If you've been exploring the world of cryptocurrency beyond Bitcoin and Ethereum, you've probably heard of Sushi. No, not the Japanese dish – we're talking about a powerful player in the decentralised finance (DeFi) space that's been making waves since its dramatic entrance in 2020.
Sushi, or SushiSwap as the platform is called, burst onto the crypto scene with what many called a "vampire attack" on Uniswap, another popular decentralised exchange (DEX). This bold move involved attracting over a billion dollars of liquidity from its competitor in just a few days.
Today, SushiSwap stands as one of the leading decentralised exchanges in the crypto ecosystem, offering a suite of financial services that go well beyond simple token swapping. With its native SUSHI token, the platform has created an ecosystem that allows users to trade, earn, lend, borrow, and more – all without traditional financial intermediaries.
What makes Sushi truly stand out is how it's putting financial power back into the hands of regular users. By democratising access to sophisticated financial tools that were once only available to privileged institutions, Sushi is helping to create a more open, accessible financial system for everyone.
What is Sushi (SUSHI)?
At its core, Sushi is a DEX and DeFi protocol that allows users to trade cryptocurrencies directly with each other without any middlemen. Unlike centralised exchanges, there's no company controlling your funds or verifying your identity – it's just you, smart contracts, and the blockchain.
Think of SushiSwap as an online marketplace where instead of a company facilitating trades, everything runs on code. It's like if eBay operated without eBay the company – just buyers and sellers interacting through an automated system.
The relationship between SushiSwap and SUSHI is important to understand:
- SushiSwap is the platform – the actual decentralised exchange and suite of DeFi services
- SUSHI is the native token that powers the ecosystem – like owning a piece of the project
The Sushi ecosystem has evolved significantly since its launch, now offering a full menu of DeFi services:
- Token swapping (the basic exchange function)
- Liquidity providing (where users can earn fees)
- Yield farming (earning rewards by supporting the platform)
- Lending and borrowing
- Token launches
- NFT marketplace
- Cross-chain functionality (operating across multiple blockchains)
When compared to other DEXs like Uniswap and PancakeSwap, Sushi stands out for its community-first approach and wide range of features. While Uniswap pioneered the automated market maker model that Sushi uses, Sushi expanded on this foundation by adding more ways for users to participate and earn rewards.
And while PancakeSwap operates primarily on the Binance Smart Chain, Sushi has expanded to multiple blockchains, including Ethereum, Polygon, Avalanche, and more.
The history of Sushi
Sushi's history reads like a crypto soap opera – complete with controversy, drama, and unexpected twists. Grab the popcorn.
It all began in August 2020 when an anonymous developer going by the name "Chef Nomi" created SushiSwap as a fork (essentially a copy with modifications) of Uniswap's code. But Chef Nomi didn't just launch a competitor; they executed what became known as a "vampire attack" – a strategy to drain liquidity from Uniswap by offering better incentives.
Users who provided liquidity to Uniswap could stake their LP (liquidity provider) tokens on SushiSwap to earn SUSHI rewards. Then, in a coordinated event called "The Migration," over $1 billion in crypto assets moved from Uniswap to SushiSwap virtually overnight. The crypto community was stunned by the aggressive yet innovative approach.
But the drama was just beginning. Shortly after the successful migration, Chef Nomi suddenly converted a large amount of SUSHI tokens (worth about $14 million at the time) into Ethereum and withdrew it. The community viewed this as an "exit scam," and the price of SUSHI plummeted.
In a surprising turn of events, Sam Bankman-Fried, then-CEO of FTX (a major crypto exchange at the time), stepped in to take control of the project. Days later, Chef Nomi returned all the funds and apologised to the community.
Control of the project was then transferred to a multi-signature wallet controlled by several trusted community members, transitioning SushiSwap to true community governance. Since then, the protocol has seen steady development and expansion, including:
- Launch of Kashi lending platform (March 2021)
- Introduction of BentoBox, a yield-generating vault (Q1 2021)
- Expansion to multiple blockchains beyond Ethereum
- Release of Miso launchpad for new tokens
- Development of Shoyu, an NFT marketplace
Despite its tumultuous beginnings, Sushi managed to establish itself as a serious contender in the DeFi space through continuous innovation and a strong community focus.
How does SushiSwap work?
SushiSwap operates on a model called an automated market maker (AMM), which is fundamentally different from traditional exchanges. Here's how it works in simple terms:
Instead of matching buyers with sellers (the way stock exchanges work), SushiSwap uses liquidity pools – essentially big pots of cryptocurrencies that users can trade against. Imagine a vending machine that's always ready to exchange one token for another, rather than waiting to find someone who wants the opposite side of your trade.
These pools are created and maintained by liquidity providers – regular users who deposit pairs of tokens (like ETH and USDT) into the pools. In return for providing this liquidity, they earn fees from trades that happen in their pool.
When you want to swap tokens on SushiSwap, here's what happens:
- You select the tokens you want to exchange (for example, ETH for USDT)
- Smart contracts calculate the exchange rate based on the ratio of tokens in the relevant liquidity pool
- The more of one token you want, the more expensive it gets (this is called "slippage")
- A small fee (0.3% of the trade) is taken and distributed to liquidity providers
- The tokens are exchanged directly in your wallet
The beauty of this system is that it's all handled by smart contracts – self-executing code on the blockchain. There's no company processing your trade or holding your funds; it's all automated and trustless.
Of this 0.3% fee, 0.25% goes directly to liquidity providers in the pool, while the remaining 0.05% is converted to SUSHI tokens and distributed to SUSHI stakers. This creates a sustainable revenue model where active users earn from the platform's success.
Key features of the Sushi ecosystem
Sushi has evolved from a simple token exchange into a comprehensive DeFi ecosystem. Let's explore the main ingredients in Sushi's expanding menu:
SushiSwap DEX: The heart of the ecosystem is the decentralised exchange where users can swap virtually any ERC-20 token (and tokens on other supported blockchains). With competitive rates and deep liquidity across many trading pairs, it's the foundation of the Sushi experience.
Kashi: This lending and margin trading platform allows users to borrow assets against their crypto collateral. What makes Kashi unique is its isolated risk markets – meaning a problem in one lending market won't affect others, making it potentially safer than some competitors.
BentoBox: Think of this as a smart crypto savings account. BentoBox is a token vault that generates yield on deposited assets while they're waiting to be used in other Sushi products. It's like your money earning interest while sitting in your wallet, ready to use.
Onsen: This liquidity mining program incentivises users to provide liquidity for specific token pairs by offering additional SUSHI rewards. It's named after Japanese hot springs – places where people gather and relax, much like how Onsen gathers liquidity for the platform.
Miso: A launchpad for new tokens, Miso helps projects conduct token sales with various auction types. It's like Kickstarter for new crypto projects, helping them raise funds and distribute tokens fairly.
Shoyu: Sushi's NFT marketplace allows for the creation, buying, and selling of digital collectables. While newer than some competitors, it aims to offer lower fees and better integration with the rest of the Sushi ecosystem.
Cross-chain deployment: Unlike many DeFi protocols that only exist on Ethereum, Sushi has expanded to numerous blockchains including Polygon, Avalanche, Binance Smart Chain, Fantom, and more. This multi-chain approach helps users avoid Ethereum's sometimes high transaction fees while still accessing Sushi's services.
This diverse ecosystem makes Sushi a one-stop shop for many DeFi activities, allowing users to move seamlessly between trading, earning, lending, and more.
SUSHI tokenomics
The SUSHI token is the special sauce that brings the whole Sushi ecosystem together. Let's break down how it works:
Total supply: SUSHI has no maximum supply cap. New tokens are minted at a rate of 100 SUSHI per Ethereum block (roughly every 12 seconds), though this emission rate has been adjusted through governance votes over time.
Token utility: The SUSHI token serves several important functions:
- Governance: SUSHI holders can vote on proposals to change the protocol
- Fee sharing: When staked, SUSHI entitles holders to a portion of all trading fees
- Liquidity mining rewards: Users can earn SUSHI by providing liquidity
- Platform access: Some features may require SUSHI holdings or staking
Governance rights: Holding SUSHI means having a say in the future of the platform. Token holders can propose and vote on changes ranging from technical upgrades to treasury management and new feature development.
xSUSHI mechanism: When users stake their SUSHI tokens, they receive xSUSHI in return. This represents their share of the staking pool, which constantly grows as trading fees are added to it. When users unstake, they get their original SUSHI plus their portion of accumulated fees – making it a passive income opportunity.
Staking rewards: The current APY (Annual Percentage Yield) for staking SUSHI varies depending on platform volume and the number of stakers, but it has historically offered attractive returns compared to traditional finance.
Market performance: As with many cryptocurrencies, SUSHI has experienced significant price volatility since its launch. After reaching all-time highs during the 2021 bull market, the token has settled into a more stable trading range.
The tokenomics of SUSHI are designed to align the interests of users, liquidity providers, and token holders – when the platform succeeds, SUSHI holders benefit through increased value and fee sharing.
How to buy and sell SUSHI
Looking to get your hands on some SUSHI tokens? Here's how you can do it through the Tap app:
How to buy SUSHI on the Tap App:
- Download the Tap app from your device's app store
- Create an account and complete the required verification
- Fund your account using a supported payment method (bank transfer, card, etc.)
- Navigate to the crypto section and search for SUSHI
- Enter the amount you want to buy
- Review the transaction details and confirm your purchase
- Your SUSHI tokens will appear in your Tap wallet
How to sell SUSHI on the Tap App:
- Navigate to your SUSHI wallet in the app
- Select the Sell option
- Enter the amount you want to sell, and what currency you would like in return (crypto or fiat)
- Review and confirm the transaction details
- Your desired currency will appear in the relevant Tap wallet
Conclusion
Sushi has come a long way from its controversial beginnings to establish itself as a cornerstone of the DeFi ecosystem. What started as a fork of Uniswap has evolved into a comprehensive financial platform that offers trading, earning, lending, and more – all without traditional financial intermediaries.
By addressing one of the biggest pain points in DeFi – high Ethereum gas fees – through multi-chain deployment, Sushi makes decentralised finance more accessible to everyday users.
As with any cryptocurrency project, Sushi faces challenges and competition, but its innovative features, passionate community, and continuous development make it a project worth watching in the years to come.
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