SushiSwap (SUSHI) is an audited^[22] Decentralized Exchange (DEX) and DeFi (Decentralized Finance) protocol described as "Uniswap meets Yield Farming" with SUSHI tokenomics. The protocol's native token SUSHI is used to govern the platform. SUSHI holders also receive a portion of the trading fees on SushiSwap. ^{[5] [4] [13] [15]}

The two functions that SUSHI has are: entitling holders to governance rights and a portion of the fees paid to the protocol. In a simplified way, SUSHI holders own the protocol. ^[5]

Farming SUSHI began on August 29, 2020.

^{[4] [5] [6]}

It was forked from Uniswap and created by the pseudonymous Chef Nomi (SushiSwap). ^[7] Within three days of its announcement, SushiSwap accumulated over 1 billion worth of value locked into the protocol. ^{[8] [10] [11]}

As of September 1, 2020, SushiSwap is an unaudited project.

^{[7] [12]} and September 3, PeckShield just completed the SushiSwap audit with all identified issues confirmed or fixed.^[23][24]

In December of 2020, SushiSwap announced a merger with yEarn. This follows high profiles collaborations between yEarn and other protocols like COVER Protocol, Pickle Finance, Cream Finance, Akropolis, and others. yEarn is creating an xSushi vault to farm SUSHI, Ether (ETH), YFI, and Wrapped BTC (wBTC). Keep3r Network will add its treasury to SushiSwap. COVER Protocol is adding insurance for SushiSwap liquidity pools through their system of CLAIM tokens and Cream Finance will provide liquidity and add SushiSwap Liquidity pool tokens as collateral for lending. ^[25]

Around early September, Chef Nomi acquired access to $27 million in Sushi tokens.

The amount held by the lead in the company became mildly worrisome, as many had questions regarding why they held full access to this amount.

Chef Nomi, in a Discord statement, stated,

A few days after this statement was made, SUSHI had suffered a loss in price per token due to Chef Nomi's mass selloff of around $13 million in dev funds. Many were suspecting that this was an exit scam from the creator, despite them denying that that was the case, and stating that they deserved the dev fund for creating the project. People in the DeFi space were not very pleased with the lack of transparency from SUSHI leaders. Many critics, including yEarn creator Andre Cronje, expressed his criticism towards the action, stating,

In addition to the selloff, the SushiSwap contract was officially transferred to Sam Bankman-Fried, after Chef Nomi gave it up. They were the sole owner of the contract prior to this exchange.^[21]

On September 11, 2020, Chef Nomi returned $14 million in funds to the SushiSwap community.

Additionally, they apologized to the community for their actions.

In a statement, they explained

They added that they would continue to support the project 'behind the scenes.' Meaning, they are going to continue working on the project's development.^[20]

One can provide some liquidity into a pool and earn rewards in the form of $SUSHI tokens. However, unlike Uniswap, those SUSHI tokens will also entitle you to continue to earn a portion of the protocol’s fee, accumulated in SUSHI, even if you decide to no longer participate in the liquidity provision. As an early adopter to help provide liquidity, you become a significant stakeholder of the protocol. ^[3]

The earnings that you’ll receive from staking will be proportional to the amount of LP tokens you have staked versus the total amount of LP tokens staked.

Unless you continue to provide liquidity, your holdings and corresponding reward earnings will gradually be diluted.

^[4]

The team designed the token distribution mechanics to make it as easy as possible for existing Uniswap liquidity providers to start migrating to the $SUSHI protocol.

^[4] There will be a circulating supply of 32,374,807 SUSHI.

^[9]

To start providing liquidity and earning SUSHI tokens, anyone holding Uniswap LP tokens can stake those LP tokens into the corresponding initial list of pools.

Once done, they will start earning tokens once rewards start on block 10750000.

The list of eligible LP tokens can be added per on-chain governance.

^[3]

At every block, 100 SUSHI tokens will be created.

These tokens will be equally distributed to the stakers of each of the supported pools.

^[4]

For the first 100000 blocks (~2 weeks), the number of SUSHI tokens produced will be 10x, resulting in 1000 SUSHI tokens being mined per block.

This is to incentivize early yield framers and adopters of the protocol and to help in The Liquidity Migration. ^[14]

The initial set of available pools:

The SUSHI/WETH pool will get twice the amount.

The creators recommend users supply their SUSHI to Uniswap to become eligible for 'extra yumminess 😋.'.

Once the SUSHI is live, a community can vote to add more eligible pools or change the SUSHI weight of any pool.

^[4]

With the current Uniswap configuration, 0.3% of all trading fees in any pool are proportionately distributed to the pool’s liquidity providers.

In SushiSwap, 0.25% go directly to the active liquidity providers, while the remaining 0.05% get converted back to SUSHI (through SushiSwap) and distributed to the $SUSHI token holders.

^[3]

10% of every SUSHI distribution is set aside for the development and future iterations, including security audits.

^[3]

After the first 100000 blocks from the $SUSHI protocol’s inception (~2 weeks), the team will be migrating all the liquidity tokens staked onto SushiSwap contracts.

This migration will involve taking all of the Uniswap LP tokens staked on SushiSwap, redeeming them on Uniswap for the respective token pairs, and initializing new liquidity pools from those tokens.

These new pools will be almost identical to the standard Uniswap pool, with the added feature that any fees accrued will be distributed to SUSHI token holders through the logic outlined above.

^[3]

Once the migration is done, the liquidity converted will be fueling the first sets of SushiSwap pools and will bring the protocol into operation immediately.

The stakers don’t need to do anything and will continue to receive SUSHI token rewards from providing liquidity going forward.

Almost 87% of the SushiSwap community votes were in favor of the migration from Uniswap to its own native platform.

Currently, there is close to $180 million worth of liquidity in the ETH/SUSHI pair on Uniswap.

^[16]

At the protocol and smart contract level, SushiSwap shares an identical interface to Uniswap. This means that if your protocol is currently compatible with Uniswap, it should be relatively simple to integrate with SushiSwap. The team will work with various DeFi and other ecosystem tools to start integrating SushiSwap. ^[3]

A review (not an audit) by Quantstamp has identified several security vulnerabilities, though none of them of critical nature.

PeckShield performed a formal security audit of the code and did not find any critical vulnerabilities either.

The $SUSHI protocol uses code from other projects including Uniswap, Yam (Protocol), Compound (cryptocurrency), and OpenZeppelin.

At some point, three days after launch, SushiSwap reached over $700 million in total value locked.

^[7]

On March 30, 2021, Fast-growing blockchain strategy game Cometh has announced its integration with SushiSwap Onsen.

This exclusive liquidity farming program is maintained by SushiSwap and will foster liquidity provisioning on Layer 1, improve $MUST trading experience with more liquidity and less slippage, and foster the strategic partnership between Sushiswap and Cometh.^[27]

The team recently launched ComethSwap, a Layer 2 decentralized exchange running on Polygon, with very strong liquidity mining incentives.

The Onsen integration aims to complete those incentives for liquidity providers who wish to provide liquidity on Layer 1 and get additional exposure to $SUSHI

The Cometh integration on SushiSwap Onsen kickstarts a long-term collaboration between both projects which will also be materialized by branded game assets and other features.

These include NFTs such as Spaceships and Asteroids as well as liquidity bridges with $SUSHI pools on Layer 2, both in-game and in ComethSwap.

The partnership is expected to result in an upside for $MUST and $SUSHI token holders.^[27]