Decrypting DeFi is Decrypt’s DeFi email newsletter. (Art: Grant Kempster)
SushiSwap, the popular decentralized exchange, made a tough call this week as it navigates the ongoing bear market.
On December 5, project lead Jared Gray proposed that all staking fees on the platform be diverted to the project’s treasury for a year. He added that a new tokeonomics model for the project is also “on the horizon,” indicating quite a shock from SushiSwap.
Currently, users who stake their SUSHI – the project’s native governance token – will receive the xSUSHI token and trading fees in return on the platform. Gray’s proposal would put an end to that, since those trading fees would be diverted to the project’s treasury.
Incidentally, the fees on the platform are 0.3% of each trade, with 0.25% going to the liquidity provider who maintains the pool and the remaining 0.5% going to these SUSHI stakers. If this proposal goes through, that 0.5% would go back into SushiSwap’s coffers.
The reason for the move? Support the project treasury in these turbulent times.
Gray said that SushiSwap is currently about 18 months old and that this proposal is a means to “secure Sushi’s future by acting together in its best interests.”
So far, the vote shows that the majority of voters agree.
Source: SushiSwap
But there is also a vocal pushback. Eventually, stakers lose some of those funds if passed. “Withholding XSushi holders from the fees to which they are entitled is a violation of the primary community obligation,” one user wrote.
Aside from the heated debate, it also appears that these stakers are withdrawing their funds quite dramatically. Data from Dune shows a significant drop in the amount of SUSHI being staked around the same time Gray made this suggestion. Others have also pointed to the sushi team’s current salaries, which are said to be in excess of $3.8 million a year. “Well, I was right,” wrote another user. “You just want to cover your salaries.”
SUSHI amount in staking contract. Source: Dune.
It’s a bold move, essentially taking money from your investors, and the concern is that if this proposal (or something similar) doesn’t go through, Sushi could be in big trouble.
When asked on the forum what happens if stakers don’t channel their funds to the Treasury, Gray replied, “I think I’ve made it very clear what the purpose of this proposal is to achieve: to shore up finances to extend the runway for Sushi to continue operations.”
Are enough sushi devotees being won over?
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