SushiSwap’s new “head chef” Jared Grey has proposed diverting all fees paid to stakers of the xSUSHI token to the decentralized exchange’s Treasury after he noticed a large hole in the decentralized exchange’s balance sheet.
“The Treasury currently provides for ~1.5 years of runway,” Grey said on Tuesday in a governance proposal. “Therefore, the situation requires immediate action to ensure sufficient resources for uninterrupted operation.”
The “xSUSHI” token is rewarded to stakers of the exchange’s native token, “SUSHI,” and entitles them to 0.05 percent of the exchange’s trading fee revenue. Typically, ten percent of these rewards are diverted to the Treasury via “Kanpai,” a kind of baked-in tax proposed as an income source last year. Grey’s suggestion was to increase that tax to 100 percent, which would see all of xSUSHI holders’ rewards sent to the Treasury multi-sig wallet. Over 75 percent of SushiSwap’s token holders have already voted in favor of the move.
In a series of tweets on Tuesday, Grey argued that the tax was the quickest way to return SushiSwap to a competitive level. He caveated, however, that it was a short-term solution to a long-term problem and that SushiSwap would ultimately need a completely revamped “tokenomics” framework.
He noted that these new tokenomics will take time to implement as the relevant proposals go through governance channels and technical development – a process that could extend into Q2-Q3 of 2023.
Grey also responded to suggestions that it was unfair to increase the tax on xSUSHI holders.
While xSUSHI worked well to attract liquidity during the bull market, he said, the Sushi Bar, where xSUSHI tokens are generated, now disproportionately rewards “non-sticky” staking, giving users a desirable return even if they aren’t interested in holding tokens over a longer period, said Grey. That gives “holders optimal terms for [return on investment] without committing to the project’s long-term value at the expense of its LPs,” he said.
“I can’t truly be for the community if I’m not honest with it. And, IMO, a good portion of the backlash to my proposal is because people can’t handle the truth,” he said.