SushiSwap's trading volume and liquidity ratio approaching that of Uniswap, with the coin price continuing to rise.

SushiSwap recently announced a major collaboration with Yearn, which has given the market significant confidence. The price surged from $1.5 on December 1 to $2.2 on December 2, marking a more than 40% increase. Reports have compared the liquidity provision between SushiSwap and Uniswap, with one metric, the "trading volume to liquidity ratio," giving SushiSwap an advantage.

SushiSwap Value Growth

In the world of decentralized finance DeFi, liquidity providers (LPs), also known as Liquid Providers, play a crucial role in platforms like Uniswap and SushiSwap, which are automated market maker (AMM) platforms. Having liquidity providers allows for proper and diverse token exchanges while reducing slippage.

Liquidity providers join AMMs with the motivation to earn trading fees. In addition, some platforms offer liquidity rewards as additional income. Currently, SushiSwap offers liquidity rewards in SUSHI, while Uniswap is still awaiting the next round of liquidity mining to start.

In a previous article, we assumed that the "trading volume to liquidity ratio" represents that the higher the ratio, the more trading fees liquidity providers can earn. Conversely, a smaller ratio indicates too much liquidity without corresponding trading volume, resulting in lower income for liquidity providers.

Observing on December 2nd, SushiSwap's liquidity decreased to $750 million from mid-November, but the trading volume increased to $146 million. The trading volume to liquidity ratio was 0.19 for SushiSwap and 0.2 for Uniswap. From November 19th until now, SushiSwap's ratio has significantly grown, indicating increased earnings for liquidity providers in the pool.

In the hour before the deadline, most of SushiSwap's trading volume came from the SUSHI/ETH trading pair, with significant transactions selling more SUSHI. Additionally, the amount of liquidity being withdrawn was higher than being added.

Important Considerations for Entering SushiSwap

Currently, providing liquidity in SushiSwap yields a trading fee income of 0.3%, split into 0.25% for liquidity providers and the remaining 0.05% requiring SUSHI staking. Liquidity providers also receive SUSHI rewards, with two-thirds of the rewards locked for six months, thus actual earnings depend on user behavior.

According to official documents, the total supply of SUSHI is 250 million, and it will be fully distributed by November 2023. 10% of the total SUSHI generated per block will also be allocated to the developer pool.

Other Exciting SushiSwap Developments to Anticipate

• SushiSwap's lead developer 0xMaki will spearhead Yearn's AMM section, which is believed to be a one-stop DeFi platform Deriswap.
• SushiSwap's lending product Bento Box will integrate Cream's liquidity.

• After the release of Deriswap, Sushiswap will collaborate on a "mystery project" with Yearn.
• Yearn and SushiSwap will cooperate on product and development, with Yearn participating in Sushi governance and adding some SUSHI tokens to its treasury.
• Adding Keep3r/ETH to the SushiSwap liquidity mining menu is currently under voting.
• Decentralized exchange "limit orders" are currently in beta.

Although SushiSwap is actively expanding its business, the above developments do not directly impact token prices but are expected to increase platform users. Please remain mindful of investment risks.