Use SushiSwap when you want to swap tokens from your wallet or earn fees by supplying a token pool. It is a decentralized exchange (DEX), meaning trades run through code on a blockchain instead of a broker. It works across supported networks, including Ethereum and Polygon.
How Does the Exchange Work?
An automated market maker (AMM) sets swap prices using shared pools of tokens. Each pool holds two tokens. A trade adds one and removes the other, changing the price offered to the next trader.
That balance matters most when your order is large compared with the pool. Buying from a thin pool can raise your own purchase price. People who supply the tokens, called liquidity providers, earn a share of the fees paid by traders.
Trading on several networks differs from moving tokens between them. A swap from Polygon to Ethereum needs a cross-chain route, which moves value between blockchains. SushiXSwap can handle that route; compare the amount arriving and the expected time before using it.
How Do I Swap Tokens, and How Much Are Trading Fees?
Start with a wallet holding the token to sell on the network you plan to use. Keep some of that network’s coin for gas, the charge for processing a transaction. Choose the token to receive, check its identity, and review the estimated output before confirming.
When speed matters, decide which network must receive the tokens before comparing trades. If the quote works, SushiSwap lets you make the swap on a supported network. The exchange also lets you supply a token pair to a pool when earning trading fees is your aim.
A quoted rate does not show every cost. Check these three parts of a trade:
- Pool fee: A standard v2 pool typically charges 0.3%. V3 pools offer fee tiers from 0.01% to 1%, depending on the pool.
- Gas: This network charge changes with congestion and can matter more on small trades.
- Price impact: Your order changes the pool price. Slippage is the extra price change you allow before the trade fails.
For a $1,000 v2 swap, a 0.3% pool fee is $3. That leaves about $997 for the pool’s pricing calculation, before gas and price impact. I would compare the final amount received, since the lowest fee can still lead to a worse trade.
How Can I Provide Liquidity?
Deposit two tokens into a pool to receive a share of its trading fees. A v2 position usually needs equal dollar values of both tokens. You may need to swap some of what you hold first, and adding or removing funds also uses gas.
V3 offers concentrated liquidity: you choose a price range in which your funds serve trades. A narrower range can earn more fees while the price stays inside it. Outside that range, the position stops earning swap fees until the price returns.
Fees depend on trading volume and your share of the pool; they are not a fixed return. If one token doubles against the other, a standard equal-value position is worth about 5.7% less than holding both tokens, before fees. This difference is called impermanent loss.
For repeat deposits, I would check trading volume against pool size before choosing a position. A busy pool gives your funds more chances to earn fees.