SUSHI that lacks freshness – SushiSwap is one of the iconic decentralized exchange platforms of the DeFi. Just over two years after its launch, it is facing major cash flow problems. Faced with this, the protocol leader announced his desire to reform the protocol.
SushiSwap soon out of business?
Last week, Jared Greythe new CEO of SushiSwap, announced bad news for the protocol. Indeed, the Treasury which supports the development de SushiSwap keeps getting smaller.
Despite a drastic reduction in annual expenditure, the protocol would have approximatelya year and a half of reserve. After this period, the coffers will be empty and the protocol will no longer have the means to support its development.
Nevertheless, Gray and his teams do not want to come to this. Thus, the latter proposed to the community to hijack a part costs generated by the protocol to cash funds. Obviously, this maneuver will come at the expense of SUSHI token stakers and other liquidity providers.
>> You don’t trust the platforms to keep your cryptos? Ledger has the solution (commercial link) <<
Jared Gray backs up his words
Unsurprisingly, the announcement of the modification of the Kanpai parameter in favor of treasury did not not to everyone’s taste.
A bit of context
This is why Jared Gray published a thread on Sunday December 11 to come back to this proposal and provide more context:
“I would like to revisit the discussions regarding the Kanpai proposal and highlight the upcoming improvements in tokenomics. I want to focus on the key drivers of Sushi’s business model and how we plan to improve it in the first quarter of 2023.”
Before going into the details of future developments, Jared Gray reviews the current and past situation of SushiSwap. The latter explains that the protocol has lost environ 30 million dollars during last 12 months. This loss comes from the rewards strategy based on the issuance of new tokens; strategy aimed at attracting cash.
Unfortunately, in practice, this has not been effective. As explained by Grey, the protocol spent more on transmit than the swap volume generated in fees:
“We expected emissions-based rewards to incur some loss to seed liquidity, but this rate is unsustainable. »
To solve this problem, the SushiSwap protocol will have to reinvent itself. With this in mind, Jared Gray announces that the next project will focus on a tokenomics review of the SUSHI token. Its objective will be to emphasize several points:
- Restore value to the SUSHI token;
- Increase the TVL of the protocol;
- Focus on liquidity providers.
“Ultimately, we need to harden the business model to produce more swap volumes and generate more fees. »
Concretely, the new tokenomics should allow liquidity providers to rreap the majority of the profits, without having to rely on issuing new SUSHI tokens. Indeed, profitability will drive more liquidity providers to offer their funds.
At the same time, Jared Gray also wishes restructure the business model of the DEX by modifying several mechanics. Nevertheless, he wishes to remain opaque on this point until the approach of his deployment.
“This realignment of value on multiple fronts will bring capital efficiency to the DEX, making it more competitive in capturing market share from competitors. Governance is essential to tokenomics, and creating more equitable outcomes is paramount to the success of a DAO, like Sushi. »
All of these developments should be deployed throughout the first quarter of 2023.
Among the direct competitors from SushiSwap, we find the giant Uniswap. This one does not intend to let himself be so easily overtaken. In effect, Uniswap continues to innovate, in particular through the recent launch of an NFT exchange platform.
In crypto, do not economize on caution! So, to keep your crypto assets safe, the best solution is still a personal hardware wallet. At Ledger, there is something for all profiles and all cryptos. Do not wait to put your capital in safety (commercial link)!