Discovering SushiSwap DAO

SushiSwap is a community-led organisation created to solve what could be called a 'liquidity problem'. We could define this problem as the inability of different forms of liquidity to connect with markets in a decentralised way, and vice versa.

SushiSwap is a Decentralised Finance (DeFi) protocol with an Automated Market Maker (AMM) and is a fork of Uniswap v2 (to which we will focus the next lessons) that allows users to exchange their resources in a decentralised and permissionless manner. This makes it more safe, since users control their funds, but also more resistant to censorship, since there is no a central control point.

We have seen the price of the SUSHI token skyrocket in the past, from a memorable minimum of ~$0.50 to a memorable maximum of $23 in few months.  Today it sits at $1,51.

Who founded Sushiswap?

SushiSwap was founded in August 2020 as a fork of Uniswap by the pseudonymous Chef Nomi and 0xMaki.
Initially launched on the main Ethereum network, SushiSwap now supports multiple chains, such as Polygon, xDai, BSC, Fantom, Arbitrum, Moonbean and a few others.

Products developed

In addition to Sushi's main function, a decentralised asset exchange, it offers a wide range of other products. Lets look at them.

• Onsen 

This is a cash incentive system that accelerates new projects by providing extra rewards in the form of Sushi tokens that can be used to govern the protocol. To be placed in the system, selected projects are allocated a certain allocation of sushi tokens to encourage the provision of liquidity for their asset. The advantage of being in the Onsen menu is that the projects themselves do not have to incentivise their communities to provide liquidity for their tokens, because Sushi does it for them.

• Bento Box

Just as the banking system is the base layer for financial transactions in traditional finance, the BentoBox is the base layer for all future financial instruments Sushi intends to offer.
The Bento Box is a special smart contract that acts as a vault for certain tokens.
Users who deposit funds in one of the BentoBox vaults benefit from extra earnings on their tokens. The vault can generate returns in several ways, for instance by allowing other participants to take flash loans and pay a small fee that goes back to the users who provide liquidity.

• Kashi

Meaning 'loan' in Japanese, Kashi is the first lending and trading protocol powered by BentoBox. Kashi allows anyone to create customised and gas-efficient marketplaces for lending.
Unlike other popular Defi money markets like Aave or Compound, Kashi isolates each market. 

In traditional DeFi markets, high-risk activities can lead risks for the whole protocol; in Kashi each market is completely separate, which means that the risk of activities within one loan market has no effect on the risk of another loan market!

• Miso 

MISO, Minimal Initial SushiSwap Offering, is an open source smart contract suite created to facilitate the process of launching a new project on the SushiSwap exchange by simplifying the process of creating a new token.

Specifically, it aims to create a launch pad that will give communities and projects access to all the options they need for a secure and successful implementation on the SushiSwap exchange.
This allows the project to attract a larger initial audience than they would have achieved on their own.

Financial difficulties

As on January 2023, the decentralised exchange held over $390 million in blocked tokens; however, it decided to abandon two products as part of its broader plans. 

Chief Technology Officer Matthew Lilley announced in a tweet that two products - the Kashi lending platform and MISO - would be shut down due to low public interest and considerable effort to maintain them.

"We have decided to deprecate Kashi (Sushi Lending) and Miso (Sushi Launch Pad)," Lilley said, adding that as yet unnamed "successors" of these products could be released in the future once Sushi had the necessary resources to support their operation.
"In the third quarter/fourth quarter it was evident there was a strong need to prioritise and we decided to focus on ideas to improve our most loved and profitable product, DEX, SushiSwap," he said.

Conclusions

Overall, SushiSwap is an innovative experiment that challenges the competitive advantage of Uniswap, an established DeFi protocol, offering a unique solution to cryptocurrency liquidity problem.

Since the fork of Uniswap, Sushi has added new features to its protocol, with community governance as the main feature.
Indeed, SushiSwap project has been praised for its strong community involvement and governance model.

But could this be enough to continue the project in the future?

Follow our next lessons on the most popular decentralised exchange UNISWAP ! #staytuned