When you first learn about the cryptocurrency exchange market, there are a few things you need to sort out before you can start trading. First, you need to find the best cryptocurrency exchange that meets your needs. Then, you need to create a cryptocurrency wallet, so you can start buying and selling cryptocurrencies. Finally, you need to decide which cryptocurrency wallet will best suit your needs.
Decentralized exchanges (DEXs) are the hot new trend in cryptocurrency trading. Not only do they attract traders by completely removing the need for a centralized authority to manage the exchange, they also allow the user to retain custody of their cryptos, and provide the user with complete control over the trading, as opposed to some exchanges that allow the exchange to withdraw your remaining balance after you stop trading.
No matter how many cryptocurrency exchanges there are, the ones we remember or use the most are centralized. Some believe that the idea of using a centralized entity to access and manage assets that are inherently designed to decentralize the financial system is inherently at odds with the principles of blockchain and cryptocurrencies. This is why decentralized exchanges (or DEX) were created, which led us to compare Uniswap and SushiSwap.
Considering the markets where billions of dollars worth of tokens are traded every second, Uniswap and SushiSwap are among the most popular DEX in the world. But if you look a little closer, you’ll find that there are many similarities, but also subtle differences that separate these two siblings. But which one, Uniswap or SushiSwap, is the better decentralized exchange for your money?
Uniswap vs. SushiSwap Comparison Chart
Uniswap vs. SushiSwap – Main differences
What is Uniswap?
Founded in 2018, Uniswap is actually one of the oldest and most original decentralized financial protocols (DeFi) in existence today. Built on the Ethereum blockchain, Uniswap was originally developed with the Ethereum Foundation before becoming the massive company we know today. Uniswap is the largest of the decentralized exchanges, with a record $242 billion in transactions by over 46 million users worldwide.
When most people think of token trading, they usually think of Uniswap. After releasing generation after generation of updates that added new optimizations and improvements to the protocol, Uniswap went from V1 to V2 in May 2020. A year later, in May 2021, Uniswap V3 was launched on the main network, which mainly included updates to provide better liquidity flow with the introduction of concentrated liquidity, faster execution times for traders and multiple levels for trading commissions.
However, most users – at the time of writing this Uniswap vs. SushiSwap guide – still using Uniswap V2, which will serve as the basis for our comparison. UNI’s native tokens have also gained a lot of value recently, rising more than 9,200% since their all-time low in September 2020. This has made Uniswap cryptocurrencies the 12th most valuable token on the market. This marks a period of tremendous growth for Uniswap as the company hosts over 72,000 lenders.
How do decentralised exchanges (DEX) work?
Decentralized exchanges like Uniswap, as well as SushiSwap and others, work very differently than the centralized exchanges we are more familiar with. In a traditional stock exchange, which also applies to other traditional platforms such as stock trading, order books are used to arrange and execute trades. When a person wants to buy a particular commodity – in this case, a cryptocurrency token – he or she registers his or her purchase order in the order book. Then they have to wait until a buyer comes along.
When the buyer is willing to agree to the seller’s price and amount, only then is the transaction complete and the seller transfers all of its assets to the buyer. DEX, on the other hand, uses a system of automated market makers (AMM). With AMM, there is no order book – instead, users pool their assets for a selected trading pair in liquidity pools. These are the pools from which users will buy their tokens, where liquidity is readily available.
Instead of manually comparing the buyer’s price to the seller’s price to complete the transaction and establish a fair market price, the MSA uses algorithms to establish the price. This is done by measuring the supply of assets within a liquidity pool, the demand for token swaps for that pool, and the overall volatility of the market, among other important parameters. As an incentive, users who pool their assets become liquidity providers (LPs), who then receive a portion of the trading fees.
How did SushiSwap start?
There are many advantages to using automated market makers, as we have already seen in our comparison of Uniswap and SushiSwap. In essence, the MSA avoids the phenomenon of large spreads (the difference between buying and selling prices) that illiquid assets face. But if this system is already as advanced as it gets, why did SushiSwap decide to give up Uniswap? Its creator, the anonymous leader Nomi, apparently wanted to renovate the tokenomics around Uniswap.
SushiSwap was then born as a spin-off from Uniswap and reached a total value of over $1 billion within hours of separating from Uniswap. However, SushiSwap gained notoriety after Chef Nomi drained SushiSwap’s development fund in late 2020. Chief Nomi traded it for 37,400 ETH (worth $14,000,000 at the time). After SushiSwap’s SUSHI tokens lost over 70% of their value in one day, Chef Nomi returned the funds. Changes have been made to prevent this from happening again.
Since then, SushiSwap has become one of the leading decentralized exchanges. According to DeFi Pulse, SushiSwap ranks 6th in terms of protocol liquidity with $5.36 billion at the time of writing this comparison between Uniswap and SushiSwap. This is reflected in the price of SUSHI’s native tokens, which have risen more than 3.100% since their all-time low at the end of 2020. With a market value of over $1.9 billion. SUSHI is ranked 74th most expensive chips.
Why choose Uniswap?
The main difference between Uniswap and SushiSwap, from a user or merchant perspective, lies primarily in the services they offer. Uniswap focuses more on trading tokens, the interface is simply divided into three sections: Swap, where you can exchange one token for another; Pool, where you can become a liquidity provider (LP) to contribute to the liquidity pool tokens; and Vote, where you can participate in managing Uniswap on the channel.
Despite its simplicity, Uniswap has become the most widely used DEX to date, with over 8,000 liquidity pools to choose from and total liquidity of $8.1 billion. The highly liquid protocol is the main reason many people continue to choose Uniswap, even though building on Ethereum means users have to pay high and often volatile gas fees. Thanks to this high liquidity, you can find currency pair swaps at competitive prices.
For liquidity providers (LPs), the constant inflow and growth of users provides an incentive to contribute even more of their assets to the available liquidity pools. Some chip savings (at the time of writing this comparison Uniswap vs SushiSwap) have very high returns for LPs. For example, the LEASE-ETH pool offers LPs the potential to earn rewards of up to 1,500% APY, and the SHIB-ETH pool currently has annual rewards of nearly 800% APY.
Benefits of Uniswap
- The large number of trading pairs and high liquidity allow users to get the best prices.
- The user interface is very simple to use and easy to understand.
- LPs receive most of the trading fees as compensation (a little).
- Some liquidity pools offer very high annual returns and fees to LPs.
- The Uniswap V3 update brings many changes: concentrated liquidity, flexible commissions, etc.
Disadvantages of Uniswap
- Doesn’t offer much other than trading tokens and pooling in liquidity pools.
Why choose SushiSwap?
If you look at SushiSwap, the pools generally have less liquidity than Uniswap, but they’re still pretty big. As we mentioned earlier, the distinguishing element of SushiSwap is what users can do with it. On their dApp, you can see that token trading and token aggregation are the main objectives. But then we could see other services, like. B. farming, which is incredibly profitable and still offers maximum profit potential through betting and even token lending.
Clearly, SushiSwap is much more than a simple token exchange platform. Thus, his income farm offers very high returns: At the time of writing, the MASK-USDC instrument had a return of 173%. Another important difference between Uniswap and SushiSwap is tokenomics, as mentioned earlier. Unlike centralized exchanges, DEX has a much simpler cost structure. Currently both Uniswap (in V2 phase) and SushiSwap charge 0.3% per transaction.
As with automated market makers, there are no intermediaries and all trading costs are passed on to the liquidity providers. LPs on Uniswap receive a commission of 0.3% of the trading fee. At the same time, SushiSwap rewards liquidity providers with less than 0.25% transaction fees on liquidity pools, and an additional 0.05% is paid to all SUSHI token holders. So we can talk about earning more with a smaller SushiSwap ecosystem if you only own SUSHI.
Benefits of SushiSwap
- A large number of trading pairs and a fair amount of liquidity for user transactions.
- All holders of SUSHI tokens receive a small portion of the transaction fee as an incentive.
- Offers the use of a variety of services – farming, vaping, loans, etc., in addition to token trading and aggregation.
- The promising integration with Binance Smart Chain avoids network congestion and high gas costs on Ethereum.
Disadvantages of Uniswap
- The user interface and the names of the various services or functions may not be clearly understood.
Uniswap vs. SushiSwap – final result
Rounding out our comparison of Uniswap and SushiSwap, we can see that tokenomics plays an important role in the difference between the two. SushiSwap, with its more equitable distribution even for illiquid sellers, as well as the constant distribution of tokens, ensures that they are trying to attract and encourage more people to join the SushiSwap network, as well as encourage them to stay. But will that stop us from giving Uniswap the DEX championship crown?
No, but it’s a close one. Uniswap is rightly the winner of our comparison, simply because it has mastered the chip exchange. With deeper pockets of liquidity and an ongoing commitment to improving price data and optimizing the trading experience, Uniswap will continue to be a favorite for those looking for a simple, reliable and unscrupulous exchange. It’s also very easy to use, without SushiSwap’s weird naming system to distinguish one product from another.
Still, SushiSwap remains a very attractive protocol for those looking for something more than token trading. For them, growing plants on SushiSwap can be a very lucrative side income, as can betting and lending out chips to earn interest. Compared to Uniswap, there are many more ways to use your money. Overall, our comparison of Uniswap and SushiSwap proves that the days of centralized exchanges may be numbered.
This source has been very much helpful in doing our research. Read more about top decentralized exchanges by volume and let us know what you think.
Frequently Asked Questions
What is the best liquidity pool Uniswap?
This is a really good question, and it’s one a lot of people ask. Uniswap is an ERC20 based decentralised exchange. The site has a quick and easy signup process that you can do. If youre new to the world of cryptocurrency, you might have heard about liquidity pools. Often, the terms liquidity pools and exchanges are used synonymously, but in reality there is a difference. The main difference between a liquidity pool and an exchange is that you cant trade on a liquidity pool. The pool is merely a service that allows you to buy and sell cryptocurrency in exchange for coins from the pool of available currencies, at the current market price. This way, you do not have to worry about exchanging your money for a specific cryptocurrency and then trying to find a buyer willing to pay your price.
What is Dex liquidity?
Bitcoin transaction speeds are notoriously slow. A new transaction takes an average of 10 minutes to be confirmed, and that’s only if there are no other transactions in the queue. This is due to the design of the network, which can only handle a set number of transactions per second. Credits solves this problem by providing faster transaction speeds and higher transaction volumes with a technology called Dex. This has a lot of potential benefits, including free micro-transactions between parties, new markets for low-value items, and real-time solutions to business problems. If you’ve ever traded Dex, you know how important liquidity is. The degrees to which the various exchanges compete for this is much more important than it would be in most other markets, because the Dex market is highly fragmented. When you’re trading other markets, you can typically get away with using one of the larger exchanges. In Dex, the exchange you use can make or break a trade.
What is Uniswap liquidity pool?
I am not going to talk about the history of the exchange, about the project’s team or even about the features that Uniswap offers. Instead, I will try to give you a clear picture of how this platform works and how it can help you in the future. The term “liquidity pool” gets thrown around a lot in crypto, but what does it mean? Simply put, it’s a group of people committed to buying and selling a certain cryptocurrency, usually Bitcoin (BTC) or Ethereum (ETH). The purpose of a pool is to increase the amount of trade-able coins on the market. The idea is that you buy tokens and then sell them at a higher price to members of the pool. The pool also buys at a low price and sells at a higher price. The difference between the original price and the price the pool sells the tokens at is the pool’s cut.
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