SushiSwap (SUSHI)

In addition, SushiSwap also has a feature called “SushiBar” which allows users to earn SUSHI by staking their liquidity tokens in a smart contract.

What is SushiSwap?

SushiSwap is a decentralized exchange (DEX) built on the Ethereum blockchain. It allows users to trade crypto assets using smart contracts in a trustless and decentralized manner. SushiSwap is an automated market maker (AMM) DEX, which uses a liquidity pool to facilitate trades. It was created as a fork of the popular Uniswap DEX and has its native token, SUSHI, which is used to govern the protocol and incentivize liquidity providers.

How Does SushiSwap Work?

Since SushiSwap works using an AMM model. It is important to first understand how an AMM model works.

In an AMM model, users can provide liquidity to the exchange by depositing a combination of different assets into a liquidity pool. These assets form what is known as a “liquidity token” and can be traded on the exchange.

When a user wants to trade one asset for another on SushiSwap, the system uses the liquidity pool to determine the exchange rate between the two assets. This is done by using a mathematical formula called a “constant product market maker” (CPMM) algorithm. The algorithm takes into account the total value of assets in the pool and the amount of each asset in the pool to calculate the exchange rate for a trade.

SushiSwap’s native token SUSHI is used to govern the protocol and incentivize liquidity providers, by rewarding them with SUSHI tokens for providing liquidity to the pool.

In addition, SushiSwap also has a feature called “SushiBar” which allows users to earn SUSHI by staking their liquidity tokens in a smart contract.

How to Use SushiSwap (SUSHI) Platform?

  1. Connect your wallet: To use SushiSwap(SUSHI) you need to connect your Web 3-enabled wallet to the platform. Some of the notable Web 3-enabled wallets are Metamask, and Brave Wallet. These wallets will allow you to interact with smart contracts on the SushiSwap platform

  2. Add liquidity: To start trading you need to add liquidity to the platform. This can be done by choosing a pair of assets to which you want to provide liquidity. Once the assets are selected you will be provided liquidity tokens in return.

  3. Make a trade: Once you own liquidity tokens you can begin trading on the platform and buy other assets using the liquidity tokens. Since the system is run on smart contracts, the exchange rate is automatically determined

  4. Removing liquidity: The last aspect of Sushiswap is to remove liquidity when you want to. The liquid tokens you own can be converted back into assets that you initially added to the liquidity pool. Keep in mind that the assets you receive will be based on the liquidity tokens you own.

Once assets are received, they can be transferred back to your Web 3 wallet.

It is important to note that SushiSwap is a decentralised platform which comes with its own set of risks. This blog is not a recommendation or advocacy of the SushiSwap platform. Users should do their research before deciding to trade crypto assets.

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