Launched in August 2020 as a fork of the Uniswap decentralized exchange, SushiSwap briefly surpassed its competitor. Now ranking third behind Uniswap’s v3 and v2, the DEX rolls out numerous integrations with major networks beyond its native Ethereum blockchain to offer users a single entry point and lower fees.
A Multi-Chain Future for Decentralized Finance
The SushiSwap protocol is one of the largest proponents of a multi-chain future in decentralized finance as the DEX is already live on Ethereum, Binance Smart Chain, Polygon, Avalanche, and Fantom. Data by Covalent provides insight into SushiSwap across these five chains.
SushiSwap on Multiple Chains: A Breakdown
- Polygon: The most popular chain by the number of swaps executed daily is Polygon, as the protocol usage skyrocketed in May.
- Ethereum: Ranked second as of June 2021 by daily swap count.
- Fantom and Avalanche: Tend to follow the same trend as Ethereum, although the gaps among the three have been widening since the active trading days in late May.
Daily Swap Volume: A Different Story
A closer look at daily swap volume shows a different story. The dominance of Ethereum in SushiSwap had been unshakable for a long time, with the peak of trading volume at almost $3 billion on May 21. However, Polygon overtook Ethereum by swap volume in June with a $420-million mark.
The Reduction of Transaction Costs
The reduction of transaction costs is the major driver behind the adoption of a multi-chain approach. SushiSwap has achieved this by offering options outside of Ethereum. Data on gas usage on Ethereum and other chains could not even be compared in one chart due to a dramatic difference in numbers.
Gas Fees: A Comparison Across Chains
- Ethereum: The use of SushiSwap on Ethereum peaked at $8.2 million in gas fees on May 19 across 27,000 swaps, with an average fee of $303.
- Polygon: Consumed $2,500 in one day across 102,000 swaps this June.
The Benefits of a Multi-Chain Approach
SushiSwap’s adoption of a multi-chain approach has several benefits, including:
- Increased Adoption: By offering users a single entry point and lower fees, SushiSwap can increase its adoption rate.
- Improved Scalability: A multi-chain approach allows for improved scalability, as transactions can be processed more efficiently on multiple chains.
Conclusion
In conclusion, SushiSwap’s decision to adopt a multi-chain approach has been a successful one. By offering users a single entry point and lower fees, the DEX has increased its adoption rate and improved scalability. As the decentralized finance space continues to evolve, it will be interesting to see how SushiSwap’s multi-chain approach is received by the market.
Sources
- Data from Covalent
- Glassnode
- Cointelegraph Consulting
Note: The above content has been rewritten to meet the specified requirements.
