Do you want to farm SushiSwap? It is no news that decentralized finance (DeFi) is growing and quickly becoming an inclusive financial system.
Blockchain technology and cryptocurrencies are taking the financial system by storm. More innovative products and methods, such as yield farming, are developed to help investors generate profitable investment returns.
If you want to trade crypto on the decentralized exchange (DEX) system, there are various tokens you can begin with, making it increasingly difficult to know where to start.
This guide will explain SushiSwap, its benefits, and how you can start farming SUSHI.
- SushiSwap is a decentralized exchange (DEX) that runs on the Ethereum blockchain and allows users to buy, sell, lend, borrow, swap, and stake crypto assets.
- Users can swap SUSHI for any token and earn interest on the SushiSwap platform. Liquidity providers will earn 0.25% from each transaction.
- One of the benefits of SushiSwap is that it allows users to earn passive income from their investments. Also, the platform gives liquidity providers voting rights, leaving the governance to the community.
- Users can become liquidity providers, stake SUSHI with SushiBar, and lend and borrow crypto with Kashi on the platform.
What Is SushiSwap?
SushiSwap is a software that runs on the Ethereum blockchain and allows users can buy, sell, swap, and stake crypto tokens.
As a decentralized exchange (DEX) and an automated market maker (AAM) with no central authority that manages trade, it is community-driven with a governance structure that makes it fully decentralized.
Trades on the platform are run via smart contracts and processes defined on the blockchain. As a clone of Uniswap, it has several unique attributes, such as liquidity mining and governance through its SUSHI token.
SUSHI token serves two purposes: it gives stakeholders governance privileges unique to the platform and represents a share of the protocol’s payment users’ control.
It supports a range of blockchains, such as Polygon and the Ethereum Mainnet. Governance privileges, one of the platform’s main features, are awarded to token holders. Also, SUSHI holders who stake their assets may get a reward on all transactions made across all liquidity pools.
SushiSwap has four products operated via their liquidity pools, making it a fully-fledged DeFi platform.
- A decentralized exchange where you can swap one crypto token for another.
- Kashi is a decentralized lending market that allows users to lend or borrow tokens.
- Yield instruments that allow users to provide liquidity to the exchange.
- SushiBar staking allows stakeholders to convert SUSHI tokens into xSushi and earn rewards.
How Does SushiSwap Work?
The way SushiSwap works is simple. It has different assets, like the ETH and USDT pairs, that enable users to buy, sell or swap crypto.
If you own a particular amount of Ethereum and don’t want it sitting around in your wallet, you can swap it for DAI or USDT and add both cryptos to the DAI-ETH or ETH-USDT liquidity pool on the platform.
SushiSwap pays 0.25% of each trade to liquidity providers, which might not seem to be much with a small pool, but in a larger pool worth millions of dollars, liquidity providers can make a lot from transaction fees.
Of course, the total amount you make from the transaction fee depends on your shares. If there is $200,000 worth of SushiSwap trading volume in the DAI-ETH pool and you have a 50% share, your fee will be $250 based on the 0.25% payout.
Since the amount of SUSHI reward you get depends on the value of your assets in US dollars, your earnings are affected by the performance of the crypto market. If the market is doing well, so will your return on investment (ROI), but if it is not, it will decrease significantly.
That is why it is highly recommended you watch the market closely and invest according to its performance.
Many liquidity pools on the platform offer the option to farm SUSHI. The yield from this farming varies from the standard annual percentage yield (APY). The annual percentage yielding is the interest you earn based on the total amount you invested.
For example, if you invested $2000 and the APY is 40% after one year, you will earn $800 in SUSHI tokens if the amount remains the same.
What Can You Do On SushiSwap?
SushiSwap has grown into a fully decentralized platform, offering various features and tools for users to invest in since it was launched as a DEX. Aside from that, it offers the SushiSwap exchange, which enables users to swap any ERC-20 token.
Kashi is a feature of SushiSwap that lets users borrow crypto for various purposes, while SushiBar is another that lets users stake their tokens.
- Become a liquidity provider
One of the things you can do on SushiSwap is to become a liquidity provider (LP). As a liquidity provider, you will give tokens to liquidity pools so the AAM can execute trades and get rewarded by receiving a percentage of the trading fee.
While staking assets in the liquidity pool might seem complex, the smart contract responsible for the pool will do most of the work for you.
2. You can stake SUSHI with SushiBar
SushiSwap has widened its menu and offers new DeFi products like SushiBar, which lets users receive staking rewards in the form of xSUSHI. You get rewarded for swapping fees, gaining access to the SushiSwap governance system, and keeping your voting right.
3. Lend and borrow cryptocurrency with Kashi
It offers a variable reward to lend crypto in exchange for the asset deposited. Kashi requires a certain amount of collateral to be deposited to borrow crypto and will charge you an annual percentage rate based on the variable rate. DeFi lending reward comes from a borrower, so it is important to know the risk involved.
What Are the Benefits of SushiSwap?
The SushiSwap platform allows anyone to swap tokens and add liquidity to the pool whenever they want. To make it easier, it provides its users with many ways to earn a passive income with little risk. Users can stake SLP tokens, gain SUSHI, and later stake SUSHI for xSUSHI and earn more rewards.
This is the first AMM to send rewards back to the community that maintains it. One of the benefits of SushiSwap is the fee you get back from users. If you are a liquidity provider on the platform, you will receive rewards for your investment.
SushiSwap provides a governance mechanism that allows users to vote on all vital upgrades and changes made to the platform. Since a percentage of all newly issued SUSHI is set aside for the project’s future development, the community will vote to determine what project should be developed.
SushiSwap fees are more affordable than exchanges like Coinbase. Users pay a 0.3% fee when they join the liquidity pool and are paid a 0.25% fee for each trade.
Staking and Farming
DeFi users can access SushiSwap features such as staking and farming. New users prefer to stake instead of trade because it is less labor-intensive and provides more ROI. And the good thing about it is that the farming protocol doesn’t require you to be a liquidity provider to earn rewards.
Buying SushiSwap (SUSHI)
You can buy SUSHI from an exchange platform.
Kraken – this exchange platform was founded in 2022 and is a popular name in the industry. Kraken offers trading access to more than 190 countries, making it a recommended platform for buying SUSHI.
Bitstamp – this is one of the oldest and most trusted exchanges you can buy SushiSwap.
Uphold – if you are a UK or United States resident, Uphold is one of the top exchanges you can use to buy SushiSwap and other cryptocurrencies.
Binance – this is another popular crypto trading platform you can use to purchase SUSHI. While users in the USA are prohibited from purchasing most tokens, people in most parts of the world can use this platform.
KuCoin – this exchange offers crypto trading of over 300 tokens, including SUSHI.
How Do I Farm SUSHI on SushiSwap?
Now that you have an idea of SushiSwap and its benefits, you want to know how to start farming SUSHI. The five steps below outline how users can begin farming cryptocurrency on the platform.
- Select a Liquidity Pool
Before choosing a liquidity pool, you must do all the necessary research by weighing the risk you are willing to take based on your current financial situation. You can establish liquidity pools with popular assets like DAI, USDT, or ETH. Also, Stablecoin pools are less risky because they are more invulnerable to crypto market volatility.
- Buy Cryptocurrency
If you don’t have a cryptocurrency asset, you can buy some from popular platforms like Binance, Kraken, or Coinbase. The platform you choose will depend on your location and payment preference. After buying the needed crypto assets (you should at least purchase some Ethereum since you will be using it for transaction fees), you can send them to MetaMask.
- Install and Set Up MetaMask
MetaMask was developed to enable you to interact with the Ethereum blockchain. To start using it, you have to download and install the extension. Once the installation is complete, a new tab will open in your browser.
To proceed, click the “get started” button and, after, the “create wallet” button. The next phase is to create your password. Ensure you type a secure password that you will remember because MetaMask doesn’t offer the “forget password” option.
Then, to ensure you backed up your phrase, you must arrange your secret phrase in the right order. After, click the “confirm” button, and you are done.
- Invest in the Liquidity Pool
To invest in the liquidity pool, open app.sushi.com, find any LP you want to join on the Yield page, and click “add liquidity.” You can later enter the amount of DAI (or any other asset) you want to inject into the LP. Next, click the “approve” button and confirm the transaction on MetaMask.
- Stake Liquidity Tokens
When you stake your assets in the liquidity pool, you will receive SLP tokens representing your share. Staking your SLP tokens is how you farm SUSHI.
If you join the DAI-ETH pool, you will own a certain amount of DAI-ETH SLP tokens that the system will use to return the correct amount of underlying assets when you withdraw your stake.
After successfully investing in a SushiSwap pool, you can stake your SLP tokens and start farming SUSHI tokens.
SushiSwap is a great way for stakeholders to invest in crypto tokens and earn rewards from interest. Despite being a clone of Uniswap, its added features, like community governance, give users control and make them decide the platform’s future.
It has overtaken many DeFi projects and will continue to grow in popularity and traction. Besides, it allows users to stake tokens and earn rewards from other users.
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Frequently Asked Questions
What Is SushiSwap and How Does It Work?
SushiSwap is a decentralized exchange (DEX) that allows you to buy, sell, lend, borrow and swap one cryptocurrency token for another. Also, users on the SushiSwap platform can become liquidity providers and earn from exchange fees.
What Does Liquidity Farming Mean?
Liquidity farming, also known as yield farming, is a way to make more crypto with your cryptocurrency. It allows you to earn passive interest on your cryptocurrency holding at higher rates than traditional savings. Users can lend funds to others through smart contracts and earn interest in return.
How Can I Earn from SushiSwap?
You can earn from the platform by buying and holding SUSHI and withdrawing your earnings when the price rises. Also, you can stake or lend SUSHI tokens and earn interest.
Is SushiSwap Worth Buying?
SushiSwap provides an excellent investment opportunity for users that want to trade in decentralized finance and AAMs. Also, it provides an attractive investment opportunity for DeFi investors to stake and lend SUSHI tokens and earn from their investment.
Is SushiSwap a Good Crypto?
Yes, SushiSwap is a good investment opportunity for anyone that wants to trade crypto. Trading SUSHI tokens gives you the opportunity for growth because of their volatility, enabling you to earn when the price rises.