Decentralized exchanges such as SushiSwap have experienced a surge in popularity over the past year.
SushiSwap has been one of the pioneers in the space and led to a new model for UniSwap by introducing a governance token to provide additional rewards to liquidity providers (LPs).
SushiSwap was founded by Chef Nomi, a pseudonymous character who created a Twitter and a GitHub account in late August 2020. The platform utilizes a model called automated market-making (AMM) instead of an orderbook model like Binance, which means liquidity providers need to add funds to liquidity pools. Afterwards, SushiSwap uses the liquidity pool to match bid and ask prices to price assets based on a mathematical formula.
SUSHI, SushiSwap’s native token, is provided to users as a reward for adding liquidity into pools. Token holders are allowed to participate in the governance of the platform. For instance SUSHI holders can submit and vote SushiSwap Improvement Proposals (SIP) with their tokens. Token holders are also able to earn a portion of SushiSwap's trading fees.
INJ was added to SushiSwap a few weeks ago which enables users to add INJ to liquidity pools in order to earn SUSHI tokens. This guide will focus on providing instructions for how to use SushiSwap and how to add INJ to SushiSwap pools.
How to Start Using SushiSwap
- Install a wallet extension such as MetaMask.
2. Go to https://sushiswapclassic.org/ and click "Unlock Wallet" on the right hand corner.
3. Click "Connect" to connect your MetaMask wallet with SushiSwap
4. If you plan to swap tokens, click "Exchange", then choose tokens you plan to swap and enter an amount.
If you plan to be a liquidity provider on SushiSwap in order to earn SUSHI token rewards the instructions are slightly different. In the "Exchange" webpage, click on the “Pool” tab. We will be using INJ-ETH as an example.
Adding Liquidity on SushiSwap to Earn SUSHI Tokens
- Click “Add Liquidity”. The base should already be ETH, but if not, select ETH.
2. Click on “Select a Token” and search for INJ.
3. Enter the amount of ETH and INJ you are going to add to the liquidity pool.
Note: You must add both ETH and INJ to the pool in order to earn SUSHI rewards.
4. Add liquidity to the pool and you’ll receive INJ-ETH SLP tokens– these can later be redeemed for tokens once you have finished staking on SushiSwap.
5. In the top "Menu" page, choose the INJ-ETH pool and deposit your INJ-ETH SLP tokens.
- Impermanent loss is always something you should be aware of when participating in DeFi pools. This refers to to the idea that when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them.
- Smart contract risk can also arise in case malicious actors are successful in tampering with the smart contracts holding your tokens.
Advantages of SushiSwap
- The platform is permissionless, and there is no KYC (Know Your Customer) policy. This means that anyone can trade and contribute to the liquidity pools without asking for permission.
- You can earn tokens as rewards. When you contribute to the liquidity pool, you earn SUSHI tokens.
- Transaction fees are optimized. 0.25% go directly to the active liquidity providers and 0.05% get converted back to SUSHI and is rewarded to SUSHI holders.
SushiSwap is an innovative platform that enables users to earn token rewards for adding liquidity to pools. This guide specially focused on adding INJ to SushiSwap pools.
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Injective Protocol is the first layer-2 decentralized exchange protocol that unlocks the full potential of decentralized derivatives and borderless DeFi. Injective Protocol enables fully decentralized trading without any restrictions, allowing individuals to trade on any derivative market of their choosing. Injective Protocol is backed by a prominent group of stakeholders including Pantera Capital, one of the most renowned venture capital firms in the world, and the leading cryptocurrency exchange, Binance.
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