SushiSwap is a decentralized exchange that processes token swaps and yield farming through an Automated Market Maker (AMM) smart contract. Running on Ethereum, the exchange is an advanced fork of the Uniswap protocol, another DEX running with the same AMM system.
The exchange financially incentivizes liquidity providers to bring tokens to the platform by rewarding them with fees. Specifically, these users are rewarded with the costs that other traders pay to perform token swaps.
To report prices, SushiSwap utilizes a number of decentralized oracles. The list includes the SushiSwap TWAP oracle, Compound’s Open Price feed oracle, and oracles created by Chainlink. Moreover, arbitrageurs also play a part in ‘delivering’ accurate prices by minimizing price differences on all trading pairs.
At the time of writing, SushiSwap sits at number six on the DeFi Pulse leaderboard and hosts a grand total of $3.69 billion dollars in collateralized assets. On the other hand, its biggest rival Uniswap is ranked fifth and hosts $3.97 billion.
The DEX owes a lot of its success to intelligent and tactical thinking. By bringing better features than their competitors, SushiSwap reached more than $1.6 billion in liquidity in less than a month. But as the features were temporary, so was the platform’s popularity. A few controversies did not help either, and SushiSwap went from being DeFi’s best project to being the worst one.
As a result, no one wanted to touch the protocol for months. It was only after new developers began working on SushiSwap that the exchange could earn the community’s trust again.
