Tokenomics · Sushi
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Tokenomics

1. Token Overview

SUSHI was introduced in August 2020 as part of SushiSwap’s fork of Uniswap, aiming to align incentives for liquidity providers and community governance.

2. Supply & Issuance

  1. Initial Emission:

At launch, SUSHI emission was set at 1,000 SUSHI per Ethereum block for the first ~2 weeks to bootstrap liquidity. After this “fair launch” period, the block rewards were reduced to 100 SUSHI per block.

  1. Ongoing Inflation:

Because block rewards continue indefinitely, SUSHI does not have a hard-capped maximum supply. The protocol can adjust reward rates through governance if needed (e.g., to reduce inflation).

  1. Distribution of Rewards:

A portion of newly minted SUSHI goes to liquidity providers in eligible SushiSwap liquidity pools. Historically, 10% of newly minted tokens were allocated to a developer fund, though the allocation details have been adjusted over time via governance proposals.

3. Utility and Value Accrual

  1. Governance:

SUSHI is primarily a governance token, enabling holders to vote on SushiSwap’s protocol proposals. Important protocol changes—such as fees, reward schedules, and new product launches—are decided by SUSHI token holders.

  1. Staking (SushiBar / xSUSHI):

SUSHI holders can stake tokens in the SushiBar contract to receive xSUSHI, representing a share of the SushiBar pool. Protocol fees from trades (typically 0.05% of each swap) are used to buy back SUSHI on the open market. These purchased tokens are distributed to the xSUSHI pool, effectively creating a continuous buyback mechanism that benefits stakers.

  1. Liquidity Incentives:

Liquidity providers in selected SushiSwap pools earn newly minted SUSHI tokens as an incentive to lock capital. This mechanism helps ensure deep liquidity across various trading pairs on SushiSwap.

4. Governance & Protocol Control

  1. On-chain Proposals: SUSHI holders can create or vote on proposals that affect emissions, fee parameters, or treasury allocations.

  2. Treasury & Dev Fund: The SushiSwap treasury (funded partly through block rewards and partially through trading fees) is used to support continued ecosystem growth, grants, audits, and community initiatives.

5. Key Tokenomic Features

  1. Continuous, Controlled Inflation:

No maximum supply; block rewards continue indefinitely. Governance can adjust block rewards to manage inflation.

  1. Fee Buybacks to Stakers:

A portion of trading fees (0.05% out of a typical 0.30% total swap fee) is diverted to buy and distribute SUSHI to xSUSHI holders. Community-Centric Design:

SUSHI’s governance-first ethos aims to keep power in the hands of the community, rather than a small group of core developers or investors.

In Summary

The SUSHI token lies at the heart of SushiSwap’s community-driven DEX model on Ethereum. It provides both governance rights and value accrual through staking rewards and protocol fee buybacks. Although SUSHI lacks a hard cap, its emission rate is subject to community governance, balancing liquidity incentives with inflation. By combining yield farming incentives, fee revenue sharing, and on-chain governance, SUSHI’s tokenomics aim to foster a sustainable and community-aligned ecosystem.