SushiSwap V3 vs V2: Key Differences & Upgrades

1. Core Improvements in V3

FeatureSushiSwap V2SushiSwap V3Concentrated Liquidity❌ No✅ Yes (Like Uniswap V3)Capital EfficiencyLow (Uniform liquidity)High (LPs set price ranges)Fee Tiers0.3% fixed0.01%, 0.05%, 0.3%, 1% (Flexible)Gas OptimizationHigher gas costs~50% cheaper swapsOracle UpdatesStandard TWAPMore accurate & gas-efficientNFT LP Positions❌ No✅ Yes (Uniswap V3-style)Cross-Chain SupportLimitedExpanded (via SushiXSwap)

2. Concentrated Liquidity (V3’s Biggest Upgrade)

• LPs can allocate funds to specific price ranges (e.g., ETH between $3,000-$4,000)
• Higher capital efficiency = better returns for active LPs
• More complex management (requires monitoring price ranges)

Example:

• In V2: LP provides liquidity across $0 → ∞ (low efficiency)
• In V3: LP focuses on $1,800-$2,200 for ETH/USDC (higher fees in that range)

3. Fee Structure Comparison

Pool TypeV2 FeeV3 Fee OptionsStablecoins (USDC/USDT)0.3%0.01% or 0.05%Standard (ETH/USDC)0.3%0.3%Exotic Pairs0.3%1%

Why it matters:

• Lower fees for stablecoins attract more volume
• Higher fees for volatile pairs compensate LPs for risk

4. Which Version Should You Use?

Use SushiSwap V3 if:

• You’re an advanced LP optimizing price ranges
• Trading high-volume stablecoins (better rates)
• Want cross-chain swaps (via SushiXSwap)

Use SushiSwap V2 if:

• You prefer simple passive liquidity
• Providing liquidity for low-volume tokens
• Don’t want to manage price ranges

5. Migration & Liquidity Incentives

• V2 pools still active but no new incentives
• V3 offers SUSHI rewards for key pairs
• V3 LP NFTs can be staked for extra yield

6. Security & Audits

• V3 audited by PeckShield & Omniscia
• V2 battle-tested but lacks new upgrades
• Both are non-custodial

Key Takeaways

✅ V3 = Better for active LPs & traders (lower slippage, flexible fees) ✅ V2 = Simpler for beginners (set-and-forget liquidity) ✅ Gas fees cheaper on V3 (important for Ethereum mainnet) ✅ SushiXSwap (V3 feature) enables cross-chain trading

For most users, V3 is the better choice—but V2 remains useful for certain niche pairs.

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