Fukkatsu: Make Sushi great again
TLDR
Sushi is amazing. Sushi is also on a death spiral: treasury went from $1b to $30m in less than a year, there’s no leadership, tech team has been reduced to a few devs, releases have been delayed and volume has plummeted. Radical action is necessary to make Sushi great again.
At Wonderland (not to be confused with Wonderland Finance), we came up with a plan to turn the ship around while it’s still possible.
Summary
During the last year, every single Sushi KPI deteriorated to a critical point. The team has been slashed, the treasury has little to no source of revenue and it’s being drained by operations with no transparency or previsibility.
We, as an activist fund, invest in protocols we believe have the potential to achieve multi-billion-dollar marketcaps but are currently underperforming. After investing, we deploy our executive and tech teams to help in the launch of new products, recruit long-term leadership, and fix what needs to be fixed. In conclusion, we steer the team back on track.
Our team is plug&play and will deliver from day 1. Even though urgent action is needed, everything we do aims for the long-term. When our engagement is over, the protocol will be in a much better place and will be in a much better situation to keep scaling.
There have been many mild proposals to change the current situation. Radical action is necessary to get Sushi back on track. We’ve done it before with other protocols and it worked.
Main issues
Sushi is amazing, a great product with a story worth telling, an off the charts brand, and a very supportive community.
But…
- There’s no leadership. Literally.
- The Treasury is at an all time low, bleeding little by little every month and with almost no source of revenue.
- There’s no ecosystem fund, no grants or incentives for people who are integrating or bringing volume to Sushi.
- Due to regulatory risk, among other things, recruiting quality talent is hard AF.
- Proposals go through but are never executed.
- Sushi’s public image is still stained from past dramas.
- Deployments to new chains have not translated into dominance.
- New projects, such as Kashi and Bentobox, have struggled to attract the attention they deserve.
- Trident has been delayed over and over until beta launch.
Solution
In order to bring things back on track, additional high quality working force is necessary. We’re offering a clear long term vision strategy together with senior management and technical teams that can double the current firepower overnight.
Our plan will be divided into phases.
- Phase 0: the financial strategy that will allow Sushi to implement the remaining changes.
- Phase 1: the organizational strategy to recover a healthy structure.
- Phase 2: additional changes for Sushi moving forward.
We have a clear vision for the future of Sushi. Right now, the current AMM space seems to be quite divided with Curve taking up the number 1 spot for stableswaps, Uniswap for main trading pairs such as ETH/USDC, and Sushi taking a strong lead in the alt/blue chips race. We will turn this strength into a solid business case, becoming the “decentralized Binance”.
Phase 0: Financial strategy
The SushiDAO Treasury multisig has 10M SUSHI available and sends funds periodically to the Ops treasury. A 10% of total SUSHI emissions are redirected towards the Treasury. Right now, this means: 200k SUSHI out, 60K SUSHI in every month, for a total loss of 140K /mo. This is also a huge blocker for any kind of future expansion. On top of that, emissions are reaching the limit: 241M SUSHI minted out of the total 250M hard cap. Not sustainable at all.
We propose to deprecate xSUSHI and relocate this revenue towards the SushiDAO. With these funds, Sushi will achieve financial health, will be able to grow the team, create a Sushi ecosystem fund and overall have enough money to scale the business.
The original idea behind the xSUSHI model was to decrease selling pressure and act as a marketing tool for investors. Nonetheless, we believe that the current APY of xSUSHI is serving neither of those goals. xSUSHI is not by itself a sufficient reason for people to hold SUSHI, but it functions as a nice to have for people who are already investing in SUSHI as a protocol instead.
For the past year xSUSHI performance has been hovering around 10% APY, which represents approximately 6-8M SUSHI and translates to a dollar value of about $20-$25M USD at current rates or around $42-$76M USD if we consider the 365 days EMA/MA price.
A 10% APY is irrelevant in crypto, but having the funds needed to scale the business 10x, is not.
The Kanpai proposal had partially discussed this situation. It was voted on but not implemented. Nonetheless, the 5% of xSUSHI revenue would not be enough to recover full sustainability.
We are aware that this action implies restructuring the current governance system. After deprecating xSUSHI, votes will be issued by SUSHI holders, with the same snapshot dynamics many other protocols use (see Yearn for instance).
Transparency and previsibility
We have also noticed a serious lack of transparency and previsibility on how the two treasuries are being managed:
- There is no financial roadmap.
- There is no public information on the real budget and expenses of the Ops treasury.
- Transfers from the multisig to the Ops treasury are not reported to the community in any way.
We strongly believe that a precise financial roadmap is absolutely necessary to enable the desired sustainability. Moreover, transparency with the community is a fundamental pillar that should be restored as soon as possible.
Treasury diversification
Right now, the treasury is composed of almost 100% SUSHI tokens. Even though this approach seems aligned with the protocol’s interest, it really isn’t, as it poses an unnecessary risk for the whole organization. In a prolonged bear market scenario, Sushi might be forced to sell their own tokens cheaply, making the situation even worse for everyone.
This was already discussed on the forum several times, but never implemented (see for instance the Kanpai proposal).
With a financial roadmap in place, it will be much easier to diversify the treasury in a healthy way. This is essential for the long term goals of the protocol.
Phase 1: Team Rescue/Restructure
After all the controversies that were made public over the past few months, the protocol has been gutted from a lot of talent. The first goal should be to retain the present team members. We believe that devs are the core of every protocol and thus, we will ensure the continuity of people developing Sushi. Only after achieving this, will we focus on regaining the lost power.
Recruitment and on-boarding processes will have to be implemented. We will provide two senior PM/Ops profiles that will take care of this, plus all other non-technical matters. Devs should not be required to take care of administrative stuff, as it happens today.
We have the capacity to deploy a team of high quality senior developers that will double the size of Sushi’s tech team overnight. This will help push the technical changes right away and smooth the transition, as new people join the organization.
In order to scale efficiently, it would be wise to create several working groups, which will be focused on specific tasks. The PMs will initialize these groups by setting a leader, who will be in charge of organizing the rest of the unit.
We are proposing the creation of the following working groups:
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Tech group: Both back and frontend devs should be included in this group, since we strongly believe that devs should be mostly focused in coding, without worrying much about any extra noise around them.
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Ecosystem Growth group: This team will be focused on providing economic support for projects being built within the ecosystem both pre/post launch and pre/post token-launch. There should exist a continuous communication channel between Sushi and other innovative DeFi protocols. This will help the ecosystem grow as a whole while establishing Sushi as the centerpiece, which is strongly aligned with our vision for Sushi.
This group will also be in charge of marketing Sushi’s innovative projects which did not achieve the deserved attention, such as Kashi, BentoBox or Shōyu.
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Multichain group: This unit should be composed of people who are focused on the specific chains and have a grasp for what the community needs. They have to be on top of what’s happening on each particular blockchain, support the teams building protocols and provide direct access to communication across protocols’ teams. The plan should be to collaborate and increase the number of protocols emerging in these new spaces. The tasks would be similar to those of the Ecosystem Growth group, but specific for sidechains.
The team will consist of several biz devs, with the Master Of Chains leading the effort
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R&D group: A Research and Development team, to tackle the in and outs of new ideas. They should aim high, towards outpacing the competence and not just chasing them.
Phase 2: Moving forward
In this section we will propose some additional ideas for the protocol moving forward. These should be considered only after achieving the previously described infrastructure.
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veSUSHI: Among the many Sushi products, Onsen is the only one which is actively minting new SUSHI tokens. This inflation is used to incentivize pools in order to attract liquidity. Right now, the SushiDAO determines in a centralized manner how these incentives are distributed. Not only is this method time consuming, but also extremely inefficient.
A solution to this problem would be to implement a veSUSHI model similar to what CurveDAO currently uses. This would take the problem of deciding where the incentives go from the SushiDAO to the SUSHI holders, who would be incentivized to lock and vote as they get rewarded with more emissions towards pools where they provided liquidity.
This idea was already discussed in the forum and voted in shapshot, but was finally not implemented.
A possible critique to this method is that incentives might be won by the most powerful protocols. In order to control this, specific gauge types could be activated in order to proportionally redirect more emissions towards lower caps and interesting projects which are aligned with the Ecosystem Growth/Multichain ideas.
Sushi could also profit from this new structure by building an “in house” Convex, which would optimize on the rewards for the liquidity providers. Moreover, these kinds of systems are well known for generating bribing dynamics, which could attract even more liquidity to Sushi.
As we previously said, deprecating xSUSHI implies that votes for governance would be issued by SUSHI holders. With the introduction of veSUSHI, votes would be issued by the veSUSHI holders. These changes in governance will be addressed.
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Decentralized Frontend: We believe this measure could be good for Sushi since it makes the system even more decentralized and censorship-resistant. On top of that, it would allow external protocols to integrate Sushi as part of their product, enabling a profitable scenario for both parties. This would also avoid unnecessary forks and would be in line with what the Ecosystem growth and Multichain working groups are trying to achieve. Regulatory pressure / legal liabilities could be eased as well.
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Expansion to non-EVM networks: This was already considered but not executed for Solana.
Wonderland
Who are we?
Wonderland (again, not Wonderland Finance) is an activist fund with an army of Solidity, UI/UX devs and researchers.
At Wonderland, we invest into projects and strongly commit to them. Our approach consists in joining forces with teams for a certain period of time, we do not take over protocols.
Our last work was with The Keep3r Network, where we:
- Redesigned the protocol tokenomics and released the V2.
- Developed a basic standardized CLI.
- Are currently taking the project multichain, developing all the necessary contracts and integrations (on-going / not public).
- Implemented UI/UX improvements to the site.
- Released dashboards and tooling.
We are actively improving development standards, by releasing new innovative tools such as our own boilerplate and the solidity mocking library Smock.
Compensation
When we invest into a project, it is because we have trust in it. For this reason, we don’t expect to be paid in fixed USD, but rather in the protocol’s vested token.
We ask for 5M SUSHI strongly tied to performance, such that incentives from both parties are aligned. You can read more on this here.
Together, we will bring Sushi once again to the top of the DeFi scene. Itadakimasu!
Wonderland
- In favour of change
- I like thing as they are
0 voters