For a lot of us, coming into the sphere of cryptocurrency has been about finding financial freedom and flexibility. For a good majority of as well, it is a place for the generation of wealth. While the surges of value that come with a bull market may be long gone, there are still consistent ways to create value with your current holdings. SushiSwap has three major avenues by which you can earn yield. The methods by which would be:
- Swapping (Trading)
- Liquidity Providing
- Staking your Sushi tokens
Today we shall go ahead to look at each of these aspects, and how you can take advantage of them to stack up your bags.
Trading
If you came to Sushi, it's likely because you needed to make a swap into a token that you wanted. We don't need to say much about this. Whether you intend on investing your USDC into a blue chip asset like Ethereum, swapping into Sushi to stake for xSushi (which we will talk about more below), liquidating your positions, or taking a gamble on a volatile memecoin; our router will try find the best rate possible for you to give you the most minimal amount of slippage in your trading. It will even aggregate into other exchanges to ensure it.
Liquidity Provision
Liquidity is the lifeblood of any exchange. While historically that would have been provided and maintained by centralized entities, DEXs bring the opportunity for the layman to get in on the action and become their own investor. By supplying funds and allowing users of the exchange use them as a medium through wish to conduct their trading, you can provide a service to other traders for a modest fee. Each swap made will take a base fee of 0.3% of the swapped total. Most of that will be given back to the liquidity providers. A portion of that is sent to xSushi holders as well. (We will talk about this later, below).
There is risk with providing liquidity, generally in the form of impermanent loss. The trades facilitated through pairing will be affected by those trades. Token values will shift as pricing between the two pairs as prices shift. The easiest way to think about this is that you’re essentially selling one half of your pair towards the other which is valued more than the other. When you withdraw liquidity you’ll find these shifts in token values will be realized. Some people may consider this to be a risk – to hedge against it you can use very correlated assets or pegged ones like USDT to USDC.
Farming
For some pairs of liquidity, there are additional incentive farms that can produce Sushi and/or other tokens on top of your base rewards. If the v2 pair you are providing has a farm, you can deposit your SLP tokens into it to start gaining these rewards. For v3 positions, eligible positions are handled automatically by Merkl and apply as long as your LP is within price range.
These rewards help other protocols promote usage of their tokens by encouraging users to bring liquidity to the DEX specifically for them. Additionally, for asset pairs that can be quite volatile, rewards mitigate risks due to the aforementioned effect of impermanent loss. APR rates listed on the Sushi app will reflect both fee collection and reward rates, so they will certainly be a significant factor when chasing liquidity pairs with high yield.
Rewards from v2 Onsen farms accrue in real time and can be freely harvest as they are earned - they will be found on the individual pool pages that the farms are assigned to. The rewards for v3 farms are updated typically in epochs of 6-9 hours and can be claimed through the 'My Rewards' tab on the Pools page. All active positions on the particular chain you claim from will have their rewards claimed at once.
Staking Your Sushi
One of the most straightforward ways to stack up your Sushi bags over the long term is to stake it into the SushiBar. The SushiBar is denoted in a different token, xSushi. Many of the protocol’s services push a small portion of fees towards the Bar, distributed equally among all holders. This is represented by the always increasing value ratio of xSushi to Sushi. When the Chefs call the Bar to be served, that ratio of value will be bumped up. Over time your xSushi can be redeemed back for a greater value of Sushi than what you had when you had initially entered your stake. With it, you can even vote on protocol proposals that are listed on Snapshot!
There is no lock or anything involved with leaving your xSushi position. You can enter and leave freely as you like.
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