Sushiswap is a decentralized exchange that was founded by copying Uniswap’s code and offering better rates. The history of the Sushi token is quite unique, including how Chef Nomi rug pulled, and then gave back to the community and apologized.
Before we start, you must first know what a Dex, or Decentralized exchange, is. Sushiswap, quite simply, is just a decentralized exchange, with a few other protocols to help it gain traction.
A decentralized exchange is a place where traders come to trade their cryptocurrency for other forms of cryptocurrencies. For example, if you had some Ethereum and wanted to trade it for Litecoin, you could do so on a Decentralized Exchange. How does this happen? Well, investors called Liquidity Providers supply their coins and tokens to the DEX so that traders can use it to trade back and forth. As one token becomes more rare, the DEX will automatically charge more to trade for it. Also, liquidity providers are incentivized with the fees that the traders pay. So, in short, liquidity providers earn returns for providing their coins, and traders pay fees so that they can instantly and cheaply perform their fees. Generally, everyone wins.
One of the most popular Dexes out there is Uniswap. We first covered Uniswap and you can check out our video on that, but we then realized Sushiswap has a much more interesting story to tell. So Sushiswap is a “fork” or Uniswap, which means they basically copied Uniswap’s code and then altered it a little bit. This is completely fine in the development world, even though it sounds a little like plagiarism. Uniswap had their code out there for anyone to improve upon actually.
The Infamous Vampire Attack
However, Sushiswap performed what is called a “Vampire Attack” on Uniswap.
We also did a video over this too, but if you don’t want to watch it I’m going to attempt to summarize it in 1 sentence. A vampire attack is when one protocol sucks the investors out of another protocol by simply offering them better rewards. Sushiswap offered up to 1000% APR for certain tokens and this lured many to go from Uniswap to Sushiswap.
However, Sushi’s history isn’t filled with rainbows and delicious APRs.
Chef Nomi Story
The guy who created Sushiswap is anonymous, we don’t know who he or she is. However, they call themselves Chef Nomi. Sometime during the creation of Sushiswap, Chef Nomi created a developer wallet and minted himself 10% of all Sushi tokens. This was all fine and dandy, and is common in the decentralized finance world. The money is to be used for advertising, paying other developers, and growing the protocol.
However, he performed what we call a “rug pull”. If you don’t know what a rug pull is, you should watch our video on it, but another 1 liner is that a rug pull is an event when the developer runs away with an investors money and then ditches the project. It is a bad thing.
At the time, Chef Nomi traded all his Sushi for 38,000 Ethereum, which was $14,000,000 at that time, but is now worth $100,000,000. This made a lot of people upset, and even more people mad. The whole sushi community was upset and lost their trust for the project.
It wasn’t long after that Chef Nomi actually returned his Sushi and actually transferred the ownership of the project to another guy named Sam Bankman-Fried. This is incredibly rare in the defi community, that he actually gave all $14,000,000 in value back, apologized, and then transferred ownership.
What makes SushiSwap Unique?
One thing I forgot to mention, Sushiswap is unique in the fact that it operates on a ton of blockchains. Uniswap only works on Ethereum, Pancakeswap only works on the Binance Smart Chain, but Sushiswap works on Ethereum, xDai, Binance Smart Chain, and Polygon, and a few others that aren’t famous yet, but them not being famous is why Sushiswap is on them – they want to be the earliest Dex on those platforms.
Even though Sushiswap’s decentralized exchange protocol is very similar to Uniswap, the history makes Sushiswap unique. That’s not the only thing though, there are some features of Uniswap that are quite valuable, yet still in early development.
Sushiswap actually has a few other features than just the token trading side. It offers a variety of tools in it’s self-dubbed bento box.
Understanding Kashi and bentobox
What is a bento box? Well, in Japan, it is a small container filled with the usual dishes that make up a Japanese lunch. Sushi’s bento box is formulated on that same concept, it’s a token vault that can support a whole collection of Dapps and Smart Contracts.
The only collection of smart contracts that Bentobox currently has is called Kashi, which means lending in japanese. Kashi is simply a lending and borrowing platform that utilizes smart contracts to allow certain margin trading.
How Kashi actually works is worth an entire video, so let me briefly cover it here. Essentially, you pick one token you want to go up, and one token you want to go down, then you can invest your money in that pair. If they both do as you predicted, you will make money, but if they go the other way, you lose money. If one of these tokens is a stablecoin, then you are essentially just lending or borrowing and using the stablecoin as collateral. Without going into too much detail, when you lose money, someone who bet the opposite way gains money, and vice versa.
Another tool Sushi offers is Miso. Miso is a traditional japanese soup that I must say myself is delicious.
Miso is a new addition to Sushiswap that aims to help new tokens launch. Essentially it helps token creators and token investors do certain things like adding liquidity so the token can be traded, creating initial token auctions, and even helping with some code creation. It’s fairly new, so we will wait until it becomes more developed and used by the community before creating a whole video around it. If you’re interested, you should subscribe and hit the bell icon because we are always creating new helpful high-quality videos just like this one, but our recent problem has been we only grow through search traffic, so we greatly value any subscriber that returns!
Aside from being a DeFi platform, Sushi is also mainly an ethereum token with a few uses.
If you are a Sushi token holder, you can stake your Sushi for xSushi and earn the liquidity provider fees. .05% fo all trades go to the xSushi stakers, which is really good because it creates constant buy pressure for the token.
It works in a similar manner that dividend stocks do – you buy them so you can essentially have passive income.
Not only that, Sushiswap is a governance token, which means token holders also get rights to vote about certain changes of the protocol.
As we end this video, we encourage you to do more research about Sushi before investing in it. We also want to thank you for watching this video to completion as it helps us grow our channel, we really hope you learned something, and most importantly, we hope to see you in the next video.