SushiSwap is a Decentralized Finance platform (DeFi) which runs on Ethereum and allows its users to trade cryptocurrencies with no acting central operator administrator. Its goal is to solve what Sushi calls the “liquidity problem”, the inability of different liquidity forms to connect with markets in a decentralized manner, and vice versa.

SushiSwap Explained

To accomplish their goal, Sushi intertwines several decentralized markets and instruments, as its features include a decentralized exchange and lending market, staking derivatives and yield instruments.

Its core function works very similarly to a traditional exchange as its users buy and sell crypto assets. However, instead of having a central regulating entity, the users’ tokens are maintained by use of smart contracts.

In terms of decision making, anyone holding SUSHI can make proposals to improve the platform or its operations. SUSHI holders can also vote on submitted proposals.

SushiSwap Farms

To become a liquidity provider, users must contribute to the SushiSwap pools by connecting their wallet and locking two assets into a smart contract on the SushiSwap farming software.

Based on whatever protocol rules are in place, buyers can swap tokens with the pool.

Smart contracts facilitate this process by taking the buyers tokens and sending him or her the equivalent amount back and, consequently, maintaining the total pool price constant.

Users who maintain liquidity in pools are rewarded with a portion of newly minted SUSHI as well as protocol fees.

SushiBar

Users can earn more SUSHI crypto with an application called SushiBar in which they can stake their SUSHI in order to earn a xSUSHI token, a special token which is always worth more than a regular SUSHI token, as it keeps accruing value from SUSHI’s platform fees

The History Behind SushiSwap

SushiSwap appeared in 2020 as the vision of an anonymous individual who goes under the pseudonym “Chef Nomi”, and two other co-founders, sushiswap and 0xMaki.

They took the open-source code which was already being used in Uniswap and turned it into the base for SushiSwap. As to grow their userbase, Sushiswap promised SUSHI token rewards to those who locked up funds in an Uniswap pool (which would later be transferred to SushiSwap).

However, controversy ensued as Chef Nomi removed an estimated $13 million USD from the pool before moving the money to SushiSwap. Chef Nomi did return the funds later and apologized to SUSHI’s users. He appointed Sam Bankman-Fried to oversee the process.