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SushiSwap is a decentralised exchange and its native cryptocurrency, SUSHI, is provided as a reward for token holders and liquidity providers.
- SushiSwap is a DEX: a decentralised cryptocurrency exchange with no single, presiding authority like a bank.
- To ensure the liquidity of its tradable cryptocurrencies, whereas traditional exchanges use order books filled with ‘buy’ and ‘sell’ orders, SushiSwap uses liquidity pools: different groups of tokens that are provided by users known as liquidity providers.
- The DeFi platform has experienced its fair share of controversy, most notably when its founder, known by the pseudonym Chef Nomi, cashed out a $14 million developer fund in 2020. However, it remains one of the top DEXs, marketing itself as an ‘improved and community-friendly’ Uniswap.
What is SushiSwap?
It is one of the world’s leading DEXs, having copied the open-source code of Uniswap to form in 2020. The platform was founded by Chef Nomi, along with co-founders sushiswap and 0xMaki, with the aim of creating an improved version of Uniswap.
On the face of things, it functions in much the same way. To create the liquidity necessary for a thriving exchange, SushiSwap uses liquidity pools. Essentially, users lock their tokens into smart contracts (pieces of code on the blockchain) and they are added into separate groups of tokens in a 50/50 ratio. Traders then buy and sell tokens directly from these pools.
A major part of the cryptocurrency narrative is decentralisation, and that is exactly what SushiSwap hones in on. It allows users to trade cryptocurrencies without the need for a central administrator, while software changes to the platform are determined by holders of the platform’s native token, SUSHI.
SuhsiSwap’s fees are the same as Uniswap, though its offering of tokens is far more limited. Moreover, the controversy surrounding Chef Nomi’s use of the platform’s $14 million developer fund has led to increased scrutiny on SushiSwap, though this capital was later returned after a 70% SUSHI price crash.
If you want to get involved in the SushiSwap ecosystem, or if you simply want to speculate on the future success of the platform, check out our guide that explains how to buy SUSHI tokens.
A brief history of SushiSwap
SushiSwap has become one of the world’s leading crypto exchanges, and we have outlined its journey to this point below.
- SushiSwap started its life via an action coined as a ‘vampire attack.’ Essentially, the founder, Chef Nomi, planned to redeem tokens from Uniswap for assets that would be transferred to SushiSwap.
- At the time of its launch in 2020, SushiSwap offered both liquidity mining and a governance token.
- On September 5th 2020, Chef Nomi drained the $14 million development fund for 37,400 Ether. Following heavy pressure from the community, the following day, Nomi relinquished control of the private key to the SushiSwap smart contract to FTX CEO, Sam Bankman-Fried. A few days later, Nomi returned the funds and apologised.
- After this scandal, the SushiSwap community quickly created clear rules for ownership and control to help the platform move forward more efficiently.
- Yearn.finance merged with SushiSwap on November 30th 2020, meaning Yearn and SushiSwap share development resources but still maintain separate tokens and governance systems.
Where can I learn more?
To learn more about SushiSwap and the potential of SUSHI tokens as an investment, check out our hub page. Alternatively, to find out more about the broader cryptocurrency market, click on any of our courses below.
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