SUSHI is an ERC-20 governance token that powers the SushiSwap decentralized exchange.
SushiSwap began as a vampire attack on the Uniswap DEX after copying its code wholesale but improving on a governance mechanism that did not offer any rewards for taking part in the management of the decentralized finance project. SUSHI tokens offered a staking reward drawn from the exchange's transaction fees, as well as governance control.
SushiSwap founder Chef Nomi — who remains anonymous behind that alias — realized that by offering Uniswap liquidity providers big rewards in SUSHI tokens for staking their Uniswap LP tokens, he could entice many to move away from Uniswap. It worked, with $840 million worth of liquidity moving from Uniswap to SushiSwap.
SushiSwap remained strong despite founder Chef Nomi draining — and quickly returning — $14 million from the project's treasury, causing SUSHI's price to fall in the process. Three months after the Chef Nomi controversy, SushiSwap announced a merger with Andre Cronje's Yearn Finance project. As part of this partnership, SushiSwap and Yearn Finance are collaborating on the Deriswap project — an upcoming derivatives platform.
SUSHI price and tokenomics
SUSHI is an Ethereum ERC-20 token that will have a total supply of 250 million when all have been minted, which is expected to be by the end of 2023.
SUSHI owners may lock their tokens into SushiSwap's liquidity pools, receiving SushiSwap Liquidity Provider tokens that are worth a percentage of the pool in exchange. These can be traded for SUSHI when pulling funds out of the liquidity pools. As each liquidity pool takes in a 0.25% fee from every trade, the amount of funds in the pool grows. That, in turn, makes the SLP tokens more valuable as they still retain the same ownership percentage. They can also be used to join "farms" that receive block rewards from the SushiSwap blockchain.
An additional 0.05% fee supports SushiSwap's staking mechanism, known as the SushiBar. SUSHI tokens staked are traded for xSUSHI, a separate token that grows in value from that fee. This permits yield farming without joining a liquidity pool.
About the founders
Both SushiSwap and its vampire attack on the Uniswap DEX are the brainchild of Chef Nomi, a developer whose identity remains hidden behind the pseudonym.
Chef Nomi was the object of a great deal of outrage after draining the SushiSwap treasury of $14 million in SUSHI. He sold it and bought Ether before departing the project, while the liquidity torn from Uniswap was being put in place. That huge sale, and the departure of SushiSwap's founder under circumstances that had people crying foul, caused SUSHI's price to fall by more than 70% in 24 hours. Two days later, Chef Nomi returned the funds with an abject apology, saying he would continue to work on development but take no part in governance.
Before departing, Chef Nomi had turned control over to Sam Bankman-Fried, the CEO of quant fund Alameda Research and the FTX cryptocurrency exchange. Bankman-Fried turned temporary control over to a group of nine people chosen by the community. On Dec. 1, 2020, SushiSwap announced a merger with Andre Cronje's Yearn Finance.