A simple idea that might just work

Summary

Make the DEX operate exclusively with SUSHI pairs. Add an auto-burn that takes a percentage of all SUSHI fees and simply burns it. Completely halt the printing of new SUSHI.

Abstract

People make stuff too complicated. By making all liquidity pools half SUSHI, you are automatically getting liquidity providers to be invested in the exchange, which is what “staking” should mean. Because all pairs would go through SUSHI, the token would have a massive pool of passive and hopefuly growing demand. The token would truly represent the exchange. By having all pools be half SUSHI, you only need one pool per token, with SUSHI arbitraging all other pairings. It would also allow an auto-burn mechanism to be implemented, automatically benefiting even SUSHI not in the pools, which users might want to use elsewhere in DeFi. One of the benefits of a single-pool per token is that it becomes easier to create a market for derivatives of tokens that capture interest yield (something that might become increasingly important for fiat tokens as interest rates rise).

Motivation

I just think the way some things are done is stupid and I don’t have the capital or technical skills to create my own DEX.

For

Simpler mechanics. More sensible “staking” function (staking your sushi would just mean using half of it to buy something else and sticking it in a pool). More stable prices. Higher volume for SUSHI. A trip to the moon.

Against

Not sure people can be convinced to migrate to an all-SUSHI version of the protocol.

I don’t want to overcomplicate things so at first, I think that should be enough.

  • I SUPPORT, making a new SushiSwap with exclusively SUSHI pairs, an auto-burn mechanism, and immediately halting the printing of new SUSHI
  • I OPPOSE, making a new SushiSwap with exclusively SUSHI pairs, an auto-burn mechanism, and immediately halting the printing of new SUSHI

0 voters

1 Like

Looks like the sentiment is universally against this line of thinking. I won’t bother expanding on it. That is fine, sushi can just keep failing.

EDIT: Sorry for being so negative, I was having a bad day.

MY VOTE depends on the percentage of Sushi fees taken versus the amount of new sushi that can be printed in a 3-5 YEAR timeframe factoring in INFLATION, SUSHI Marketcap and Crypto Market projections

Sushi gains a lot of revenue and fees from unique pairs. Reducing to only sushi, would decimate usability of the platform, and would remove revenue from those pairs.

I like the idea of orienting sushi as a reserve currency(which is roughly what I see you proposing) but I think the approach of just ripping off the bandaid would be overly disruptive to the platform.

im against forcing people to create sushi pairs but overall idea is good, maybe incentivize creating pair with sushi? size of incentive proportional to size of pair

As Icedcool was saying, I think it would actually do a lot more harm making one sided Sushi pairs. It’s already hard enough as it is to attract liquidity and people want cheap, low friction routes to trade through. Stablecoins and native assets are key in that. Sure it could be USDC → Sushi → ETH, or USDC → Sushi → Tether, but that adds an extra line of taxation and friction that traders - big, small, arbitrage bots, whatever - are not going to appreciate, especially if slippage is bad on a more niche token. As it stands me must attract liquidity to keep a well lubricated DEX. More liquidity is going to come by keeping things easy and open for people and projects to operate as they like. More liquidity in all directions = more traffic = more dividends for xSushi = more interest in actually being a Sushi token holder.

Also I’ve never been too impressed by the idea of burning personally. The token is designed to be hard capped, it’s not minting indefinitely. I don’t think burning is sustainable in the long term and I’ve always seen it as just a psychological trick to manipulate numbers so Sush numbah go down but dolla go up.

Now what I might be for is a bridge pool of just Sushi across all the chains that could be used to swap through at a fair price. Could be a magnet for all the farmed Sushi on L2 chains that get dumped and never actually get put back in as LPs if it could be done smoothly and securely.

1 Like

Well from my understanding, you can’t actually stop the current implementation of SushiSwap, it’s always going to be there on the blockchain, so you can’t actually force anyone to do anything. However, the front-end and the marketing could be aligned towards this new vision.

I’m not sure the fees charged matter that much (within reason). That is, I think LPs gain in volume what they end up losing through low fees. So just have a universally low fee for all SUSHI based pools, so that even needing to do two trades ends up relatively cheap.

As far as niche tokens are concerned, the fact all liquidity is concentrated in a single pool should help with slippage, not hurt. If you need WBTC/NICHE, WETH/NICHE, USDT/NICHE and USDC/NICHE pools, there is going to be more slippage than if you just have a WBTC/SUSHI and NICHE/SUSHI for your WBTC → NICHE swap. By focusing on SUSHI pairs you cut down dramatically on the number of rare pairs with low liquidity, because all the liquidity for a token is going to concentrated in a single pool.

Your point on burning doesn’t make any sense, it’s simple supply and demand. By burning SUSHI, 1 SUSHI is going to represent a higher share of the total SUSHI supply. It’s just an alternative to paying dividends/interest. And considering tokens in liquidity pools don’t generate interest, and unrealized capital gains are not taxed, it is a much better choice than paying rewards in the form of extra tokens.

I don’t get your argument. What is the practical difference between having a UNIQUE1/UNIQUE2 pair, and having both a UNIQUE1/SUSHI and a UNIQUE2/SUSHI? By making all pools SUSHI, if you want to provide liquidity you wouldn’t need to worry what you should pair it against. And if SUSHI as a token can be set to generally increase in price, the impermanent loss becomes less of an issue. The LPs would be helping all SUSHI hodlers, but they wouldn’t need to bitch about it because they too would be SUSHI hodlers, and they would know that the best way to make their investment more valuable is to provide more liquidity to the exchange. Right now LPs are mercenary, they have no reason to be loyal. With SUSHI pairs and a burn mechanism, they would become loyal citizens.

I think we need to look to BNB as an example of this done right. The BSC is effectivelly an informal blockchain version of the exchange. And while they do have non BNB pairs both on and off the exchange, they highly encourage the formation of those pairs, and the BSC makes all DEX trades pay fees in BNB. This made BNB rocket up during the bull, and then still outperform BTC during the bear.

The other key thing I believe we should look into is making it easier to capture interest on capital invested in liquidity pools. This just requires money market tokens that represent a share of a money market pool, which SushiSwap could operate. Because all liquidity would be concentrated in SUSHI pairs, it would be much easier to get liquidity into those tokens. It might also be possible to operate a money market app without the need for external oracles, and with automatic liquidation through the pools themselves. Of course, that would require a lot more liquidity to ensure security, but it’s a long term vision.

That would require inflation. What is the point of investing in a SUSHI pair if your SUSHI tokens in the pair are just going to be inflated away? “Incentives” are just ponzinomics, it’s pointless. And the idea that you have a limited supply because in a hundred years the inflation will stop (like Bitcoin) is nonsense.

I’m trying to understand what you mean by a bridge pool. Can you elaborate?

The difference between growing your wealth by acquiring new tokens (an inflationary, incentives based approach) versus growing your wealth by the tokens you own growing in value (a deflationary, burn based approach) is massive. The reason rich people pay little in taxes is because they don’t have to realize capital gains, they can just borrow against their investments to simulate income. Taxes can halve your real yield. I’m aware that not everyone actually pays their taxes, but it’s always better to have a way to do things properly.

You know, there is also the option of doing pretty much what Ethereum is doing. Pay stable farming rewards for SUSHI pairs, to encourage migration to the new model. At the same time, burn a portion of the swap fees. So at times of higher volume, the burn partly or completely offsets the inflation from farming incentives, while at times of lower volume providers get to still see numbers going up.