3 reasons to buy SushiSwap
It seems extremely difficult for investors to get a raw deal with SushiSwap (CRYPTO: SUSHI). A decentralized exchange (DEX), SushiSwap was originally a fork of Uniswap. Since its inception, SushiSwap and the SUSHI token have grown into a lucrative space for investors to provide liquidity.
SushiSwap’s offering and the strategies recommended by the community are complex. Let’s take a look at three reasons why the SushiSwap token can provide good value to investors today.
1. One stop shop for passive income
Many other decentralized exchanges do not offer the diversity of SushiSwap offerings. That is, when it comes to passive income opportunities.
SushiSwap allows investors to access pools of liquidity. These pools allow investors to earn fees on the SushiSwap exchange, for the tokens listed on the platform. This is not unique among DEXs.
However, SushiSwap can do this on 14 different blockchains. This is an extremely robust and unique offer. SushiSwap pools reward liquidity providers with LP tokens, which can be used for farm yield. This can happen in SushiSwap and it is the best way to do more SUSHI.
Uniswap, the DEX on which SushiSwap was originally based, does not have this functionality. As a result, SushiSwap became the fifth DEX by volume. The future looks bright for the SUSHI token simply because of the number of ways it can use it. SUSHI is not a governance token, it is a utility token. That’s what it brings to investors: utility.
2. Gas-efficient loan
SushiSwap offers a smart contract called BentoBox which acts like a token safe. Placing your tokens in the safe earns more tokens over time.
BentoBox supports several decentralized applications, or dApps. It is important to note that investors can interact with dApps in a gas efficient manner using BentoBox. (In the crypto world, gas refers to the fees associated with carrying out transactions on the Ethereum blockchain). Indeed, BentoBox has been designed to require the minimum possible actions on the part of the developer and the user. As a result, investors can choose to lend their SUSHIs to the Kashi lending dApp and maximize their returns over time.
Kashi has the power to revolutionize how lending works in Defi, as anyone can create a contract to lend a token. This really allows traders and investors to take advantage of the high returns possible in the Defi space.
3. Set of trident to create new pool opportunities
The value of BentoBox for the SUSHI token and the SushiSwap ecosystem cannot be overstated. It allows investors to deposit their tokens and generate passive income with little to no effort. That’s why an Automated Market Maker (AMM) built on top of BentoBox has the power to go even further. Trident, currently in development, will be this solution, adding four new types of pools that allow new possibilities for providing liquidity.
Trident is particularly innovative with its concentrated liquidity pool offer. This allows investors to specify at what price range they wish to add liquidity within a pair of tokens. Previously, when you added cash to a pool and its popularity increased, your returns could decrease. This type of pool encourages liquidity providers by granting them higher fees within a given price range.
Investors looking for above-average returns might want to consider Trident, as it is one of the only MAs to provide passive returns on deposits. This is great news for SUSHI, which will be one of the most traded pairs of tokens on the AMM, supporting its price even further.
Not for the faint of heart
Often, the more complicated an investment, the riskier it is. This is certainly true in the world of cryptocurrency. SushiSwap is not for the faint of heart. The rewards can be incredible, but there is a steeper learning curve for understanding the software and the strategies offered by the community.
Of course, we advocate a long-term buy and hold strategy. However, with a token linked to a decentralized exchange, the risks and potential volatility of such an investment can be much higher than with other tokens. Investors are exposed to the potential for regulatory risks and security concerns are escalating.
However, those who are optimistic about the continued increase in decentralized exchanges may want to take a close look at SUSHI. There’s a reason this is a fast-growing decentralized exchange in the top five. Therefore, this is a token that is currently on my watch list.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.