Sushiswap has been making phenomenal moves, but is the platform’s token SUSHI a good investment?
Sushiswap is now valued at over a billion US dollars. The protocol manages $2.3 billion of liquidity and sees $1.3b of trading volume every single day.
If you haven’t been paying attention to Sushiswap, now is the time.
But what does the platform’s success mean for the SUSHI token? What makes it a good investment today?
Sushiswap is a decentralised trading platform that lets users swap tokens at the touch of a button, without having to trust a middleman.
Yesterday one user bought $15m of SUSHI in one on-chain transaction.
More and more people are realising Sushiswap is a decentralised trading platform that lets users swap tokens at the touch of a button, without having to trust a middleman. that Sushiswap’s growing size is huge news, as the protocol has a clear value capture mechanism. xSUSHI stakers earn a share of all fees on the platform. The bigger Sushiswap grows, the more SUSHI stakers earn.
To fully understand why so many are putting big money into the SUSHI token we need to dive into exactly what a DeFi DEX is.
What is DeFi/ DEX?
To understand why SUSHI is a good investment we need to understand DeFi.
The last year has seen the rapid rise of decentralised finance on the Ethereum blockchain, making investors fortunes and offering a host of practical applications. But why has DeFi grabbed everyone’s attention and why should you be excited?
DeFi, or decentralised finance, provides the financial tools to replace the banking industry, it’s entirely permissionless allowing anyone to take out loans, deposit or borrow funds, make trades and much more – all without having to open an account or rely on third parties such as banks to handle your hard-earned money.
Decentralized exchanges, DEX, have quickly become a popular aspect of this DeFi boom. Platforms such as Sushiswap provide quick and easy exchanges of cryptocurrencies whilst avoiding long waiting times and fees you typically have with leading exchanges. Not only this but they also offer investors incredibly appealing rewards that are hard to ignore!
According to DeFi Pulse there’s a total of over $25 Billion locked into DeFi at the time of this article, with Sushiswap possessing a whopping $2.2 Billion of this it’s easy to see why it should be catching your interest.
What is an AMM?
Automated market makers (AMM) were pioneered by UniSwap but have come a long way since then. In short, they rely on mathematical formulas to exchange your tokens. This cuts out the middleman, such as Binance or Coinbase, who you would rely on to act as a middleman to process your trade and take a fee.
This faster and safer method of exchanging is propped up by liquidity pools through which liquidity providers earn rewards. Put simply, traders can come along and interact with this pool, depositing one token, and withdrawing a market price equivalent of the other.
Where Did Sushiswap Come From?
Sushiswap had a rough start.
At first, people were skeptical of Sushiswap, and understandably so, it was a clone of Uniswap and seemed to be a money grab that offered little news in the realm of DEX and DeFi.
And then disaster struck, the creator known as Chef Nomi cashed out a significant chunk of capital from the project. This saw a huge 73% crash in the price of the token and an outraged community. Despite the creator returning this money and withdrawing any involvement in the future of SushiSwap it was still a significant blow to the project’s image and seemed to be the end.
That is until 0xMaki took responsibility for the project and resumed its development. Sushiswap progressed from a clone of Uniswap with a damaged reputation to its own entity offering appealing practical uses. Now a market leader with 20% of all DEX volume and an engaged community actively working together and which continues to reward and incentivise liquidity providers, it is safe to say SushiSwap has turned itself around.
What makes Sushiswap any different from its competitors like Uniswap you may be asking. The answer holds the key to answering if Sushiswap is a good investment.
Sushiswap has differentiated itself from its main competitor Uniswap by relentlessly shipping new features to improve the platform.
The first one is the clear value capture mechanism, something absent from Uniswap currently.
Holders can stake their SUSHI as xSUSHI and earn a share of all the fees on the platform, which has been as high as 60% APY. Staking also serves as a buying pressure on the SUSHI token, taking it temporarily out of circulation, which is great news for its price.
xSUSHI has caused a wave of investors, all looking to earn a share of the protocol’s rapid growth.
So why else is SUSHI a good buy?
Another crucial feature has been the Onsen program, which was previously known as the menu of the week. Onsen is a liquidity incentives scheme. In short, the protocol provide extra SUSHI for certain trading pairs, with the community voting for which pairs to boost.
This extra yield has built close ties with other projects and attracted many liquidity providers to the platform.
An upcoming feature is the Bentobox, which will allow for extra yield with lending and borrowing. More on this in the next piece.
Sushiswap’s arsenal of new features, combined with a brand new UI focused on simplicity has made the platform highly attractive for users and liquidity providers alike. The new branding and logo are demonstrating that the platform has matured and developed, fully shaking off the history that initially scared people away.
Together they provide a complete suite of DeFi tools, all benefitting from shared developers, resources, audits, and accessible from one place.
Yearn Finance has one of the strongest reputations in the space, and Sushiswap is benefitting from the close association with figures like DeFi genius Andre Cronje.
Let’s have a quick look at the projects.
Yearn Finance: Traditionally focused on yield-farming, providing high returns by automating farming strategies.
Sushiswap: DEX, easily trade tokens without a middleman.
Cream: Bank, lend your tokens to earn yield, or pay a fee to borrow them.
Pickle: Gauge boosts, lock up your PICKLE tokens in order to get bonus yield from farming strategies.
Akro: A network of traditional finance clients and legal infrastructure
DeFi Vs Centralised Exchanges
So to recap, what are the benefits of decentralised finance and exchanges and how are they making centralised mainstream giants like Coinbase obsolete?
- No longer will you have to set up an account, taking pictures of your ID, waiting days for verification. Allowing you to remain anonymous and keep your information safe.
- You no longer need a middle man to delay the process of exchanging cryptocurrencies and losing money to exchange hacks.
- No more waiting around for deposits, withdrawals, or exchanges. DeFi is much faster.
- You have increased security as you’re not relying on a third party, vulnerable to hacking, to protect your funds and information.
This really is a game-changer, adapt to DeFi or lose! Sushiswap is an established player in this growing space and something you should keep your eye on. Whether you aim to quickly and easily exchange your tokens with no fees or if you’re more interested in the exciting rewards from offering liquidity.
We are at the beginning of a DeFi revolution.
More and more people are realising that DeFi is thousand times more efficient, secure, and rewarding than traditional centralised systems.
The platforms that will lead this revolution are just beginning to gain an established foothold.
Those who can recognise the seismic changes underway and get hold of the tokens will be rewarded handsomely.
With a huge share of DEX market and a growing team and community, Sushiswap is set to play a vital role in this story.
With SUSHI tokens you don’t just benefit from the platform’s success, you also shape it. All decisions are made by community vote, and unlike Uniswap there are no big traditional finance backers hoarding the tokens.
So when looking to answer the question “Is SUSHI a good investment?”, don’t forget that big players are looking to own a large share in order to control the protocol.
Sushiswap is a community run, community rewarded DeFi giant in the making.
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