SushiSwap Rebrands as Sushi Labs, Introduces Council Governance Amid Controversy
Summary:
SushiSwap, the decentralized exchange, has undergone an extensive rebrand to now be known as Sushi Labs. This change includes a shift from a decentralized autonomous organization (DAO) to a council structure. The new structure aims to respond more effectively to market shifts and user demands previously hindered by a complex governance model. Sushi Labs' managing director, Jared Gray, emphasised the potential for improved DEX liquidity management. The rebrand has been met with some controversy, including allegations of a hostile takeover, rooted in its perceived centralization.
Decentralized exchange, SushiSwap, is kicking off a rebranding and revamp of its business model after months of intense discussions. Now known as Sushi Labs, it will swap the decentralized autonomous organization (DAO) for a "council structure."
On the 11th of June, the birth of Sushi Labs was announced, a self-governing entity tasked with the administrative, technical, and operational facets of the Sushi ecosystem. This innovative overhaul, first suggested in March, was an aim to offer a speedy response to market conditions and user needs, sidestepping the elaborate governance that had previously slowed down the protocol’s response to market shifts.
Under this new Sushi Labs, a council system akin to that used by the derivatives protocol Synthetix will be utilised, encompassing four councils – the High Kitchen, Treasury, Grants, and Ambassador Councils. The High Kitchen, comprising six to eight members, will carry out the role of the main ruling body, managing multisig transactions for the protocol.
Jared Grey, the newly appointed managing director of Sushi Labs, notes that the previously stagnant expansion and AMM liquidity issues faced by Sushi were not due to LPs gravitating towards DEXs offering higher yields but to the former organisational structure. With the revamped structure, a sufficient budget, and the utilisation of successful products like Route Processor, Sushi intends to boost its DEX liquidity.
The multi-million-dollar budget formerly commandeered by the DAO, amassed from 25 million SushiSwap (SUSHI) tokens, will now be managed by Sushi Labs. Tokenholders will retain the power to designate treasury allocations but will be exempt from operational details.
DefiLlama data indicates that in May, Sushi gathered $1.62 million in fees, with a profit of $270,500 for the month. This presents a stark contrast to its performance in 2021, when it raked in $14.37 million in revenue and generated $86.24 million in fees.
An additional change comes in the form of a multitoken product suite, poised to balance product costs and offer more rewards for tokenholders. The Sushi statement contends this multi-token ecosystem approach will "reduce the risk of Sushi token inflation and alleviates the fiscal pressure of funding DAO schemes when products are in the red."
The newly introduced model hasn't been without its share of controversies and criticism due to its centralized complexion. Accusations of a hostile takeover surrounded the proposal, and a Sushi member foretold the demise of Sushi DAO on their governance forum.
Financial hurdles have plagued SushiSwap since 2022 when Grey drew attention to a potential $30 million liquidity provider incentives loss, prompting a review of its tokenomics. In December of the same year, the decentralized exchange disclosed that it only had a 1.5 budget for operation, steering it towards diversifying its treasury and bolstering liquidity management.
Published At
6/11/2024 6:00:00 PM
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