Over time, Uniswap and Sushiswap have rapidly grown to be among leading decentralized exchanges (DEXs) in today’s crypto industry. Worth noting that DEXs are designed to allow users explore their digital assets without having to keep those assets in the custody of other parties. This thus helps to strengthen users’ privacy, eliminating the security issues of centralized trades. Today, Uniswap and Sushiswap have cemented their place as the two main DeXs within the DeFi sphere. This development has, over time, ignited Uniswap vs Sushiswap debate, particularly amidst users. Interestingly, this article intends to engage readers in the comparative analysis involving Uniswap vs Sushiswap. Without a doubt, the two crypto exchanges are leading forces in the sphere, having continued to enjoy users’ trust and loyalty over time. Meanwhile, with this article, a thorough evaluation of the background, strengths, weaknesses, and structures of these exchanges will be done.
Nevertheless, it is imperative for every investor, trader, and other concerned body to embrace this content without sentiments. Worth noting, this piece is not geared towards placing one above the other. Therefore, every decision taken as a result of this piece lies solely on the investor and not the responsibility of the author.
Uniswap vs Sushiswap: General Overview
To better analyze the Uniswap vs Sushiswap debate, it is imperative to critically overview both exchanges. Starting with Uniswap, it runs as a global decentralized crypto exchange. It is built on the Ethereum blockchain. Interestingly, Uniswap, unlike others do not charge users for trading fees. Further, the decentralized exchange runs without an order book. Rather, it employs its constant product, market maker. Also, Uniswap runs as an open-source platform, thereby allowing anyone to copy the code in creating their own decentralized exchange. With this, users are able list free tokens on the exchange.
Generally, Uniswap enables users to deposit money in liquidity pools. As designed, liquidity pools on Uniswap run as representatives of a token pair. Every contributor to the pools, identified as liquidity providers usually receive fees obtainable from swaps on the pools. Remarkably, the fees paid to the liquidity providers are usually in line with their pool share. This pool entails stablecoins, including USDC, DAI, or USDT. Notably, the pools are Ethereum smart contracts, aiding the automatic management of swap features.
Also, the protocol allows users to explore its enablement to swap currencies. Through its automated liquidity protocol, Uniswap solves liquidity issues. According to findings, it recently emerged as the fourth largest DeFi platform owing to its commitment to solving the problem. Just like other DEXs, Uniswap allows users to enjoy full control of their assets. This thus prevent loss of funds when the exchange becomes compromised.
Uniswap vs Sushiswap: General Overview
To better analyze the Uniswap vs Sushiswap debate, this piece will now do an overview on the latter. Notably, Sushiswap runs on an Automated Market Maker (AMM) system, employing Ethereum smart contracts to complete transactions. More so, the platform allows users to provide tokens through its liquidity pools. Notably, some users usually lock their funds in the pool, thereby providing the funds necessary to complete the swap. It uses an approach, identified as income farming to award providers of the liquidity.
The providers obtain rewards from the fees generated from every trading on the network. Also, providers of liquidity usually enjoy a portion of the fees obtainable by the trade. Notably, the exchange usually award them in its native token, Sushi. Additionally, Sushiswap has two offerings, namely Kashi and SushiBar. Kashi serves as its lending smart contract. The second, Sushibar runs as its staking smart contract.
Interestingly, SushiSwap became originally hardforked from Uniswap on the Ethereum blockchain. Ever since its emergence, it expanded to scores of Layer 2 scalability platforms and competitive chains. These platforms and chains include Arbitrum, Polygon, Avalanche, Gnosis, Harmony, and others.
Uniswap vs Sushiswap: Native tokens
Furthering this Uniswap vs Sushiswap debate requires overviews of their respective native tokens. Notably, both of them have possess native tokens, which fuel, power and safeguard their networks. As for Uniswap, its native token, UNI allows its holders to enjoy governance rights, thereby participating in decision making processes of the project. It runs as an ERC-20 token.
As for Sushiswap, its native token, Sushi also runs as an ERC-20 token. The pool usually distribute the tokens to liquidity providers on Sushi Swap through Liquidity Mining. The token enjoys a maximum amount of 250 million tokens.
Meanwhile, after analysing the general overview of the basic info about the two prominent decentralized exchanges, it’s imperative to note some key similarities. Without a doubt, the Uniswap vs Sushiswap comparison contains some unifying characteristics.
Among the notable similarities is the strategic use of liquidity pools. The two decentralized exchanges have a liquidity pool within their structure. Basically, the pool has tokens of two distinct cryptocurrency which allows users to exchange one token for another in the pool for a certain fee. Aside swapping of tokens, Users of the two Decentralized exchanges can provide liquidity by gaining incentives on contributions to liquidity pools.
Also, another prominent similarity that’s evident in the Uniswap vs Sushiswap context is the use of Automated Market Makers (AMM). Worth noting, the two exchanges employs the AMM model to facilitate trades. This comes against the use of the traditional order book model as commonly used by centralized cryptocurrency exchanges. In that regard, the AMM model provides a seamless way of placing a trade orders. Traders won’t have to wait for another party to carry out trades or swap their tokens before placing theirs.
Notable differences in the Uniswap vs Sushiswap comparison
Rewarding New Tokens
Another dominant difference in the Uniswap vs Sushiswap comparison is the incentive that comes with adding new tokens on the two DEX. Through the Onsen initiative, Sushiswap provides liquidity to new tokens. More so, the Onsen system helps fresh projects with little relevance with extra SUSHI incentives as a reward for staking their coins.
With Onsen, other users are encouraged to acquire the new tokens for staking for them to gain fresh returns. Thus, contributing to the growth of emerging projects. However, these feature isn’t present on Uniswap. As it stands, there are no rewards for launching emerging or new coins on Uniswap. In this theme of the Uniswap vs Sushiswap comparison, the latter has an obvious edge over its rival.
Another aspect of the Uniswap vs Sushiswap debate one must consider is trade volume. Trade Volume reflects the overall value of trade users did on a particular cryptocurrency exchange. To some extent, it’s a worthy benchmark for determining the success and growth of a platform.
To some extent, Uniswap is bigger compared to Sushiswap in terms of trading volume. Before the intrusion of the bear market, Uniswap trading volume almost hit $7.7 billion, while Sushiswap is way behind at $1 billon. The trading volume indicates that Uniswap has more users than Sushiswap.
Other vital differences
In this aspect, Uniswap doesn’t have any liquidity mining program. At a time, the DEX resorted to the distribution of UNI tokens as rewards for liquidity providers via liquidity mining. Though the liquidity mining project didn’t attain a noticeable height as it failed to get running fully, before going into extinction. So, traders don’t have an optional way for getting UNI coins after the initial distribution of the token.
For Sushiswap, users can enjoy the rewards of the running liquidity mining initiative of the DEX. This is possible through the staking of their coin to earn SUSHI governance tokens. Consequently, making SushiSwap superior to its competitor in this aspect of their review.
Furthermore, most cryptocurrency exchanges provide liquidity pools of crypto token types that aid traders to swap their coins. However, this service usually attracts a swapping fee, which many traders consider before using a decentralized exchange. On Uniswap, swap fee costs are between the range of 0.05%, 0.3% and 1% depending on the risk the liquidity provider goes through and the volatility in the pools.
For Sushiswap, the DEX attaches a flat swap fee rate of 0.3% on all trading pairs. Shunning the consideration of risks and volatility before determining a certain amount users must pay as a swap fee. On Sushiswap, the liquidity providers get 0.25%, while SUSHI token holders receive the rest.
It’s imperative to note that this piece doesn’t intend to place a certain decentralized exchange above the other. In the Uniswap vs Sushiswap comparison, the two have things in common that most characterize them as a Decentralized exchange. On the other aspect, they both have glaring differences that describe their strength and weaknesses. A notable takeover every investor must consider is that the two exchanges can be utilized based on their strengths.
Nevertheless, there are much-needed improvements the two exchanges must work on to facilitate the exodus of new users into the world of DeFi. Both Uniswap and Sushiswap can encourage newbie users to tap into the ever-dynamic world of virtual assets. Lastly, investors and traders must commence independent research to determine the exchange that suits their preference.
Read More :