Sushi’s Role in Fueling the Katana Flywheel

DeFi has come a long way from its early days of hype and mercenary liquidity. Katana -  designed from the ground up for real yield, deep liquidity, and sustainable DeFi. As Katana’s core spot DEX and aggregator, Sushi plays a crucial role in this ecosystem. Let’s break down how Sushi fits into Katana’s flywheel—and how you can make the most of it to maximize your capital efficiency.

Sushi’s Role in the Katana Flywheel

Before diving into Sushi’s role, let’s quickly recap how Katana’s flywheel works. Katana takes user-bridged assets (USDC, ETH, WBTC, and USDT) and puts them to work through VaultBridge, auto-depositing them into Morpho vaults on Ethereum. These vaults generate real yield from overcollateralized loans—no token printing here. That yield then flows back to Katana and is distributed via core apps like Sushi, Morpho, and Vertex.

A portion of network fees—including sequencer fees—is reinvested as Chain-Owned Liquidity (CoL). The chain uses these fees to buy LP positions and backstop vaults, reinforcing deep liquidity across the ecosystem. Because the chain never withdraws this liquidity, users can count on stable, reliable markets.

This cycle—assets in, yield out, liquidity deepened through CoL, and more users attracted—drives sustainable growth across Katana’s entire ecosystem.

So, where does Sushi sit in all of this?

Sushi is…

Where VaultBridge Capital Lands

When you bridge assets to Katana via VaultBridge, they don’t just sit idle—they’re put to work in yield-generating strategies through Morpho on Ethereum. The yield flows back to the chain foundation to be distributed via core apps. In return, you receive vbTokens (like vbUSDC) that are bridged to Katana.

Once on Katana, these vbTokens can be deployed in DeFi protocols like Sushi. By providing liquidity on Sushi, these tokens earn boosted rewards and help strengthen the ecosystem. Sushi is one of the main destinations for these tokens—helping turn idle assets into productive, yield-earning liquidity.

To unlock this yield, users must actively deploy their vbTokens—ensuring productive TVL instead of idle capital.

Where Chain-Owned Liquidity (CoL) Deploys

Katana reinvests sequencer fees and core app revenue to build Chain-Owned Liquidity (CoL). Sequencer fees are immediately reinvested to buy LP positions and backstop vaults—deepening liquidity and supporting the entire DeFi ecosystem.

A big part of this CoL is deployed into Sushi’s tight-range LPs—like AUSD/vbUSDC and vbWBTC/WETH. This keeps markets deep, slippage low, and trades smooth. And because the chain never withdraws this liquidity, users can be confident that reliable pools will always be there—even during volatile times.

Where Trades Happen

Sushi isn’t just another DEX on Katana—it’s the central spot DEX and aggregator. Most trades—whether simple swaps or cross-chain—flow through Sushi.

When you swap AUSD for ETH, trade vbWBTC, or provide liquidity, it’s happening on Sushi—either directly or through apps integrated into Katana’s wallet. Sushi is the main hub for trading on Katana, keeping everything connected and composable.

Where Real Yield Begins

One of the best parts about Katana is that the yield users earn isn’t just from token emissions - it’s powered by real economic activity and integrated yield sources:- Native DeFi protocol yield (e.g. trading fees from Sushi)- VaultBridge yield from Ethereum- Sequencer fees- Yield earned from Chain-Owned Liquidity (CoL)- KAT token emissions

This yield flows from Ethereum (via VaultBridge) to Katana and then into Sushi’s liquidity pools. By providing liquidity on Sushi, you’re tapping into this diverse yield stream—getting rewarded for putting your tokens to work in the ecosystem.

Sushi is one of the key places where this yield lands—giving you a reliable way to earn while supporting a growing DeFi network. 

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