SushiSwap V2: The Community-Powered DEX Revolutionizing DeFi

Introduction

In the fast-evolving world of decentralized finance (DeFi), SushiSwap emerged as a groundbreaking decentralized exchange (DEX) that challenged the status quo. While Uniswap dominated the automated market maker (AMM) space, SushiSwap V2 introduced a community-first approach with innovative features like yield farming, governance rewards, and multi-chain expansion.

In this blog, we'll explore what made SushiSwap V2 a game-changer, its key features, and why it remains relevant in today's DeFi landscape.

What is SushiSwap V2?

SushiSwap V2 is the second major iteration of the SushiSwap DEX, built as an AMM (Automated Market Maker) that allows users to swap tokens without intermediaries. Unlike centralized exchanges, SushiSwap V2 relies on liquidity pools where users deposit tokens to facilitate trading and earn fees.

What set SushiSwap apart was its fair launch, community governance (via SUSHI tokens), and additional DeFi products like lending (Kashi) and yield optimization (Onsen).

Key Features of SushiSwap V2

1. Liquidity Pools & Yield Farming

• Users could provide liquidity to pools and earn 0.25% trading fees.
• The Onsen program rewarded LPs with extra SUSHI tokens, boosting APYs.

2. SUSHI Token & Governance

• SUSHI was distributed to liquidity providers as an incentive.
• Holders could stake SUSHI in xSUSHI to earn a share of protocol fees.
• Decentralized governance let SUSHI holders vote on key decisions.

3. Multi-Chain Expansion

• Originally on Ethereum, SushiSwap V2 expanded to Polygon, Fantom, Arbitrum, and Binance Smart Chain (BSC).
• Lower fees and faster transactions on Layer 2s made it more accessible.

4. Kashi Lending & Borrowing

• A standalone lending platform allowing isolated risk markets.
• Users could lend assets or take out leveraged positions.

5. Better Slippage Control than V1

• Improved routing algorithms for more efficient swaps.
• Lower price impact for large trades compared to early versions.

SushiSwap V2 vs. V1: What Changed?

FeatureSushiSwap V1SushiSwap V2Liquidity MiningBasic rewardsOnsen program (boosted yields)GovernanceMinimalFull DAO control (SUSHI staking)Multi-Chain SupportEthereum onlyPolygon, BSC, Arbitrum, etc.Additional ProductsJust swappingKashi (lending), BentoBox (vaults)Fee Structure0.30% to LPs0.25% to LPs, 0.05% to xSUSHI stakers

Why Was SushiSwap V2 So Popular?

1. Fair Launch & No VC Dominance – Unlike Uniswap, SUSHI was distributed to users, not investors.
2. Aggressive Yield Farming – The Onsen program attracted massive liquidity.
3. Multi-Chain Strategy – Expanded beyond Ethereum’s high gas fees.
4. Innovative DeFi Products – Kashi and BentoBox added lending and vault functionalities.

How to Use SushiSwap V2?

1. Connect a Wallet (MetaMask, WalletConnect, etc.).
2. Swap Tokens – Trade ERC-20 tokens instantly.
3. Provide Liquidity – Deposit into a pool to earn fees & SUSHI rewards.
4. Stake SUSHI – Lock tokens in xSUSHI for protocol fee shares.

Is SushiSwap V2 Still Relevant Today?

While SushiSwap V3 (with concentrated liquidity) has launched, V2 remains active because:

• Simplicity – Passive liquidity is easier than V3’s active management.
• Legacy Pools – Many users still farm on V2.
• Cross-Chain Accessibility – Still the go-to DEX on chains like Polygon.

However, V3 offers better capital efficiency, so new users may prefer upgrading.

Conclusion

SushiSwap V2 played a pivotal role in DeFi’s growth, introducing fair tokenomics, multi-chain accessibility, and innovative yield strategies. While newer versions exist, V2 remains a solid choice for passive liquidity providers and traders on multiple blockchains.

Want to try SushiSwap V2? Visit app.sushi.com and dive into decentralized trading!

What’s your take on SushiSwap V2 vs. V3? Let us know in the comments! 🍣🚀