Uniswap and SushiSwap are two of the biggest decentralised exchanges on the market, with both platforms having billions of dollars of collateral locked into their protocols at any given time.
Whilst these two Ethereum-based projects are ostensibly in direct competition, potential investors may be surprised to learn that they are remarkably similar in many ways. So is one a better investment than the other in 2022?
After a rollercoaster year in 2021, the cryptocurrency market is a very different place going into 2022 and the section of the industry known as DeFi is continuing to evolve. Gone are the days when cryptocurrency was simply bought and held, with hopes that a token would appreciate over time. Projects like Uniswap and SushiSwap allow crypto holders to put their tokens to work with liquidity mining.
Of course, both SushiSwap and Uniswap also provide a platform for users to exchange their ERC-20 tokens, without needing to go through a traditional broker or exchange. In other words, these DEx’s operate completely autonomously, with no need for a middle man or central order book.
In the following Uniswap vs SushiSwap comparison, we’ll be lifting the lid on these two projects and looking at their key differences, as well as their similarities. Hopefully, after reading you’ll have a better idea of how each platform operates, as well as where their respective tokens may fit into your investment portfolio.
What Is A Decentralised Exchange?
Decentralized exchanges, as the name suggests, are cryptocurrency exchange marketplaces that remove the need for an intermediary custodian - in other words with no middle man. By leveraging smart contracts, DeXs can allow for peer-to-peer transactions, linking buyers and sellers directly. Conversely, centralized exchanges are managed by a centralized organization such as a bank or broker that is seeking to turn a profit.
Because DeXs don’t have a central order book, they rely on things called Automated Market Makers and liquidity pools to ensure that there are always tokens available to meet the needs of users looking to buy, sell or exchange. AMMs are algorithms that set the price of a token based on supply and demand. Users are encouraged to stake their own tokens in liquidity pools, for which they are usually rewarded a proportion of the trading fees.
In exchange for staking their tokens in liquidity pools, users usually receive an alternative token of equivalent value that acts as a kind of IOU. These tokens can also be freely traded on the networks.
Many of the top DEXs are built on top of existing blockchains. The most popular is, of course, Ethereum, followed by the likes of Binance Smart Chain and Cardano.
Uniswap vs SushiSwap - The Fundamentals
Uniswap and SushiSwap are decentralised exchanges that are both built on the Ethereum blockchain. Effectively, they fulfill a similar role and could be said to be in competition with each other. However, SushiSwap actually started life as a fork of Uniswap - so the two projects are directly related.
This can make it a little trickier to identify what the fundamental differences between the two platforms are. In the following overview of each one, we hope to identify exactly what sets Uniswap and SushiSwap apart.
Uniswap
Background
The concept for Uniswap was raised in 2016, after Vitalik Buterin outlined the idea of an on-chain exchange system. When Hayden Adams began working on developing this idea in 2017, he received $100k from the Ethereum Foundation. Uniswap was then born around a year later, in 2018.
As we’ve mentioned, Uniswap is an Ethereum-based project. It is what’s known as an Automated Market Maker - and this is what sets it apart from traditional exchanges. Uniswap doesn’t rely on an order book to make transactions, it instead uses an algorithm to determine price and uses liquidity pools to ensure tokens are available to users on the exchange.
Inevitably, the idea of an automated exchange that removed the need for a middle-man proved popular and Uniswap quickly started building liquidity and transaction volume. Uniswap incentivises users to provide liquidity by rewarding them with a share of the fees, based on trading volume of the particular pool they provide liquidity to.
Key Information
Uniswap is one of the most popular DeXs out there and, at the time of writing, it has some $8.29bn locked into its protocol, according to DeFi Pulse.
The platform employs a Constant Product Market Maker, which effectively means the price of a token increases or decreases in relation to supply and demand. Whilst this does mean there is greater slippage on larger orders, ultimately it is what makes Uniswap tick.
The trading pools themselves are what allows Uniswap to ensure orders can be met. The pools are made up of ERC-20 tokens and a relative amount of Ether acting as collateral. Users providing their tokens to the liquidity pools receive newly minted liquidity tokens which acts as an IOE for their proportion of the pool as well as a 0.3% fee from each trade.
The UNI Token
The UNI token came to life after the fork that spawned SushiSwap. The latter instigated a rewards scheme with its own native token, SUSHI, so Uniswap followed suit to encourage its user base not to jump ship to the newer platform.
Today, the UNI token is primarily a governance token. This means that UNI holders effectively run the platform - voting on potential protocol changes and steering the direct of the project and its future upgrades.
The UNI token can also be bought and sold on the open market, as with most major cryptocurrencies, which offers investors the chance to gain exposure without having to enter into the Uniswap protocol itself.
Check Out: Will Uniswap Make Me Rich in 10 Years?
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SushiSwap
Background
SushiSwap is another Etheruem-based exchange that began as a fork of Uniswap. Initially, SushiSwap improved on the original Uniswap blueprint by offering its own governance token and the possibility of liquidity mining. In fact, users could use the collateral tokens they received from staking on Uniswap to earn SUSHI governance tokens - so SushiSwap very much sought to poach users from its predecessor.
The project launched in August 2020 and, despite some early teething troubles relating to dubious action from creator Chef Nomi, the project quickly established itself as a competitor to Uniswap. This was largely down to the fact that Chef Nomi effectively relinquished control and the rules governing the project were tightened up.
Fundamentally, it is very similar to Uniswap, as both are AMMs that rely on liquidity pools to run their services. Notably, SushiSwap also offers the SushiBar, which allows users to effectively re-stake their Sushi Liquidity Pool tokens to earn further rewards.
Key Information
When it comes to locked-in funds, SushiSwap trails Uniswap slightly, having an estimated $1.9 billion on its books at the time of writing. However, it’s worth bearing in mind that SushiSwap is a much newer platform, so this is largely to be expected.
Just as with Uniswap, SushiSwap is an AMM that uses smart contracts to determine the value of a particular token, then liquidity pools supply the exchange with the tokens needed to support transactions. Again, these pools consist of ERC-20 tokens.
One of the major advantages that SushiSwap has over its predecessor is that a high proportion of its fees are redistributed to users. Liquidity providers receive 0.25% of pool fees, with an additional 0.05% paid to SUSHI holders. In addition, SushiSwap still offers yield farming for SUSHI holders, whereas Uniswap closed its UNI token farming period.
The SUSHI token
Once again, the SUSHI and UNI tokens serve very similar purposes. SUSHI is used as a reward for liquidity providers. Holders of SUSHI are also entitled to higher rewards for staking their tokens. The token is also used in the governance of the SushiSwap platform.
As we’ve noted, SUSHI holders can also use them at the SushiBar. This involves staking them in return for the xSUSHI token - which then unlocks even greater rewards. The inner mechanism is too complex to be explained here, but this feature is an advantage that SUSHI has over Uniswap.
Of course, some people also speculate on the prices of SUSHI and the token can be traded on major exchanges such as Binance, FTX and OKEx exchanges.
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SushiSwap vs Uniswap: Which Is The Better Investment?
It seems that both SushiSwap and Uniswap have their strengths and weaknesses and both are undoubtedly popular platforms. However, they also represent fairly similar investment opportunities so many investors will be looking to choose one or the other for their portfolio. But which is the better pick?
To answer this, we need to take a look at a few details with regards to each project’s price movement - looking back as well as forwards.
Uniswap vs SushiSwap: Price History
Before looking at price forecasts, it’s a good idea to look back at how Uniswap and SushiSwap have performed leading up to this point. Price history can give us an idea of each project’s price bands, as well as how they move in line with the wider cryptocurrency market - as well as in relation to each other.
Uniswap
As we’ve noted, the Uniswap exchange was launched in 2018 but its native token was launched two years later, towards the end of 2020. This was a fortuitous time to enter the market, as the cryptocurrency market was set to take off in the coming months. In fact, UNI doubled in value almost as soon as it launched, hitting $7.10 by mid-September. The token then slumped to $3.40 as the year drew to a close.
Of course, 2021 proved to be a record-breaking year for the cryptocurrency market and UNI was caught up in several major price swings. At the start of January, UNI was trading at $5.17. A few weeks later, it soared by around 275% to $19.39. February was another successful month, with UNI rising to $29. UNI dropped slightly at the start of the month, before soaring to $32.62 just a week later.
There was then a week or two of volatility before UNI climbed to $43.67 - an increase of 740% on its price at the start of the year. It then crept up to its all-time high of $44.92 in the first few days of May. However, a major downturn followed and UNI had slumped to $16.91 by the end of the month. The downturn largely continued across June and July, before the token started to recover in August, reaching $31.05 by the time September arrived.
Uniswap then experienced declining fortunes leading up to the end of the year, dropping to $14.17 in December. At the time of writing, the token was trading at $11.83.
SushiSwap
Despite Uniswap being the older platform, SushiSwap actually launched its token first. The token was first listed in August 2020 and soon saw some pretty drastic price movement. Having spent its first couple of days at around $2.59, SUSHI suddenly tanked to $1.16. However, just a day or so later the token surged to $8.84.
After its initial spike, SUSHI went into something of a decline early on and had dropped below the dollar by November 2020. However, things turned around before the year was out and the token made its way back up to $2.61 before the major price surges of 2021 kicked off.
The first upswing occurred throughout January, as SUSHI finished the month at $10.27, representing growth of almost 300% in a single month. However, things were about to get a shot in the arm and after the third week of February, SushiSwap had skyrocketed to $18.45. Another upswing took hold in March, sending SUSHI to its all-time high of $23.38.
Things came crashing down in April, however, and SUSHI dropped to $10.65 before the month was out. May then saw another price surge, with the token regaining the $20-mark and topping out at $21.44. The cryptocurrency market as a whole then took a downturn over the summer and SUSHI spent June and July below $10 before recovering to $14.93 in September.
The end of 2021 saw SushiSwap on a downward trend and at the time of writing the token was trading at $4.78.
Uniswap vs SushiSwap: Future Predictions
Having taken a retrospective of each project's historical price data, it's now time to hear a few market analysts on what they are predicting for the future. Readers should be advised that the following Uniswap and SushiSwap price forecasts are suggestive only - there are no guarantees when it comes to investing in the cryptocurrency market.
Uniswap (UNI)
Uniswap is a popular exchange and already has a large user base, so it is perhaps of little surprise that many analysts expect its native token, UNI, to increase in value over the coming years. However, the analysts we looked at do differ in how they see the next twelve months or so.
Over at DigitalCoinPrice, for example, Uniswap (UNI) is expected to experience a fairly volatile year in 2022, climbing as high as $17.27 but struggling to hold value month to month. The pattern is then somewhat repeated in 2023, as the token is expected to make significant gains going into the summer, reaching as high as $20.87 in June, before declining slightly and finishing the year back at around. Then the picture in 2024 is much the same, with UNI up by as much as 119% in summer, before declining in the winter months.
On the other hand, WalletInvestor actually forecasts that Uniswap will climb steadily across 2022 and 2023. According to its technical analysis, UNI will reach an average trading price of around $29 by December, before continuing on an upward trajectory into 2023, potentially climbing as high as $35.43 by the end of the first half of the year.
Elsewhere, TradingBeasts sees things slightly differently. It has Uniswap (UNI) fluctuating across 2022 and 2023, trading between $11 and $14. However, things will get steadier around 2024 and the token will make significant gains, increasing in value by almost 70% by the end of the year. As summer 2025 arrives, UNI is predicted to be trading at a potential high of over $23.19 per token.
Read Also: Uniswap Price Prediction
SushiSwap (SUSHI)
Perhaps unsurprisingly, many SushiSwap price predictions for the next year or so look remarkably similar to those of Uniswap. However, whilst both tokens are expected to see volatility across 2022, it appears as though SushiSwap is expected to make the more significant gains.
If we look at DigitalCoinPrice again, we can see that it predicts SUSHI to climb by as much as 50% across the summer months of 2022, before going into decline and finishing the year at around $6.98. As we head into 2023, SushiSwap is expected to become bullish once again, climbing as high as $8.21 by the end of March - an increase of over 70% on today’s price.
Meanwhile, WalletInvestor has SushiSwap making fairly consistent gains across the next year. Having reached an average trading price of $12 in the first half of the year, SUSHI will continue to build on its success and by December could hit a potential high in excess of $13.9 per token. Prices will then continue to rise - albeit at a slightly reduced rate - in the early months of 2023, reaching a potential high of $14.81 by April.
Finally, we have a SushiSwap price prediction from the Economy Forecast Agency which suggests that the token could struggle to hold any significant gains in 2022 and will potentially decline by almost 20% by December. However, SUSHI’s fortunes are then expected to turn around in 2023, with the token climbing by as much as 69% by year's end.
Check Out: SushiSwap Price Predictions
Uniswap vs SushiSwap: Conclusion
When it comes to investment, it appears that there’s not a great deal to separate Uniswap vs SushiSwap. Both projects are Ethereum-based exchanges and both operate in a fairly similar way. As we’ve noted above, SushiSwap started life as an offshoot of Uniswap, so it stands to reason that they have similar infrastructures.
In terms of total value locked in, then Uniswap is the bigger platform of the two, which might strike a chord with investors. However, it would also appear that most of the analysts we looked at are predicting slightly bigger growth for SushiSwap in the coming years, so this might also be a factor in making any investment decisions.
The bottom line is that these are both leading exchanges and if you are looking to add more DeFi tokens to your portfolio, then either SushiSwap or Uniswap would make a worthy addition. The only thing to be aware of is that both are likely to undergo significant volatility in the coming months, so it's important to have a strategy in place and not be swayed by sudden, short-term price movements.
Of course, if you choose not to buy UNI or SUSHI, you can still use either platform to stake your existing tokens and earn rewards. For many investors, these projects are a good opportunity to put their tokens to work, rather than have them sitting around in a wallet.
How To Invest In SUSHI Or UNI Coins In 2022
If you want to buy SUSHI or UNI this year, then you’ll need to find an exchange that lists these tokens. Fortunately, you’ll find both on eToro - one of the leading names in retail investment. eToro has an award-winning trading platform that’s suitable for novices as well as more experienced investors.
Opening an account takes just a few minutes and, once you’ve completed the necessary verification, you’ll be able to buy and sell many of the cryptocurrency markets' most popular tokens.
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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
FAQ
Is SushiSwap better than Uniswap?
SushiSwap formed as a result of a Uniswap fork and was initially touted as an improvement on the original exchange protocol. It certainly has its advantages - particularly the SushiBar, which offers users more rewards. However, it should be noted that Uniswap is still the bigger of the two exchanges, with significantly more assets locked into its protocol.
How is SushiSwap different from Uniswap?
When it first launched, SushiSwap differed from Uniswap in that it had its own token, SUSHI. However, to try and stop users jumping ship, Uniswap responded with the launch of UNI. The two platforms are inevitably very similar, but SushiSwap is the better of the two when it comes to yield farming and returns for those providing liquidity.
Where can I buy SUSHI?
SushiSwap is one of the world’s most popular DEXs, so you’ll find its native token listed on most top exchanges. We usually recommend eToro, as its one of the most trusted brands out there and has a user friendly trading platform.
Which crypto should I buy in 2022?
There are plenty of tokens poised for growth in 2022, so investors have a great deal of choice when it comes to building their portfolio. The key thing here is research. A good place to start is our list of the ten DeFi cryptocurrencies that could explode in 2022.
What is a decentralised exchange?
A decentralised exchange is a platform that allows cryptocurrency holders to buy, sell and exchange tokens without having to go through a mediary custodian. DEXs use algorithms to set their prices and make use of liquidity pools to ensure that tokens are available for transactions.
Read More:
How To Make (Or Lose) Money With SushiSwap (SUSHI)?
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