Sushiswap Vs Uniswap : What Are The Differences?

Sushiswap Vs Uniswap: Introduction to decentralized exchanges

Sushiswap (SUSHI) and Uniswap (UNI) are two of the top decentralized Exchanges (DEXs) running on the Ethereum (ETH) network. They are the two dominant DEXs running in the decentralized finance (Defi) sector. 

To avoid the security issues associated with centralized exchanges, DEXs allow users to exchange their assets without outsourcing the retention of those assets to other parties. Additionally, DEXs provide improved privacy because Know Your Customer (KYC) validation is less common. In this blog, let us compare Sushiswap vs Uniswap and understand what makes them so special.

What is Sushiswap?

Let us first examine what is Sushiswap. Sushiswap is based on the Ethereum blockchain employing the AMM protocol and is a decentralized exchange. Sushiswap was forked from Uniswap in 2020.  It offers new financial services in addition to maintaining some fundamental aspects. For instance, it does not use an order book but smart contracts, simplifying the process of buying and selling cryptocurrency. 

How does Sushiswap work?

Before investing, it is important to understand how Sushiswap works. Users can become liquidity providers so that others can trade tokens inside token pairs. Decentralized exchanges like Sushiswap use the Automated Market Marker (AMM) by matching traders with liquidity providers. 

Liquidity providers or LPs are motivated to offer tokens for staking benefits. A fee of 0.25%, equivalent to LP’s share of the liquidity pool, will be charged on all token swaps.

To enable token switching SushiSwap offers two primary features: Trade (to exchange tokens) and Liquidity (to add money to liquidity pools).

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How does Sushiswap liquidity mining work?

Before you learn how Sushiswap liquidity mining works. You will need to invest in some expensive hardware ASICs. You can mine Sushiswap with mining pools. You need to download the unMinable miner app to join the pool and start mining. unMinable is a mining app that allows you to mine several digital assets. 

The program starts and runs mining operations using a CPU or graphic processing unit. The capabilities of the PC will impact the profitability of your mining operation. You will need to invest in GPU for its superior processing and solving mathematical problems in mining. 

After downloading the Unminable app, you need to set up your wallet. Set up and customize the mining app to start mining.  

Understanding Sushiswap tokenomics

SUSHI is the native governance token of Sushiswap. You can stake SUSHI can be staked in exchange for xSUSHI, which also receives fees (0.05% on swaps) and gives voting rights. SUSHI acquired through staking in xSUSHI pools is time-locked for six months. Users who withdraw their SUSHI from the SushiBar receive their SUSHI back along with any costs they accrued while keeping their xSUSHI.

There was an unlimited supply of SUSHI at first, but it was later suggested to limit the supply to 250M. The suggestion was approved, putting a cap on the total quantity of SUSHI produced. It is anticipated the hard cap will be reached in November 2023.

The top Sushiswap wallet in the market

Users use their Sushiwap wallet to hold, buy, exchange, or stake SUSHI tokens. There are several types of Sushiswap wallets each with a distinct style and benefits. You can opt for a desktop SUSHI wallet, Mobile SUSHI wallet, or hardware SUSHI wallet. The top Sushiswap wallets are – 

• YouHodler

• Keystone wallet

• MetaMask

• Ledger Nano S

• Im Tokens

Also read: 10 Best web3 wallet | Price, Safety, Features

What are Sushiswap gas fees?

You can divide Sushiswap gas fees into –

• Trading Fees – Users incur 0.3% fees when they trade on the platform. Sushiswap charges the fees directly. 
• Gas Fee – Ethereum charges a gas fee for every transaction on the Ethereum blockchain. The gas fees are the highest component of Sushiswap gas fees. 

If we compare Sushiswap vs Uniswap gas fees spent by users between 2021-12-01 and 2022-01-26 62.61 million USD and 408.89 million respectively.  Uniswap costs $115 per transaction, and Sushiswap costs $113 per transaction in the same period. The average transaction fee was  $66 for Sushiswap and $68 for Uniswap. The average fee is lower of Sushiswap is lower because the platform uses smart contracts.

How does Sushi staking work?

With your Sushi tokens, SushiSwap not only gives you the chance to make $SUSHI and split platform fees, but you can also make xSUSHI tokens from your $SUSHI tokens! No matter whether you own any other platform tokens or have any liquidity pairings or not, holders of xSUSHI get 4.5% of all platform transaction fees from Sushi and, soon, 2.5% of fees from Shyu. To get started, all you need are some $SUSHI tokens and some Ethereum (ETH), as usual. 

• Visit the website and download the app and connect your wallet to the app.
• Ensure you have Sushi tokens in your wallet that you can stake. Click the explorer tab to select the SushiBar option. 
• Confirm staking and enter the tokens you want to stake. 
• Approve the transaction in your wallet.

Also read: How to write a smart contract? | Step-by-Step Guide

How to use Sushiswap?

If you want to learn to use Sushiswap, you need to have knowledge of Ethereum and a central exchange. Change the fiat money that a centralized exchange accepts into ETH. Then, after conducting your study, select a liquidity pool in the SushiSwap. This will aid in avoiding investment rug pulls. After that, connect an ERC-20 compatible wallet to the exchange platform.

Click on the swap option on the SushiSwap application’s left-hand side of the screen. You will see the SushiSwap token displayed on your screen following the completion of additional transactions on the Ethereum network. On SushiSwap, choose the token from the drop-down menu. In the box, type the amount you want to exchange. You can deposit cryptocurrency investments on the platform.

A transaction fee is charged when the platform executes swaps. The liquidity providers receive the next portion, with 0.05% going to Sushi token owners. The owners of the around 0.3%–0.25% transaction fees are liquidity providers. Additionally, users can buy a SushiSwap token and stake it to generate passive revenue.

How to buy Sushiswap?

Here is how to buy Sushiswap –

• Sign up for the service by first making an account on an app like Coinbase and confirming your ID on the app.
• The next step is to select a payment option from the method box. The procedure can then be started by using a debit card or bank account.
• Select “Buy” to initiate. Choose SushiSwap from the list of assets at this point. Additionally, open the SushiSwap browser and press to access the checkout screen.
• Enter the amount of cryptocurrency you wish to buy in your home currency. The amount will instantly change to a SushiSwap value.
• The “Preview buy” button should be tapped to complete your purchase. It will display the specifics of your purchase. Remember to confirm your purchase at a later time.

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What is Uniswap?

Let us understand, what is Uniswap. Users can use the Uniswap platform to trade in Ethereum tokens. It is a decentralized platform powered by the Ethereum blockchain. Uniswap was introduced in November 2018 and is presently the top DEX (Decentralized Exchange) on the Ethereum platform. A decentralized exchange is not dependent on a third party to handle the user’s cash. Instead, the users are in charge of their finances. Users utilize smart contracts stored on the blockchains to accomplish this. Some of Uniswap’s competitors are-

• Injective

• Vertex Protocol

• Kine

What is Uniswap liquidity mining?

Uniswap functions as an AMM by using cryptocurrency funds from its users. Each liquidity pool that houses these funds has a pair of cryptocurrencies in it. Anyone can use cryptocurrency to join these pools and serve as a liquidity provider. This is known as Uniswap liquidity mining. All transactions on Uniswap are subject to modest fees divided among the pool liquidity providers as Uniswap miner fees. If we compare Sushiswap vs Uniswap – Uniswap has no liquid mining program other than the initial token distribution, while Sushiswap has an active liquid mining program that rewards SUSHI governance tokens for contributing to liquid.

How do you mine Uniswap?

Here is how you mine Uniswap. You first need to know Uniswap is mined through liquid mining, and not traditional mining seen in Bitcoins. Decentralized exchanges or DEX like Uniswap need liquidity. Users with tokens provide the required liquidity (LP) or funds to Uniswap and are rewarded by the DEX. Users earn a commission reward and can generate a passive income on their contribution.  Here is how it works,

• Users get a special liquidity token sent to the address provided by them.
• The tokens are distributed in proportion to the user’s Uniswap contribution.
• When transactions are completed,  0.3% is charged to the sender of the transaction. The fee is divided proportionally to all the LP in the group. 
• The liquid providers must burn their liquidity tokens, effectively trading them for their share of the liquidity pool, to recoup the undying liquidity and collect fees.

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Understanding Uniswap tokenomics

Uniswap released its native token UNI in September 2020. The token is currently ranked 16 on the coin market cap. Uniswap initially intended to distribute the 1 billion UNI that was created at Genesis for four years. 2 The community will receive about 60% of the money, with the remaining 40% going to the staff, investors, and advisors. A constant inflation rate of 2% will exist after the first four years. UNI is currently ranked 16 on Coinmarketcap. 

If you hold UNI tokens, you can vote on platform updates, new development, and pricing structure adjustments.

The UNI token was developed to stop users from leaving Uniswap for the competing DEX Sushiswap fork.

What is the top Uniswap wallet?

Users have the option of connecting their wallets directly with the Uniswap exchange. They can connect to the network by clicking “connect to a wallet” in the upper right corner if they want to start supplying liquidity to the Uniswap network.  Some of the wallets supported are – 

• MetaMask
• WalletConnect
• Coinbase Wallet
• Fortmatic
• Portis

What are the Uniswap gas fees?

Uniswap liquidity fees range from 0.01 to 1% of the transaction. The DEX has a four-tier fee structure corresponding to the volatility of the cryptocurrencies in the cryptopool. 0.01% (v3 governance); 0.05% (stable/stable pairs like USDC/USDT); 0.3% (stable/blue chip pairs like USDC/ETH); 1% (wild pairs like ETH/DOGE). The gas fees for ETH-related transactions have become extremely high- more so when the network is congested. If you compare Uniswap v2 Vs v3 fees for retail users –

• With the v2 pool, the fee/liquidity ratio is 184,461 / 218,728,477 = 0.000843. 

• The same ratio on v3 is 703,170 / 332,460,000 = 0.00211. However since you don’t provide liquidity in a tight range / actively manage your position, your actual ratio will be divided by 10 or 0.00021.

Also read: Why are NFT Gas fees so high? | Deep dive into gas fees

How does Uniswap staking work?

Uniswap staking is a unique process and uses an automated liquidity protocol. You need an ETH and ETH20 secure wallet to participate in Uniswap liquidity staking. Uniswap helps to eliminate the traditional order book method and helps create a liquidity pool for each ERC-20 token thus contributing to creating high liquidity in trading.

Each pool is a smart contract with a combination of ERC-20 tokens. There is no restriction in investing in the liquidity pool. Uniswap is completely decentralized, so you have total control over your money.

Uniswap staking is distinct from all other types of bitcoin staking. However, after you’ve worked out how to do it, you may use your ERC-20 tokens to earn a passive income by adding them to liquidity pools with Uniswap.

How to use Uniswap?

Use a compatible crypt wallet to use Uniswap. You can do the following things on the exchange. 

• Trade crypto – select the “Swap” option, then the coins you wish to send and receive.
• Liquidity mining: Select “Pool” from the menu. You can create a new position and fund it with any two cryptocurrencies that already have a Uniswap pool. To find out which couples are popular, you may also look at the top pools.

How to buy Uniswap?

Uniswap is available in several crypto exchanges. You can trade US dollars or other flat currencies for UNI at Coinbase, Gemini, or Kraken. You can buy Uniswaps in three simple steps. 

Choose the cryptocurrency exchange- you can acquire Uni with other currencies through the Uniswap platform. You’ll need to pick a cryptocurrency exchange if you’ve never invested in cryptocurrencies before or if you wish to use fiat money. Exchanges may differ might differ in terms of charges and features for each transaction. 

• Buy: You can insert a payment method after selecting the exchanges. Several payment options are available to buy cryptocurrencies like a bank account or debit card, or credit card. Buying with your credit card is not recommended because they charge a hefty transaction fee. 
• Visit the trading platform and type the ticker symbol UNI to buy Uniswap. Specify the number of tokens you wish to buy or the sum of money you want to invest. 
• Market orders and limit orders are typical options. Limit orders are executed if the cryptocurrency price reaches a price you specify, whereas market orders are executed immediately at the best price available. You can store your UNI in digital or hardware wallets.

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FAQ: Uniswap VS Sushiswap

Traditional bitcoin exchanges are centralized. Decentralized exchanges are viable alternatives to centralized exchanges and have different design frameworks. In this section, we focus on some common FAQs Uniswap vs Sushiswap.

1. Why are Uniswap fees so high?

There are a few reasons why Uniswap fees are so high. Uniswap fees can be categorized into – 

• Liquid pool fee or platform fee – the fee for swapping two cryptocurrencies on the platform. This is usually 0.3% of the transaction.
• Gas fees are transaction fees to interact on the Ethereum platform. This is the biggest part of your fees, and Uniswap has no control over the gas fees. With limited transaction bandwidth, the gas fees for Ethereum have become very high.
• Slippage fee – It is the difference between the anticipated price and the executed price.

2. How high can Uniswap go? 

Are you wondering, how high can Uniswap go? Presently, Uniswap has the 11th highest market cap demonstrating its tremendous popularity and confidence. It is considered to be a secure investment because of its large-cap designation (which has decreased to roughly $4 billion after the de-pegging of Terra). Uniswap is a large-cap project, yet it is also a new project in a rapidly changing sector. By selecting Uniswap, you get the best of both worlds: a developing, early-stage product with less volatility than altcoins with modest market caps.

3. Is Sushiswap a good investment?

After Sushiswap had a rocky beginning in 2020, several investors wondered if Sushiswap was a good investment. Here are some reasons why it is a good investment- 

• Sushiswap is a safe platform to invest.

• Several big financial firms plan to enter the Defi space

• The app is making high revenue

• You can influence Sushiswap’s future.