEX. Also, you are facing the risk of impermane loss, which cannot be overcome. But offering liquidity to high-APR pools is still worth the effort.
After considering all these aspects and deciding on a currency pair to deposit io the liquidity pool, you should check that you have the same amou of currency pairs in your wallet. You can also use the Swap section of Sushi Swap to get the tokens you need to deposit cash.
Step 2. Add liquidity in Sushi Exchange
From the top menu, go to the Pool section and the Add tab and select the currency pair you wa to deposit as cash. You must also eer an amou of each token of the same value.
After selecting these details, click on Approve Token to allow the exchange to access your tokens. Read the notification carefully and then click on Confirm.
After confirming the tokens (if this is the first time you are using these tokens to provide liquidity, this process is required for both tokens), return to the SushiSwap ierface and click Confirm Adding Liquidity.
You will be shown a window with information about what you deposited for cash. This information includes the amou of each token eered as well as your share of the cash pool. Click on “Confirm Supply”.
Then you need to confirm the transaction from your wallet; Because depositing cash to DEX carries a transaction fee. Click on “Confirm”.
After returning to Sushi, you will be shown information about cash.
Your funds are now in the liquidity pool and are no longer in your wallet. If you wa to use your funds, you need to go to the cash section in Sushi and withdraw it.
Step 3. Checking the liquidity provided and withdrawing it
To view your liquidity pools, go to the Pool section and the Browse tab. From this section, you can withdraw your locked assets and reward by clicking on “Remove”. Also, if you wa to add more cash to that pool, click on the “Add” option.
Buy sushi
To buy sushi currency like any other digital currency, you have two ways: to buy some other coin (for example, Tether) from an Iranian exchange and convert it to sushi in a foreign exchange, and to buy sushi from an Iranian exchange from the beginning.
Using foreign exchanges has always been challenging for Iranians and has become more difficult in rece years. Strict autheication requiremes have severely limited the number of iernational exchanges suitable for Iranians, and on the other hand, domestic exchanges support most of the famous coins and tokens. The set of these factors has made Iranian exchanges a more reasonable option for Iranians.
If you iend to buy sushi currency, you can use the sushi swap purchase page of Aruzdigital website. Finally, we recommend that you do enough research before investing in any currency and weigh all aspects and consider your loss limit.
Frequely asked questions
Sushi Swap is a deceralized exchange whose liquidity is provided by users and managed in a deceralized manner.
SUSHI digital currency is the native currency of Sushi Swap exchange, which has the role of a governance token and its holders can participate in protocol decisions.
UniSwap is the largest deceralized exchange in the world, and in terms of market size and number of active users, it ranks higher than Sushi Swap.
summary
In this article, we explained what sushi is and how it works. Although this deceralized exchange has serious competitors such as UniSwap, it offers various advaages to its users, as you read in this article.
Ultimately, it is up to SushiSwap leaders, community members, and cryptocurrency market forces to decide the future of Sushi. Time will tell what the future of this digital currency will be like and where it will go.
