SushiSwap (SUSHI) Operational Model Analysis – What does the extended business model mean to SUSHI holders?

SushiSwap (SUSHI) Operational Model Analysis – What does the extended business model mean to SUSHI holders?

Analyze AMM SushiSwap operational Model, AMM (Automated Market Making) with top 3 TVL in the market, to further understand project orientation and gather useful insights.

To continue our AMMs Operational Model Analysis series, today, let’s get to SushiSwap AMM Operational Model, AMM with top 3 market TVL.

What Is SushiSwap (SUSHI)?

  SushiSwap is originally an AMM forked from Uniswap. This project inherits all of Uniswap unique properties about AMM model. It allows users to swap any ERC 20 tokens, using liquidity pool instead of ledger.

  There was a time when SushiSwap was strongly condemned by the community because the original project owner, Nomi Chef, sold SUSHI tokens. However, overtime, with the strong support from the community, SushiSwap has grown very quickly and strongly, becoming the DEX with 3rd largest TVL in the market today.

  Currently, SushiSwap orientation is to expand the market size, besides the main product which is AMM SushiSwap, the project has been developing many new intergrated products/features such as Lending, Leverage, IDO, Yield Optimizer,..

  In this article, besides learning about the general operating model of SushiSwap, we will also learn about the operating model of its own products, to further understand how each piece in SushiSwap connects with each other.

  At the end of the article, I’ll have a summary of some key ideas about the operation model of SushiSwap so it will be easier for you guys to digest.
Please refer to it for more investing perspectives.
Operational Model of SushiSwap elements

Currently, SushiSwap has these main products as:
– Sushiswap – Multichain AMM
– Onsen
– BentoBox
– Kashi Lending
– Miso
– Mirin

We will go over all these products one by one.

xSUSHI Staking

This is the most important feature for SUSHI-holders. When you staking SUSHI token, you will receive xSUSHI:


–  5% APY: SUSHI stakers will receive 5% APY
– Governance: the new xSUSHI token has the ability to participate in governance, SUSHI token is not eligible for this.
– Revenue: Those who hold xSUSHI tokens will receive a portion of the revenue from all SushiSwap products.

However, in exchange, your SUSHI tokens will be locked for 6 months, in order to stabilize the SushiSwap project.

  In general, the biggest benefit of xSUSHI is to enjoy a part of the revenue from SushiSwap’s products, when the revenue from the products increases, it will drive the demand to buy SUSHI to receive more revenue.

  Now we will take a deep dive into SushiSwap’s products, how they work and capture value to the SUSHI token, thereby understanding the potential and value of the SUSHI token.

SushiSwap – Multichain AMM

  SushiSwap is the first and also the core product of the Sushi project, this is a fork version of Uniswap V2, so the operating model of SushiSwap is quite similar, but there are still some differences between these two AMMs.
  Below is a comparison table between 2 AMM, Uniswap and SushiSwap


Uniswap SushiSwap
  • Both are AMM
  • Use x*y = k algorithm
  • Pool 2 token Model with 50%:50% ratio 
  • Liquidity Provider will get all 0.3% transaction fee.
  • No Liquidity Mining program.
  • 0.3% transaction fee will be split, 0.25% for liquidity provider token, 0.05% for xSUSHI token holders.
  • There is a Liquidity Mining program, encourages users to provide liquidity by rewarding bonus SUSHI tokens.

In the main features such as Pool Model and using the x*y  = k algorithm, you can read the article “Operating Model of Uniswap V2” to better understand how AMM SushiSwap works. In this article, I will clear out the differences and innovative aspects of Sushi compared to Uni.

  SushiSwap model operates in 4 main steps as follows:
(1): 1 pool on SushiSwap will have 2 types of assets, for example, A and B, the liquidity provider will put 2 assets at the ratio of 1:1 into it. Also receive SLP toke (Sushiswap Liquidity Provider), this is a token representing ownership of a part of assets in the pool.

(2): Trader who wants to exchange from A to B can put A into the pool and receive B.

(3): Sushiswap currently charges a fee of 0.3% of the value of each transaction, this fee will be divided as:
– 0.25% for LP (Liquidity Provider)
– 0.05% for xSUSHI holders. I will talk about xSUSHI later on this article.

(4): In addition to receiving 0.25% transaction fee, Liquidity Provider can also bring SLP token (Sushiswap Liquidity Provider) to staking, to be rewarded with Sushi token, this is Sushi’s liquidity mining program to encourage everyone to provide even more liquidity.

  Through this model, you can see, SushiSwap was originally just a forked version of Uniswap, but there were also many significant improvements, especially offering many incentives, targeting each participant:

  SUSHI holders: SushiSwap generates a profit (0.05% transaction fee) for SUSHI holders, who can be viewed as project owners.
 Liquidity Providers (LPs): SushiSwap has a long -standing Liquidity Mining program that incentivizes LPs to provide more liquidity on Sushiswap.
Users: Abundant liquidity, users will spend less Slippage when transacting, but the more users trade => The transaction fee that xSUSHI holders and LP will receive will also be more.
So, with the reward sharing mechanism, Sushiswap has created benefits for all parties involved in the platform, including liquidity providers (LPs), users and even Sushi holders (project owners).

Onsen – New Incentives Program

Incentives is a strong point of SushiSwap, helping SushiSwap compete with other competitors, so the project developed an incentive system and launched the Onsen program.

Onsen is a new type of Incentives program that rewards SUSHI tokens for a certain number of Pools to boost the liquidity provision for Pools on SushiSwap.

This is step (4) in the operating model of SushiSwap, a program to increase Incentives, reward Liquidity Providers to incentivize the provision of liquidity.


How does a project get on the Onsen?

Being on the Onsen means that the project will attract a large number of TVL, this is the desire of many projects.


The project that wants to go to the Onsen must go through 2 steps:


Apply: In order to apply, the project must not only be a quality project, create value for society, and also be transparent with information, the project must also fulfill the following additional requirements:

Pool must be available on SushiSwap with a minimum TVL of $1,000.

It must deposit 1000 SUSHI or 2 ETH to SushiSwap, this is considered as a registration fee, this money will be given as liquidity to Pool SUSHI/ETH forever.

Review: The project after completing the application form will be reviewed by 0xMaki (leader) and the core team of SushiSwap.

After passing these 2 steps, the project will be on the Onsen.

How does Onsen capture value for SUSHI Holders?


As can be seen, Onsen program does not capture the value directly for the SUSHI holder, but will directly promote the operation on SushiSwap:


Onsen rewards LPs to incentivize providing liquidity.

The project that wants to go to Onsen must create a Pool on Sushiswap, and at the same time incur a fee of 1000 SUSHI or 2 ETH for registration, this fee will also be used to increase the liquidity for Pool SUSHI / ETH.

Onsen also helps SushiSwap to get more new partnerships,…


As SushiSwap grows, more transaction fees will be generated, SUSHI holders will still be the beneficiaries.


Onsen is the program to promote all SushiSwap products and indirectly create value for SUSHI-holders.

BentoBox – Token vaults helps create Yield

   Next product of SushiSwap is BentoBox, launched in early 2021. All SushiSwap products serve only one purpose: Generate revenue -> capture value for SUSHI tokens.


If the project has created a fairly successful AMM and generated a lot of revenue, it will move into other areas, and the Bento Box will be the weapon to help SushiSwap achieve that.


What is a bento box?


BentoBox is a vault (store) containing all tokens, and will help create Yield on those tokens.


Technically, Bento Box will be like a wallet, a bank account, when you put money into Bento Box, you will be able to comfortably use the services that Bento Box provides, including Lending service, mint token Synthetic, leveraged trading strategies, best Yield optimization strategies….


Bento Box is one of the top-knot product from SushiSwap team, this is expected to be the “DeFi game changer” in the future, and will be a weapon to help SushiSwap compete with other competitors.

With Bento Box services, you will still be able to use your own wallet, but you will get the following benefits if you put your capital into Bento Box:


  • Reducing costs, you do not have to approve continuously when using different services, different Protocols, you only need to grant permission for the first time.
  • Low gas fees for tokens inside the vault (applicable to different protocols using BentoBox).
  • Mechanism of one transaction for many objects.

How Bento Box capture value for SUSHI token


BentoBox can be considered as a financial service provider, for each service Bento Box will collect a part of the fee, which will be divided among xSUSHI holders.


There is no fee for storing assets on Bentox Box, and details about the transaction fees of each product, I will specify in the following section.

Kashi Lending – Lending products and leveraged trading


Kashi is the first product in Bento Box’s list, providing Lending service.


Operation model of Kashi Lending


Kashi uses Bento Box as a wallet to borrow and lend. Kashi uses a unique lending model, Isolated Lending Pair, which allows borrowing and lending in pairs.



  • Deposit into Bento Box to enjoy the benefits mentioned above.
  • Select the Pool you want to lend.
  • Lend your tokens and earn interest.


  • Deposit money into Bento Box.
  • Select the Pool you want to borrow.
  • Provide collateral.
  • Borrow tokens.

If other Lending projects such as Compound, Aave,… use a common Lending/Borrowing Pool for both lenders and borrowers


In Kashi Lending, the project divides Pool Lending/Borrowing into trading pairs, creating an Isolated Margin market. Basically, the difference between Kashi Lending and Compound AAVE is the same as the difference between Isolated Margin and Cross Margin.


Some unique points of Kashi Lending’s operating model:


Cheap Gas Fee: Thanks to Bento Box, Kashi reduces unnecessary transactions.


Anyone can create a lending pair with only one token as a lending asset, one token as collateral, and a private oracle.


As Pools are separate:

  • Ensuring the safety of the system, when 1 token got hacked, it will not affect the remaining Pools.
  • Providing an Isolated Margin trading experience for users, when a token is heavily discounted, it will not affect the entire Portfolio.
  • More tokens will be accepted for borrowing/lending, creating even larger market.

How Kashi capture value for SUSHI holder


With the above operating model, Kashi will collect fees from the following activities:


  • Lending Fee.
  • Asset liquidation fee (90% of assets will go to asset provider, 9% to SushiBar, 1% to Dev team).
  • Flash loan fees.
  • Trading strategy fees on BentoBox.

Miso – IDO platform


Miso is a set of open-source smart contracts developed for the purpose of supporting the launch of projects on SushiSwap exchange (also known as IDO – Initial Dex Offering). With Miso, Sushi will become a launchpad, which allows community and the projects themselves to access the options needed to launch and participate in token sales.


Miso is special in providing tools for founders with zero tech knowledge to customize the token launch including: initial launch, vault, farm selection…


The elements of Miso:


TokenFactory: Place to generate tokens for the project (supply, mineable or not, ..).

Market: Conducting IDO, currently Miso supports 2 main auction forms: Crowdsale and Dutch Auction.

Liquity: Part of the fund raised from IDO will create a liquidity market on SushiSwap

Fermentation: Vault/escrow option to lock tokens over time.

FarmProduce: The new token IDO will be farmed on Onsen – SushiSwap’s Incentives program.

  Besides helping to conduct IDO, Miso will support the project to add many new features, mainly based on the existing Sushiswap ecosystem:


  • Create tokens and conduct IDO easily according to the available model.
  • Create a trading market on SushiSwap.
  • Support Farming on Onsen: Helps the project attract a large amount of TVL, create an effective initial trading market.
  • Support Lending pairs on Kashi, support trading strategies on Bento Box in the future.


These advantages will help SushiSwap attract projects and compete with current IDO platforms.


How MISO captures value for SUSHI-holder


MISO is an IDO platform, so like the tokens of other IDO platforms such as DAO, POLS, PAID, DUCK, … it is very likely that SUSHI token will also have more token use to increase SUSHI buying demand.


At the same time, through MISO, the entire SushiSwap ecosystem will have access to a new, liquid source of projects, through which MISO will bootstrap all SUSHI products.

Mirin – Connecting liquidity from CEX

Mirin is a special feature that helps connect liquidity from CEXs to SushiSwap, this feature will be released in SushiSwap V3.


Simply put, Sushi combines with a Cex exchange or a certain third party (eg. Binance), users can choose to provide liquidity through the exchange, that liquidity in this 3rd party will be in a Subpool connected to the Mainpool of SushiSwap. It means Sushi pool is the sea that sucks all the liquidity from the rivers (exchanges).

Why Subpool? Why don’t users pour liquidity directly into SushiSwap?


The reason is to ensure safety of the entire SushiSwap system, we need separate Subpools for each CEX or 3rd party.

Through this cooperation, both CEX and SushiSwap will benefit:


  • CEX will be able to choose the optimal Yield source through SushiSwap, thereby providing the best product to users.
  • SushiSwap will get a huge source of liquidity. You already know how large the liquidity on CEX is, way higher than DEXs, what if 1% or 2% of that liquidity goes to SushiSwap?

In addition, in cooperation with CEX, Mirin will also bring users many new, easy-to-use features that are suitable for CEX users, such as “1-click” experience for swapping, adding liquidity, farming, experiencing Dual Yield on 1 Pool…

SushiSwap Operation Overview


To summarize, after analyzing how each product of SushiSwap works, we get the operating model of SushiSwap as follows:

Sushi has chosen a horizontal development strategy: expanding products, gathering audiences to participate in the Sushi ecosystem.


(1) DEX users: Sushi provides a full set of products that DEX Traders need, including Swap, Lending, Synthetic, Trading Strategy (leverage, yield optimization),… At the same time, users are encouraged to participate by Onsen through Farming program.


(2) CEX users: Through cooperation with 3rd parties, CEX users who are less technically savvy can still use SushiSwap’s products.


(3) Project: The project is the foundation for the development of Sushi, building a quality trading market that will attract more investors to SushiSwap. SushiSwap has 2 products to support this audience:


MISO: IDO platform on SushiSwap with many new utilities, resonating with the Sushi ecosystem.

Onsen: A new Incentives program, helping the project get some initial attention.


=> Mirin, Onsen, Miso are products that do not directly contribute value to SUSHI holders but they do promote/encourage each specific audience to participate in SushiSwap’s products.


(4) Fees: SushiSwap and Bento Box are two products that directly create value for SUSHI holders, through collecting a part of the fee during service provision. This fee will be transferred directly to the xSUSHI holders.

This is a very clear and effective model of SushiSwap, creating specific benefits for each participant, connecting them together, and creating one of the best digital DEX exchanges in the market today.


In addition, by developing more products and integrating more utilities, SushiSwap will have more revenue for SUSHI-holders.


However, the risk here is by developing multiple products, it will be difficult to control and maintain each product performance. SushiSwap must be very careful in every step of its product launch, because when it is necessary to build, attract and retain users also very crucial.

How does SushiSwap capture value for SUSHI token?


Initially, when SushiSwap was just a forked version of Uniswap, the SUSHI token was used for two purposes:


  • Governance.
  • Reward the parties participating in SushiSwap (Traders, Liquidity Providers).

You see at that time, SUSHI holders did not receive too many benefits, while SUSHI tokens were minted continuously, from which the price of Sushi quickly dropped very sharply after peaking at $10.


However, over time, the SushiSwap community has recovered. Slowly, the project took on more visible steps, largely thanks to a very active community.


Tokenomics of the SUSHI token has also become more efficient.


In the above, I have clearly stated how each SushiSwap product captures value for SUSHI-holders, for now, I will recap some of the main points. SushiSwap will capture value for the SUSHI token in 4 ways:


  • Governance: Allows xSUSHI holders to participate in Protocol governance.
  • Make direct profit: By creating products => Product development => Creating fees => Some go to xSUSHI-holders.
  • Generate indirect profits: Projects that want to join Onsen or Miso will all have to create a liquidity pool on SushiSwap => increasing liquidity will increase profits for xSUSHI-holders.
  • Create Buying Demand:
  • APY: SUSHI Stakers will receive 5% APY.
  • Increase revenue source: By generating more and more profit, it will stimulate people to buy and stake SUSHI to share the profit.
  • Provide liquidity: You can buy SUSHI to participate in farming on SUSHI Pools on Sushiswap.


Future projections

A KOLs in the Crypto market likened AMM product as a Burger. If other DEXs like Uniswap, Balancer, Bancor focus on developing those Burgers, then SushiSwap chose another direction, the project decided to sell more Ice cream, soft drinks, hot dogs,… along with the Burger.


So the future of SushiSwap’s burgers may not be as good as those of other DEXs, and the project will bet on the by-products: Are those by-products welcome? Does it match the existing Burger?


Let’s take a look at the future of SushiSwap’s upcoming products:


SushiSwap: SushiSwap is an AMM that used to have the highest TVL in the market, but now both TVL and volume are decreasing compared to other competitors. This is understandable because the project is focusing on developing “additional products”, when these products explode, we will see the rise of AMM SushiSwap again.

Miso: IDO platform on SushiSwap – this will be the most anticipated product. I will liken it to a piece of bacon that is extremely suitable for the existing Burger, and also very suitable for everyone’s existing taste. Miso hopes to bring many new use cases for the SUSHI token.

Bento Box: The expected 2nd weapon SushiSwap, currently the project has only launched Kashi products with Lending / Borrowing features, there are many other features and products that may soon be released with Bento Box, according to Bento Box. As I learn about Sushi’s Roadmap, some of those features/products will be:

  • Trading leverage > 1x.
  • Synthetics Assets.
  • Trading strategies.
  • Yield resource maximization strategy.

In general, these are all essential products for traders and perfectly match the existing “burger” SushiSwap.

  One more thing about the future of SushiSwap, have you noticed that it is rapidly expanding to many chains, now SushiSwap can be used on 7 Chains as below. Some other chains are in the process of being perfected such as Avalanche, Polkadot.


This is completely in line with the “expand” vision of the Sushi team, after expanding product features, expanding the audience of participants, now is the time for “SushiSwap Restaurant” to expand to other chains, not only serving customers in Ethereum.



SushiSwap is not just an AMM, the project is developing its own ecosystem. So the operating model of SushiSwap is quite long, and I am very happy if you read this far.


Overview of the operation model of SushiSwap, we can draw some main ideas as follows:


  • Through building an ecosystem, SushiSwap centralizes all value into one source, for xSUSHI holders.
  • Currently, SushiSwap is not promoting AMM products but focusing on developing other accompanying products, thereby indirectly promoting AMM products of the project.
  • SushiSwap’s business model will follow the “Expansion” direction after expanding the number of products, expanding the participants, the project is aiming to expand to  new chains, currently the project has plans to expand to Another 9 chains.
  • The future of SushiSwap will largely depend on two products Miso and Bento Box, two weapons that help SushiSwap compete with AMM rivals.

This is the operating model of SushiSwap, the project has chosen a unique orientation compared to other AMMs in the same industry.


If you have any questions about the operation model of Sushiswap, comment in the comment section below. In addition, if this is a valuable article for you, please share and spread the knowledge.

The Operation Model Series is a Series to help you understand more deeply about 1 Protocol, how the Protocol works and its potential for future development.

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