31 March 2021 | ZebPay Trade-Desk
SushiSwap is essentially an automated market maker (AMM). AMM’s act as decentralized exchanges and use smart contracts to make markets for a given number of pairs of tokens, and this depends on how the AMM’s are designed and configured. SushiSwap was launched as recently as September 2020 as a fork of Uniswap, which is arguably the most popular and AMM in the DeFi space presently. Many industry experts believe that SushiSwap will serve as a derivative of Uniswap, providing enhanced features such as increased rewards for network participants via its in-house token, SUSHI.
SushiSwap Snapshot (at the time of writing):
| Native Token | SUSHI |
| Market Capitalization | $ 1,979,824,435.86 |
| Locked USD Value | $ 4,294,049,314 |
| Current Price | $ 15.61 |
| 24 HR Volume | $ 305,333,448.69 |
| All Time High/Low | $ 23.38 / $ 0.4737 |
| ROI (from ICO) | 352.06 % |
| Script in Circulation | 127,244,443 SUSHI |
| Total Supply | 250,000,000 SUSHI |
SushiSwap exists as an AMM, which allows for automated trading liquidity to be set up between two cryptocurrency assets. DeFi traders and associated entities that seek to capitalize on the early boom in project tokens and create liquidity find such AMM platforms very attractive. Typically, AMM’s do not maintain order books, which in turn helps to avoid liquidity issues and hence create a highly efficient decentralized exchange. SushiSwap will also for better user interaction and governance, creating a stronger incentive mechanism for the platform. The platform charges a 0.3% cut from transactions that take place on its liquidity pools, and its SUSHI token is used to reward users portions of those fees. SUSHI entitles users to governance rights.
SushiSwap’s in-house token is SUSHI. It’s created at a rate of 100 tokens per block. The supply of the token depends on the block rate. Currently at approximately 6,500/day, and there will be an estimated 326 million SUSHI tokens in circulation by Q3 of this year, which is approximately a year after SushiSwap was first launched. SUSHI did not have any premine and was minted on the Ethereum block number 10,750,000 and hence began with a supply of zero tokens.
Investment Analysis:
Since the launch in early September 2020, SUSHI has traded in a wide range, after opening at $0.696 the price it hit was $23.38 appreciating more than 3000% within roughly 6 months of its launch. The lowest price it has witnessed is $0.473 which was below its launch price.
SushiSwap has generated a significant amount of interest in the DeFi space and has become the leader of decentralized finance ranking soon after its launch. Tracton gained is attributed to the fact that it is a result of a Uniswap fork, but having said that this AMM promises to provide better and control to its users through its enhanced governance protocols.
On the price action front, Sushi has traded bearish recently, but a minor correction is seen in the last few days, and an upward trend is likely. The volatility of the asset might be higher compared to more traditional assets, but it is actually comparable when compared to the initial phase of other assets in the DeFi, which makes it a good tradable asset in the short term as well.
We look at how the ROI on a MoM basis looks for Sushi, proving once again how attainable and attractive the asset looks.
| 2020-Sept | 2020-Oct | 2020-Nov | 2020-Dec | 2021-Jan | 2021-Feb | 2021-Mar | |
| Avg. Price ($) | 2.50 | 0.74 | 1.07 | 2.43 | 6.06 | 15.29 | 18.13 |
| MoM Returns | – | -70.40% | 44.59% | 127.10% | 149.38% | 152.31% | 18.57% |
As seen in the table above, Sushi gained much of its traction, after about a month after its launch. The token has always held its momentum, barring the tumble it took in October 2020 and hence proving its volatility. However, since recovery, the asset has been growing at a phenomenal rate with a 6-month CAGR of ~100%, and is showing promising signs of maturity in the crypto space.
From a liquidity pool standpoint, there are four big liquidity pools right now in terms of total value locked with APY rates varying from 14% to 29% yearly: The annual percentage yield (APY) shows the real compounding rate of return that is earned on a savings deposit or investment taking.
This makes SushiSwap an interesting offering in the DeFi space as it is a by-product of Uniswap, a well established asset and it ups the governance mechanism of that AMM. SushiSwap can potentially become one of the most prominent players in the DeFi market. The ability to participate in the governance of it may, therefore, be very valuable. Although a very nascent token, Sushi has a lot of potential for growth as it develops in the marketplace over time.
References:
https://zebpay.com/blog/
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