Uniswap and SushiSwap are very similar competing decentralized exchanges (DEXs) built on the Ethereum blockchain. While UNI handles more volume and has been around for more time, SUSHI does has some unique benefits such as a yield farming platform and bonuses for token holders.
But which is the premier DeFi platform? Learn more about both to see which DEX is right for you.
What is Uniswap?
Uniswap is a decentralized exchange where anyone in the world can deposit money into liquidity pools or use them to swap between currencies for a small fee. Each pool represents a token pair between 2 Ethereum-based currencies. Just like a USD/CAD exchange you’d use before crossing the Ambassador Bridge, Uniswap provides UNI/ETH, ETH/USDC and many many more.
Those who deposit money earn this fee. They are known as liquidity providers (LPs), and they are incentivized to provide liquidity in order to earn the fee associated with all the swaps they provide the liquidity for.
LPs can choose which crypto pair they want to provide liquidity for, and in the newly-released Uniswap V3, LPs can even choose which section of the price curve they wish to provide liquidity for. This means they can concentrate their liquidity around the relevant range, where the vast majority of swaps are happening. They also earn much higher yields by concentrating their liquidity, but expose themselves to price action that might take them out of the fee-earning range.
Uniswap liquidity pools are Ethereum smart contracts at their core. These smart contracts automate market making, and all of the swap features are also handled automatically by code.
What is SushiSwap
SushiSwap is a fork, or copy, of Uniswap with some minor changes. The user interface is based on a sushi menu, and more gamified than Uniswap’s platform.
SUSHI was launched by it’s anonymous “chef” Nomi back in August 2020, and drama with Uniswap’s creator Hayden Adams quickly ensued. Hayden was not happy about a copycat stealing nearly a billion dollars in staked liquidity within just a few hours of launching, and rightfully so.
But, why did so many LPs move their money off of the time-tested Uniswap? In short, Uniswap had already completed some token distribution benefits that SushiSwap was still providing, making it temporarily more lucrative for LPs to provide liquidity to SUSHI pools.
Similarities Between Uniswap and SushiSwap
SushiSwap began as a fork of Uniswap, a literal copy-paste. While some changes have been made, the core products remain the same.
Both platforms are automated market makers (AMMs) that operate decentrally on the Ethereum blockchain. Both platforms can be used to swap between currencies by tapping into liquidity pools filled by other users who are active in the DeFi ecosystem.
You can also become a liquidity provider on both platforms and earn the fees associated with the swaps you provide liquidity for. All of this executes automatically by the smart contract making you an effectively passive source of income.
This is a good way to get into the crypto space without becoming the biggest investor. At the same time, you should not assume that all your contributions to the pool are going to make you lots of money at once. Invest slowly, monitor your account and determine if this is a good way for you to proceed in the future.
Differences Between UNI and SUSHI
There are a few key differences that separate the Unicorn from the Sushi copycat.
- Uniswap has launched V3 which enables concentrated liquidity positions, represented by NFTs and stored in Ethereum wallets just like ETH, UNI and any other NFT. Concentrated liquidity is a huge deal, and has not been achieved by any legacy financial institution before making Uniswap and DeFi some of the most novel operations in the financial arena to date. On both platforms, liquidity can only be provided across the entire price curve, which means a huge portion of your position is not in fee-earning territory, and making an equivalent yield to the v3 version would require an enormous amount of V2 liquidity.
- Uniswap offers multiple fee tiers, which are all paid fully to the liquidity providers. In contrast, SushiSwap offers a 0.3% fee for swaps, 0.25% of which is given to the LP, and the remaining 0.05% is distributed to SUSHI token holders. As a token holder, you will earn more in SUSHI, whereas a liquidity provider is better off in a Uniswap pool making the full 0.3%.
- SushiSwap offers a yield farming platform. Let’s say you stake ETH into a smart contract for the Ethereum 2.0 upgrade. Then you’ll receive an ETH2.0 token that can later be redeemed for your original ETH. This way you hold a “wrapped” token that represents your “real” token. Some wrapped tokens can be staked as well, compounding the yield. This process is known as "yield farming”. Some of its yield farming pools boast APYs up to 96%. Just note this is an increasingly risky strategy that should be approached with extreme caution.
Where to Buy UNI
Uniswap is available on Kraken, Gemini and Coinbase (as well as Binance and a few others available to non-U.S. customers). If you’re U.S.-based and don’t have an account with one of these centralized exchanges, there are links provided below for you to get started today.
Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.
Just note that due to the U.S. Securities and Exchange Commission (SEC) Know Your Customer (KYC) regulations, you’ll have to verify your identity for tax purposes. This will include uploading your Social Security number, photo ID, full name and date of birth.
Where to Buy SUSHI
SUSHI is available for direct purchase on Coinbase globally, and Binance if you’re outside the U.S.
Alternatively, you can purchase ETH on a wider variety of exchanges, and use Uniswap or SushiSwap to swap into SUSHI tokens.
Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.
FAQ
Does Uniswap or SushiSwap have better returns?
Uniswap gives liquidity providers the option to charge 0.05%, 0.3% or 1% depending on the trading pair. The more exotic the pairs typically lean towards the 1% fee tier.
Is SushiSwap better than Uniswap?
Not really. Uniswap pays their liquidity providers more and has a better interface. Sushiswap is better for yield farming, although that may not last forever.
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