Multichain Expansion Operational Fund

Abstract:

In order to maintain and expand to an expansive list of sidechains and layer two solutions, this proposal recommends that 2% from the 5 basis point fee bridged back to SushiBar be reserved under operational management.

Specification:

The rationale for this operational fund stems from the need to acquire additional human, infrastructure resources, and align technical objectives. Currently bridging and converting the accumulated LP positions reserved for SushiBar are strategic actions. This operational fund allows for not only the expansion of relevant operational tools to scale these actions, but also ensure bridging is happening often and strategically amongst other ongoing initiatives.

To give a general example. On Polygon roughly 5 billion in volume has been generated over three months. An optimal process would bridge back 5 billion * 0.05% = $2.5m to the Sushibar over three months. Under this proposal, the operational fund would receive $2.5m * 2% = $50,000 over three months in accumulated LP positions - providing the necessary resources to maintain, build, and prioritize operational items necessary to achieve consistent and optimal bridging processes as well as expand incentive management operations to other chains (11 main nets and growing). Please note there are significant operational processes and products necessary to assume an optimal, if not above optimal, harvest of accumulated LP positions.

Additionally aligning the management fund with volume performance keeps the focus on further optimization while acknowledging operations scale somewhat exponentially with volume on a network. The management fund would alleviate some of those scaling challenges around human and infrastructural resources.

Furthermore this proposal recommends Ethereum mainnet be excluded from the proposed 2% management derivation as this remains a primary responsibility. Since expansion to all EVM and non-EVM compatible chains is not within the purview of primary responsibilities, such a operational fund can be appropriately applied to sustain such expansion organically.

The details of the proposal are open to be discussed and voted on by the community. Core team has discussed and set the proposed recommendations regarding percentage and applicable networks. Welcome any feedback to the recommendations that have been given.

Operational Fund to sustain multichain operational organically (as percentage of the 5 basis point fee applied to all swap volume)
  • 0%
  • < 2%
  • 2%
  • .> 2%

0 voters

Operational percentage applied to
  • None
  • All Networks
  • All Networks except Ethereum Mainnet
  • All Networks except Ethereum Mainnet and other Network

0 voters

7 Likes

I’m a little confused why the Sushi operational wallet would need more funds? Sushi currently has $12M in the operational fund and $276M in the treasury. I don’t see how an extra $50k will make any difference. If you need more resources to manage this, there’s room to get those resources, right? This would just add an extra complication/task.

What am I missing?

5 Likes

With the asking so low, this should be covered by the income generated from staking treasury.

I think your estimates for the notional value in the treasury and available funds in the operational wallet might be overestimated. Significant funds in the operational wallet and treasury are earmarked for vesting as well as incentives on Polygon, Harmony et al.

The current model for multichain expansion is quite frankly not sustainable. The operational multisig does not have any sort of mechanism to derive income or gains from each expansion to sustain subsequent operations. Additionally it would be a naive assumption that expansion is only a matter deploying contracts - rigorous infrastructure, monitoring, community building, incentives management all are necessary for successful and sustainable deployments.

Creating robust systems is all about aligned incentives. This mechanism works well for all- xSUSHI holders can expect a steady expansion to different networks to derive new volume, the resources are in place to grow these networks (imo growth should be more important to xSUSHI holders since an AMM that just sits there doesn’t do anyone any good), and any network that experiences significant growth will have the subsequent resources to ensure both continued reliability (internal infrastructure is a exponential cost point in in order to guarantee 99% uptime) and expand the momentum on that network. Sustainable pinwheel effects are key.

Let’s just use the treasury is always convenient, but ultimately not sustainable.

6 Likes

Good sense to finance revenue generating opportunities. I think 1bp of fee seems fair

If Kanpai is put up for a vote and passes, couldn’t a portion of the treasury income from Kanpai be explicitly earmarked for multichain operational expenses (especially given Kanpai would divert a portion of xSUSHI income regardless of which chain it comes from)?

The idea behind Kanpai was to use the additional treasury income to both cover operational expenses (such as a Multichain expansion/operational needs) and still have excess leftover income to build up a reserve base in the treasury.

This proposal seems to be a similar idea, but instead explicitly earmarks the entire amount of diverted xSUSHI income to multichain expansion/operations purposes.

2 Likes

I think Omakase brought up a lot of good points in the Sushi forum and I approve of this proposal.

Just some observations and thoughts on my own experience:

  • I use Sushiswap on Polygon multiple times per day, the analytics going down hurt, but had no long term consequences for me, but I can see how this damages our reputation.

  • Sushiswap on Fantom definitely feels like a third-class citizen. The liquidity it has amassed for the effort it receives is amazing, but imho can’t be sustained as competition is tougher on Fantom
    as there 2 other DEXes that currently offer a better experience and/or swap fees.

  • If you dedicate devs to a certain chain and give them a percentage based funding, it might lead to some unwanted competition / jealousy between teams within Sushi.

1 Like

I think there are some nuances between the proposals, even though the underlying mechanism in utilizing xSUSHI is the same, that has led to a difference in reception.

  • Well-defined, specific scope - not just for the general purpose of treasury maintenance
  • Recommendation to exclude mainnet since it does not fall under the scope of multichain expansion
  • The goal of multichain expansion is to grow potential revenue for xSUSHI holders. There is no cannibalization of existing revenue streams, rather ensuring each subsequent expansion can be sustainable
  • Difference in magnitude in what Kanpai defines as the payout ratio
  • For operational feasibility the funds are directed to an operational multisig as opposed to treasury. This reduces friction and ensures rapid reaction to exponential growth situations.

These items being outlined, I’m generally supportive of Kanpai and see no reason this proposal could not exist as a subset (provided treasury friction is reduced) if both pass or independently if the former does not pass. However, I feel this proposal addresses an immediate actionable pain point that directly benefits and is aligned with xSUSHI holders (specific sustainable funds for continued revenue growth). Hopefully both proposals can open subsequent discussions regarding future aligned uses of this mechanism.

6 Likes

After listening to @OmakaseBar 's talk on Forum call, I feel bullish on this! If we are already facing bottleneck issues (for eg. analytics being down for a week) while expanding across different EVMS at this stage, maybe it will make Sushi come off as a dilettante. Traction is important along with the pace. I totally agree, it’s sustainable to make sure things like this don’t happen right from the root and make operations more smooth.

1 Like

Multi-chain capabilities will make or break AMM.

The faster and simpler for the user the better.

And it has to be invested in RIGHT NOW. By the time competitors are online, it’s too late.

Thorchains comes to mind - we’ll see if it pans out.

Will there be any plans to expand on to Solana? The Bonsai proposal from Raydium does not include an implementation of Bentobox on Solana, but this would be hugely beneficial.

New services should be covered by new sources of income. Essentially, the new services should be self-sustaining. That is how I view this proposal. I support the proposal.

I’m thinking of this in regards to regular business operations. If something is just a “cost center,” it is often removed. If the product or service is not supporting it’s own operations, it is generally discontinued. Same should apply to any expansion offered by Sushi. Each expansion which requires more operational overhead should be able to pay for itself.

DAO financial operations should be no different than other costs centers. Unless a particular feature/product is a loss leader, we should require the feature/product to cover its own costs. IMHO

1 Like

I support this. - growth initiative w/ a mechanism to sustain & fund future growth. Would like to see this get to thinking through prioritization order.