*obligatory not financial advice*
What is SunSwap?
SunSwap is the decentralized exchange with the highest trading volume on the fast and cheap but also semi-centralized Tron blockchain. The DEX was originally part of the JUST Network that is a basket of DeFi applications on Tron, but it has split and become its own standalone application.
Sun allows its users to trade TRX coins and all kinds of Tron tokens like BTT, JST or wrapped tokens of ETH and BTC. It works much like any standard DEX like Uniswap or QuipuSwap do. Users can deposit their digital assets into liquidity pools for trading pairs that traders can use to exchange their cryptocurrencies in exchange for a trading fee. The prices are set automatically based on the ratio of the supplied tokens.
There is also a stablecoin swap integrated that is more efficient for trades between 2 assets with the same value, like 2 different USD stablecoins. This is based on how the Curve Finance stablecoin DEX works by keeping the slippage much lower because the formula that sets the prices is taking in account that the different stablecoins are supposed to have the same value.
Each trade has a fee of 0.3%. The liquidity providers for the regular swap are receiving a 0.25% fee that is directly added to the pool so that they get compounding interest and the remaining 0.05% are used for buy backs and burns of the SUN token to reward its holders. Half of the fees for stablecoin swaps are also added to their pools to reward liquidity providers and the other half is distributed to SUN stakers in the form of the TUSD stablecoin.
The platform still remains close with the JUST Network and has let some users of its lending protocol JustLend earn some of its SUN governance token. The DEX has also done an airdrop to holders of veCRV because they took some inspiration from the Curve Finance project. SunSwap is an integral part of Tron DeFi system and while the number of tokens available for trading is rather limited in comparison to DEXes on other blockchains, the dApp controls almost 2 billion dollars’ worth of cryptocurrencies and continues to grow.
SunSwap has undergone a mayor update in Jun 2021 and has enabled things like liquidity mining and rewards for its token holders. The DAO is not complete yet and token holders have only limited governance rights but this will improve further in the future. It is a solid DEX with great utility within Tron, however, one strong downside is that the Tron blockchain itself is very centralized and has a sketchy past, which also puts all of its applications at risk.
The SUN Token
SUN is the governance token of the SunSwap DEX. It gives it users voting rights for changes to the DEX, but this is currently rather limited and will only increase later on. To participate in voting, the holders need to lock their SUN for between 6 months and 4 years in exchange for veSUN tokens.
How much voting weight they have depends how much veSUN they hold and how many veSUN tokens they receive depends on how long they choose to lock their funds. Holding veSUN is also being rewarded with 50% of all fees on stablecoin swaps, paid out in the TUSD stablecoin and holding veSUN lets liquidity providers earn more SUN tokens with liquidity mining. A small share of the trading fees is also used to buy back and burn SUN tokens.
There is a max supply of 19,900,730,000 SUN tokens. 1% of the total supply was airdropped to holders of veCRV since the stablecoin swap feature is closely related to Curve Finance, 51.8% are being distributed to the liquidity providers of the SunSwap DEX, but a part of that was also distributed to users of partnered projects like JustLend. 47.2% of the supply remains undistributed for now and the developers might use them for funding. About half of the supply is going to the actual users and supporters of the DEX, but half is also in control of the founders.
The protocol switched to a new token after the mayor updates in Jun 2021. The old version of SUN still exists but is now called SUNOLD. The new SUN token has a supply that is thousand times larger than that of the old version, which is why in many graphs it looks like the price drastically tanked (like below), but the holders of the old version are able to switch to the new one at a rate of 1:1,000, meaning that they didn't lose any value from this change and the market cap stayed the same only the total number of tokens and the price per token are now different.
The value of the token depends on how much liquidity is in the smart contracts of the protocol and on how many trades the DEX is handling. That is because governance rights have more value if they affect more money and because more trades mean more token burns for SUN and more stablecoin rewards for the stakers. SunSwap is the main DEX of Tron and if its blockchain grows and attracts more projects, then there will be more demand for decentralized trading on the chain. Tron has much faster transactions and has much lower fees than Ethereum, but it is semi-centralized which also puts SunSwap at risk. The supply of the SUN token is also rather centralized.
The token can be traded on Binance and MEXC Global but the SunSwap DEX itself has it available too of course. You can use a Tronlink Wallet to store your tokens and interact with the SunSwap platform.
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