Table of Contents

🤔 What is SushiSwap?

SushiSwap is a decentralized finance app built on Etherium that allows users to:

  • Swap tokens
  • Lend/Borrow
  • Take leverage positions
  • Launch new ERC-20 tokens, etc

💡 What role does SUSHI token play ?

  • Governance: SUSHI is the governance token for ShushiSwap protocol. Token holders
    • Propose and vote on updates to protocol.
    • Decide how funds in SushiSwap treasury would be spent.
  • Stake: SUSHI holders can stake their tokens. .05% fee from all the trades on Sushiswap is distributed among the stakers in proportion to their stake.

📝 How Sushiswap started

  • Vampire attack:
    • Chef Nomi, an anonymous coder copied the code of Uniswap and launched SushiSwap in August 2020.
    • SushiSwap motivated Uniswap liquidity pool token holders to pool their liquidity tokens in return for SUSHI tokens(offering as high as 1000% APR returns).
    • Eventually, SushiSwap used Uniswap’s liquidity tokens to suck all the underlying assets to Sushiswap pools.
    • As a result, Sushiswap drained over $1B liquidity from Uniswap in less than a week.
  • Rug pull by Chef Nomi:
    • 10% of the SUSHI token supply was allocated to dev fund. Dev fund was reserved to fund future development of the project.
    • Chef Nomi had admin keys and access to dev funds. On 30 Aug, he sold all the SUSHI tokens in the dev fund and pocketed $14 million.
    • However, after 2 days Chef Nomi apologized and returned the funds to the dev fund.
    • He also transferred the admin keys to Sam bankman fried, founder of FTX exchange.
  • Sam Bankman-Fried passed the control to numerous trusted community members, ensuring SushiSwap’s decentralized future.

😌 What problems does it solve ?

  • No trusted third party: Users are in control of their funds. The exchange does not involve any middleman.
  • Centralized exchanges pool all the funds and cryptocurrencies in one place, presenting a lucrative target for hackers.
  • No complicated paperwork like KYC and long waiting period is involved for trading cryptocurrencies.
  • Governments cannot regulate Sushiswap because:
    • It is deployed on Etherium.
    • Founders are anonymous.
    • Its governance is decentralized.
  • Efficiency gains: Sushiswap does not have to run servers and hire an army of developers. This allows Sushiswap to provide better rates as compared to centralized crypto exchanges, which have to generate profits and have huge overheads.
  • Take out loan:
    • None of the traditional banks issue loans against crypto.
    • Sushiswap allows users to take out loans against their crypto holdings.
    • Users do not have to sell their crypto holdings and incur capital gain tax. Instead, they can use it as collateral to borrow.
  • Flexible payment solutions:
    • No fixed payment schedules
    • No min payments
    • No credit history
    • Users pay at their own pace.
  • Most banks in the world offer no interest on savings. People can choose to store their savings on SushiSwap and earn a much higher interest.
  • Traditional banks have to build relationships over many years to partner with other institutions whereas other Defi apps can build permissionless on top of SushiSwap to access its liquidity and interest rates on savings.
  • There is no transparency in how banks operate. Most banks take excessive risks because governments insure deposits. Whereas SushiSwap’s code is open-source.
  • Central banks set arbitrarily low-interest rates that result in capital misallocation. Whereas, interest rates on SushiSwap are a pure function of supply and demand of underlying assets.

🤖How does it work ?

Automated market maker

Sushiswap uses “constant product market maker” equation instead of the order book model to provide quotes for trading assets.

Sushiswap has many liquidity pools that consist of token pairs, such that the product of the quantity of first token “X” and second token “Y” always remain constant.

X * Y = constant

The trader can take a portion of X but he will have to supply adequate Y so that their product remains constant.

If the price of an asset gets mispriced as per the existing price of the asset in the real world: Arbitragers use the opportunity to deposit the expensive asset and take out cheaper asset rebalancing the pool.

Anyone can start a new liquidity pool by supplying the initial liquidity. Others can also join and add liquidity to existing liquidity pools. In return, .25% of the transaction are distributed among the liquidity providers in proportion to their liquidity.

Impairment loss

Over a period of time as traders trade with the liquidity pool, it can happen that:

  • The ratio of the two assets in the liquidity pool changes, such that there is more of one asset and less of another.
  • It is possible that the liquidity provider could have been better off holding the two assets in equal proportion, instead of the new ratio.

Sushi Bar

SUSHI token holder can stake their SUSHI in Sushibar. In return, they receive xSUSHI token for staking SUSHI token.

.05% of all the transactions are distributed among the stakers in proportion to their stake.

MISO - Minimal Initial Sushiswap Offering

MISO is a set of smart contracts that helps in launching new crypto project tokens. This suite of contracts, dubbed our “ingredients”, is divided into the following groups:

  • TokenFactory — A Factory to create tokens for projects; fixed supply, mintable, Sushi token.
  • Fermentation — Vaulting/escrow options for locking up tokens over time.
  • Market — Contracts for initial token offerings; Fixed price crowdsale, batch auctions (also known as an IBCO), and Dutch auctions.
  • Farm — Fresh tokens can be farmed for rewards by users
  • Launcher — Easy liquidity migrations; set a portion of raised funds to create a new SushiSwap pool and migrate trustlessly.

MISO helps:

  • Founders: To easily launch crypto tokens.
  • Buyers: To easily find new projects and have confidence that the tokens have been created using standard high-quality code.


Onsen is a liquidity bootstrapping program. Teams can fill out form for their token to be considered in the Onsen program.

Liquidity pool of the projects selected by the community in the Onsen program receive SUSHI tokens to bootstrap liquidity.

Onsen also helps the Sushiswap ecosystem as new tokens are listed on Sushiswap, increasing the total value locked and trading volume. More trading volume increases the value of SUSHI token.

Bento Box

Bento Box is a token vault that generates yield on the capital deposited into it. Bento Box uses low-risk farming strategies like:

  • Lending on Compound.
  • Providing flash loans, etc

Financial instruments built on Sushiswap use Bento Box. For example capital in limit buy order remains idle till the time price of the asset reaches a particular value. Whereas, in Bento Box, the idle capital is used to earn yield.

Bento Box invests part of the fund to earn yield and retains the other part to be used in case the user asks for the fund back. This is similar to the fractional reserve banking used by traditional banks.


Kashi is lending and borrowing  platform, built on Bento Box

  • Lenders provide liquidity by depositing their cryptocurrency.
  • Borrowers stake their crypto token as collateral and take out loans of up to 75% of the collateral amount.
  • Borrowers pay interest on the borrowed amount, similar to how lending/borrowing work in the traditional world.
  • Interest rates are determined on the basis of supply and demand.

🏛️ Governance model

  • SushiSwap uses snapshot, a decentralized voting system. SUSHI token holders create and vote on proposals to update the protocol.
  • SushiSwap uses Multisig signers to make changes passed by voting. Sushiswap’s Multisig signers are a diverse set of widely respected  9 community members. An update requires sign of 6 out of 9 members to be executed.
  • The multisig signers do not have decision-making power, as their role is to simply enact on-chain the decisions SUSHI holders make via off-chain voting on snapshot.

👍 Tailwinds

  • Crypto industry is growing. So is the demand for cryptocurrencies.
  • Network effects: More liquidity providers will attract more traders. More trading fees will attract more liquidity providers. This positive feedback loop has potential to cause exponential growth in a short period of time.
  • Most of the banks offer no real interest on savings. As a result, most people are searching for ways to earn a safe yield on their savings.

SushiSwap app MISO hacked on Sep,21

An anonymous contractor with the GitHub handle AristoK3 gained access to “Jay Pegs Auto Mart” project’s code repository and inserted his own wallet address in place of auctionWallet at the auction creation.

The hacker was successful in transferring 864.8 Ethereum coins — around $3 million — into his wallet. However, he returned the stolen funds in less than 24 hours.

😨 Risks and challenges

  • Trading and banking sector is heavily regulated by their respective governments, central banks and securities & exchange commission. Many governments will try to ban/regulate SushiSwap for operating without a license.
  • Liquidity pools hold tokens worth millions of dollars presenting a lucrative target for hackers.
  • There are many crypto projects building decentralized exchanges.

💰 Tokenomics

SUSHI has max supply of 250 million tokens.

  • 10% of all emissions go to Multisig-controlled treasury/dev fund.
  • 90% of the supply will be distributed to liquidity providers.

Vesting schedule

Complete supply will come into circulation in 2024.

Demand pressure

Token’s price increases due to demand pressure.

Demand pressure on SUSHI token will come from:

  • Governance: Users will acquire SUSHI token to participate in SushiSwap governance.
  • Staking: Users will acquire and stake SUSHI tokens to earn rewards.
  • Speculators: They will buy SUSHI tokens for future price appreciation.

Market opportunity

Sushiswap has almost half of the volume as compared to the largest decentralized exchange: Uniswap.

Sushiswap has many additional features and SHISHI holders also get .05% of transactions as reward. However, Uniswap has a much higher market cap than SushiSwap.

Market is giving Uniswap a premium and ShushiSwap is trading at a discount as compared to Uniswap.

🧐 Indicators to watch out for

  • YouTube channel is growing:
  • Twitter following is growing:
  • Liquidity is growing:
  • Trading volume is growing:
  • User base is growing:

👋Final remarks

Sushiswap is the of the most innovative projects, even though it started off as a fork of Uniswap.

Chef Nomi stealing funds from the dev fund could have given Sushiswap a bad name but has made the project even more decentralized.

I will be investing in SUSHI because:

  • Fix max supply.
  • Minimal inflation.
  • All indicators point to exponential growth.

The ideal way to invest in SushiSwap:

😊 Do further research