Michaël van de Poppe - 23 March 2022
A brief look into the history, present, and future of SushiSwap
Originally, Sushi started out as a fork of Uniswap in August 2020. It attracted users by offering higher rewards in the form of Sushi tokens. Rewarding liquidity providers with tokens was fairly new at that time. In the weeks following the opening of the farms on SushiSwap, the platform achieved a TVL of $1.2 billion, for the majority at the expense of Uniswap’s liquidity. The team behind SushiSwap was led by the anonymous developer “Chef Nomi”. On September 6 Nomi sold $8 million worth of Sushi tokens on the market, single handedly causing the price and the trust in the project to plummet. In hopes of saving the project, Nomi handed over control to FTX CEO Sam Bankman-Fried. He then made an effort to move the control of the project back to the community by deploying a multi-signature wallet into Sushi’s smart contracts. On the 11th of September Chef Nomi came out with an apology and he returned the Ethereum he had sold his Sushi for back to the treasury wallet.
It is now exactly a year since Sushi’s and the protocol has proven itself as one of the most innovative DeFi projects on the market. With a wide variety of products and venues it accrues a daily average of $1.1 million in fees across different chains. The following segments highlight the various products of SushiSwap. Additionally, their newest innovation called Trident is explained.
First and foremost, SushiSwap is a DEX (Decentralized Exchange). On SushiSwap users can trade peer-to-peer or provide liquidity so others can trade. As per its decentralized characteristic, it is very easy for new projects to create liquidity. Like Uniswap, SushiSwap is an AMM (Automated Market Maker). Without going too much into details, liquidity is provided on an AMM along a curve on which the product of the two tokens is always constant. You can learn more about constant-product AMMs here. The experience on SushiSwap is very user friendly. Their UX and UI are up to standard and the protocol even supports limit orders, unlike many other DEXes.
What makes SushiSwap stand out from its main competitor Uniswap, is the ability to put your representative liquidity tokens in so-called farms to earn Sushi tokens. There are two places where a user can deposit his SLP tokens (Sushi Liquidity Pool): on the main Sushi page and the Onsen, referencing famous bathing facilities in Japan. Both are farms incentivized by Sushi tokens. The main difference is that the main Sushi page is only for tokens of high quality and demand, like ETH-USDT. The Onsen menu is designed for tokens that are relatively new. Additionally, users can stake Sushi to receive xSushi. A portion of the fees generated by the different venues of Sushi are distributed to xSushi holders. It makes sense for long-term Sushi holders to convert their tokens to xSushi.
The BentoBox is an essential infrastructure on Sushi’s platform as it allows for other products to be built on top of it. The BentoBox enables users to record an artificial balance for their tokens while they’re in reserve, like in a traditional fractional reserve system. The deposited tokens can then be used in more than one way at the same time. Deposited funds in the BentoBox generate yield through various low-risk strategies and lead to higher capital efficiency. Examples of these strategies are the use of flash loans, deposits on external platforms and yield opportunities present on the Sushi platform, for example depositing on Kashi.
Kashi is the lending and margin trading venue on the Sushi platform. Anyone can come in to create markets for lending, borrowing and collateralization of various ERC-20 tokens. The main difference between Kashi and other lending platforms, like Compound and AAVE, is the use of isolated risk markets. On Compound and AAVE the solvency of any token can affect the solvency of the whole platform. This is not the case for Kashi as with their unique isolated design only one token pair is affected, moving risk away from the entire platform.
The last product SushiSwap introduced to its users is called Miso and is a launchpad for projects to easily launch their token on. Sushi offers a ton of different options regarding the initial price, farms, and vaults, so that projects can customize the details of their token launch entirely to their preferences.
In the pipeline
And there is even more in the works. Recently, Sushi announced their newest liquidity pool system called Trident. In late March Uniswap introduced active liquidity to the crypto space and set a new standard of capital efficiency for AMMs. It was only a matter of time for Sushi to come out with their form of active liquidity. Trident is built on top of BentoBox and thus funds in the BentoBox can be used for liquidity. Additionally, Trident brings different pools to the table with the goal to reduce slippage. An example is the hybrid pool that consists of different tokens of the same asset class (USDC, USDT, DAI or renBTC, wBTC, etc.). It also brings concentrated liquidity to Sushi that gives liquidity providers more control over their position in the pool. Through these various tools, the goal of Trident is to enhance capital efficiency on the platform and make the experience of users on Sushi as easy and smooth as possible.
Additionally, Sushi is building their own NFT marketplace, much like OpenSea, where they intend to bring a lot of promising new features to the table, like fractional ownership, multi-chain support, social tokens, marketplace fee distribution, and more. So they are basically creating an all-in-one NFT marketplace, as OpenSea is lacking some of these features. This is beneficial for the community as competition brings innovation. More details can be found in the governance proposal here:, and their Twitter.
As it seemingly started out as a rugpull, Sushi developed itself as one of the most innovative DeFi projects in this space. With a wide variety of venues, it covers the most important aspects of decentralized finance. Their tokenomics are also promising as xSushi receives a part of the fees generated from every venue. Currently, Sushiswap is the second largest DEX on Ethereum while the team keeps building to become an allround multi-chain DeFi platform.