The frenzy about cryptocurrency is at an all-time high. Many other currencies have emerged since the introduction of the first cryptocurrencies, such as Ethereum and Bitcoin, with some still doing pretty well on the market. Nonetheless, it’s reasonable to assume that the trend toward cryptocurrency isn’t going away anytime soon.
SushiSwap (SUSHI) is a relatively new alternative on the market, having been launched in August 2020. It functions both as a crypto exchange and cryptocurrency. The exchange allows users to swap cryptocurrencies. SushiSwap was designed to be a more open platform where people could easily connect.
It’s grown significantly since its inception, and the exchange reached over USD$3 billion in liquidity by August 2021, and this number continues to grow to this day. Hence, it may be an exciting investment opportunity for savvy cryptocurrency investors. Yet before investing in SushiSwap, here are some things you need to know:
1. Based on the Code from Uniswap
First, it’s important to know that SushiSwap is an automated market maker (AMM) that runs on a decentralized exchange. Additionally, SushiSwap isn’t the founder of AMM. It’s built on a platform known as Uniswap (UNI). SushiSwap was created by an anonymous developer using the moniker Chef Nomi, who used Uniswap’s code.
Users can trade cryptocurrency tokens. However, unlike other cryptocurrency exchanges, no central authority manages or facilitates trades. SushiSwap instead uses mathematical formulae and smart contracts to determine prices. Smart contracts allow for the execution of more complicated transactions on a blockchain.
So, if SushiSwap is decentralized, how does the exchange get its money? They use liquidity pools, where users lend their crypto funds to these pools in exchange for a reward.
2. You Don’t Need An Account
Unlike other cryptocurrency exchanges, you don’t need to register an account with SushiSwap. Centralized exchanges usually demand you to register an account, but because SushiSwap is decentralized, you don’t have to. However, to transact, you do need a crypto wallet. You only need to download the application, connect it to your cryptocurrency wallet, and then you can look for a great site where you can learn how to start lending, borrowing, trading, and swapping.
3. The Founder Carried Out A Vampire Attack
SushiSwap encountered a significant issue upon its inception. SushiSwap was based on Uniswap’s programming and was developed on a similar foundation, but it lacked distinguishing features that would entice users to their platform. Uniswap was already using the concept of liquidity pools, so SushiSwap had to look for a different way to draw people: to offer more lucrative incentives that would entice users to switch to a new platform. With this, SushiSwap tokens were created as incentives by the founder.
By depositing to SushiSwap’s platform, people would get rewarded with a SushiSwap token. However, there was one catch that may be deemed predatory. SushiSwap tokens were given to users in exchange for their Uniswap token deposits. Therefore, by depositing on the SushiSwap platform, users could earn more. Uniswap’s liquidity was essentially siphoned and transferred to SushiSwap, so the move was considered a vampire attack.
As a result of this ‘vampire attack,’ SushiSwap raised an excess of USD$800 million in crypto funds. Nevertheless, despite this move, Uniswap did not go under and even increased in popularity. Today, both SushiSwap and Uniswap still exist.
4. The Developer Tried To Defraud Users
During its early phases, the founder of SushiSwap engaged in a scam called a ‘rug pull,’ in which the developer steals investor funds for his own use. So, ensuing SushiSwap’s debut, Chef Nomi took approximately 20,000 Ethereum tokens and 2.5 million SUSHI. Users were understandably surprised by this occurrence. Even so, despite what had occurred, SushiSwap remained intact.
Unexpectedly, the initiative was taken over by Sam Bankman, the CEO of the cryptocurrency exchange FTX, who had invested in SushiSwap early on. It has been reported that he gave the site almost five million SushiSwap tokens as a donation. After that, they formed a new task force to oversee the project because, in essence, the ownership structure had changed. Thankfully, it’s reported that Chef Nomi returned to make amends and pay for what he had taken.
5. It’s A Capable Platform
Aside from the fact that SushiSwap has its fair share of controversy, it’s a valuable platform. People enjoy using it because it allows you to borrow, swap, lend, farm, and stake your cryptocurrency investments through the platform.
6. Holders of The Token Have Voting Rights
Holders of SushiSwap tokens have voting rights about how the exchange should be managed. You can vote on the proposals, and you have a say in determining the outcomes of these proposals.
7. It’s Competitive
SushiSwap provides many benefits, but you should be aware that there are other decentralized exchanges. Other decentralized exchanges are gaining traction in the crypto market. Uniswap, which is still making waves in the market for decentralized cryptocurrency exchanges, is a good example. Therefore, if you want to invest in SushiSwap, you might want to consider all the alternatives to ensure you’re buying the right asset.
SushiSwap is one of the most exciting crypto projects you can get involved in. However, like with any other crypto asset, know that it can be a risky investment. Cryptocurrencies are highly volatile, so you must be prepared to take on that inherent risk when you invest in SushiSwap. Plus, you need to understand how your crypto asset works. Therefore, you must know the ins and outs of SushiSwap before investing in it.