The popularity of decentralized exchanges (DEXs) is growing quickly because users can exchange cryptocurrencies through a third party without relinquishing control over them.
Among the many DEXs piggybacking on Ethereum’s blockchain, Uniswap and Sushiswap are two of the most prominent. So, what are the differences in these two exchanges? Let’s take a closer look.
What Is Uniswap?
Uniswap, a decentralized cryptocurrency exchange based on the Ethereum blockchain, is adamant about changing the way most platforms operate financially. It’s free for all users and doesn’t come with exorbitant trading fees. As a result, people are flocking to the platform to trade their tokens and coins knowing they won’t have to shell out extra fiat to trade.
What Is Uniswap?
How Does Uniswap Work?
Uniswap is a trading platform that uses modern technology to function and keeps your reserves safe. It doesn’t rely on or implement traditional advanced trading processes. Instead, it uses the Automated Market Maker (AMM), which is a smart contract that holds liquidity pools and reserves that dealers use when trading.
What Are Uniswap’s Unique Features?
Uniswap is a decentralized cryptocurrency exchange that runs on the Automated Liquidity Protocol (ALP). Traders get paid for putting money into a consolidated fund, which they do by contributing to Uniswap. This fund, in turn, enables more efficient trades. Because there is an active fund that can accept any order regardless of its size, you don’t have to wait for someone to match your price before you can execute your trade.
What Are the Pros of Uniswap?
Uniswap offers its users several advantages.
What Are the Pros of Uniswap?
- No mandated KYC.
- Asset self-management.
- Endless access to new tokens and coins.
No Mandated KYC
KYC (Know Your Customer) is a standard process that requires new account owners to verify their identities. Unlike most financial institutions, Uniswap doesn’t require this type of information because it wants to offer a simple peer-to-peer trading experience.
Asset Self-Management
With Uniswap, you can handle everything from your wallet. As a result, you’re in control of your funds and can trade them whenever you want without waiting for approval or sending money elsewhere.
Endless Access to New Tokens and Coins
Thousands of cryptocurrencies and tokens are available on Uniswap. This gives you a chance to invest in new projects while they’re still growing in popularity. You can also trade with people globally without worrying about borders or regulations.
What Are the Cons of Uniswap?
On the other hand, Uniswap has some drawbacks that potential users should be aware of.
What Are the Cons of Uniswap?
- No support for fiat deposits.
- High gas fees.
No Support for Fiat Deposits
Uniswap doesn’t accept fiat currencies like the U.S. dollar, so you’ll need to deposit crypto from another exchange-connected wallet.
High Gas Fees
When the Ethereum network is busy, it takes more gas to send a transaction. Gas fees depend on how many other people are sending transactions at the same time. Therefore, busy networks can increase Uniswap’s gas fees.
What Is Sushiswap?
SushiSwap allows users to swap different virtual currencies by connecting their cryptocurrency wallets. The 11,700 currency pairs it supports make it the largest DEX in terms of available cryptocurrencies — larger than IDEX and EtherDelta.
What Is Sushiswap?
Users can deposit funds into SushiSwap using MetaMask or Ledger Nano S and trade from there. The platform lets you buy and sell with just one click and offers 24/7 customer support.
How Does Sushiswap Work?
SushiSwap is an Ethereum-based token exchange platform that uses the Uniswap protocol. It’s based on the premise of Uniswap but uses tokens to incentivize its suppliers.
For example, they award users through income farming. In addition to their own token, SushiSwap also supports the following cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ripple (XRP), and Stellar Lumens (XLM).
What Are Sushiswap’s Unique Features?
Although Sushiswap originally started as a hard fork of Uniswap, it has since enhanced its code to vary greatly from Uniswap.
Forking happens when there is a change in the blockchain, resulting in a transaction split. When that happens, the transactions go their own ways, and the two ends can keep their transaction keys safe.
Meanwhile, Sushi tokens are another innovation that inspired Uniswap to follow suit. Sushiswap grants Sushi tokens to users as a reward for generating volume.
What Are the Pros of Sushiswap?
A hard fork of Uniswap, Sushiswap is driven by community-focused features. It essentially milks Uniswap’s liquidity while keeping its original design. Despite working like Uniswap, Sushiswap intends for its platform to look and feel different.
What are the pros of sushiswap?
- Liquidity-provider-focused incentives.
- Intricate rewards system.
- Security audit approval.
Sushiswap’s parent protocol followed a different path than initially intended, eventually acquiring 80 percent of Uniswap’s liquidity by itself.
- In the first phase of the ecosystem’s operation, traders use Uniswap liquidity pool tokens and exchange them for Sushi.
- As a next step, traders deposit their stake tokens into their Sushiswap accounts to trade with their decentralized exchanges (DEX).
Here are some of its benefits.
Liquidity-Provider-Focused Incentives
On Uniswap, liquidity providers earn network trading fees by providing liquidity. Smaller traders are at greater risk of surpassing large cryptocurrency exchanges and mining pools as the primary sources of digital asset liquidity.
Sushiswap is different, though. The platform improves upon this model by providing incentives to liquidity providers: They can earn Sushi tokens — which are based on the fees generated by their trade — and use these tokens in exchange for goods or services.
Intricate Rewards System
Uniswap’s distribution mechanism is different from the original chain and fork. Providers on Uniswap share 0.3 percent of a pool’s liquidity equally, whereas the original chain and fork each charged a fixed trading fee regardless of pool size.
Sushi, on the other hand, distributes 25 percent of trading fees to liquidity providers. The exchange also converts 5 percent into Sushi and redistributes it among token holders.
Looking at the difference, Uniswap’s trading fee is fixed, whereas on Sushiswap, 5 percent will be distributed to the platform’s token holders.
Security Audit Approval
Sushiswap has developed a new approach to how exchanges work and manages to address many issues at once. For instance, it conducts security audits and reserves 5 percent of its token distribution for ongoing development.
What Are Sushiswap’s Cons?
As with Uniswap, however, Sushiswap does have some negatives worth noting.
What are sushiswap’s cons?
- Insubstantial technology.
Insubstantial Technology
Sushiswap uses Uniswap version 2.0. This version of Uniswap’s protocol was licensed to allow other developers to do anything with it (as a GNU GPL) so Sushi developers took advantage. Unfortunately, this means Sushiswap doesn’t have its own steady platform. Although working on Uniswap’s platform seems easier, Sushi could’ve done more if the platform had its own protocol to maintain and develop.
When Uniswap released its newest protocol, it changed its licensing tactics to maintain commercial control for several years. They kept the source code public, however, and will revert to GPL after a delay. Sushi can update its core when the license changes.
Sushiswap Vs. Uniswap: Making the Choice
If you want to maintain a higher level of privacy, Uniswap may be the best option for you. It doesn’t require a KYC process and you have complete visibility and control over your funds with limitless trading opportunities. If liquidity is a deal breaker, Sushiswap is the way to go. Sushiswap also has the best deals available as well as security audit approval. Both are excellent choices if you’re looking for an anonymous exchange with few restrictions.
