Dear Sushi Community,
We’re seeking feedback on our latest effort to refine Sushi’s token model, aiming to cement its role in the protocol’s ongoing success and contribute to its growth. Since its launch, Sushi has been at the forefront of tokenomics with initiatives like MasterChef and xSushi. We aim to present a token model that sets us on a sustainable growth path and long-term strategy. In January, we published an initial draft, which, thankfully, generated meaningful feedback from the Sushi and DeFi community, and we believe this final draft represents the best model curated from that feedback.
As Kanpai expires in December of this year and Sushi’s current distribution model quickly approaches full distribution, this proposal outlines our vision for a revised Sushi token model crafted to ensure stability and sustained value for all stakeholders. The model builds on three pillars: protocol sustainability, token utility enhancement, and treasury diversification. We invite you to review the proposed changes linked below, which will synergize to support a resilient token economy.
Read the full proposal: Sushi Tokenomics Proposal Final
Below is a brief overview of the newly drafted model’s mechanics and goals.
Challenges and Solutions
Through thorough analysis, we’ve identified several challenges within our current token model.
Here’s a brief on what we’ve found and our proposed solutions:
- Liquidity Subsidization: We aim to improve the efficiency of our liquidity subsidization, thereby reducing the annual cost of Sushi emissions.
- Balancing Value: Our current Sushi emissions compared to the income of the Sushi Bar suggests a 1:1 ratio, leading to unsustainable value extraction. A more balanced approach is needed.
- Financial Stability: We must address the current emissions-to-income ratio impacting our economic viability to enhance stability.
- LP Incentives: The incentives for Sushi Liquidity Providers need recalibration to remain competitive.
- Staking Mechanisms: We are considering revising xSushi staking to serve high-conviction participants better.
- xSushi Distribution: Aligning xSushi staking closer to its original intent will provide a fairer value distribution among participants.
Our economic model design scales strategically via DEX innovations and includes the following:
- Trading Fees: A primary revenue source from transactions in our liquidity pools.
- Routing Fees: Income from trade fees via our Aggregation Router.
- Staking Fees: Potential revenue from staking rewards.
- Partnerships: Opportunities for revenue growth through strategic partnerships.
We’re focused on aligning our tokenomics with the interests of our key stakeholders:
- Liquidity Providers (LPs): Aimed at ensuring long-term incentives.
- xSushi Holders: Provide a stable token supply, non-dilutive rewards, and governance.
- Traders: Looking to offer an improved trading experience with low slippage.
- Token Projects, DAOs: Building long-term partnerships that contribute to stability.
- Sushi Treasury: Ensuring diversified and sustainable income streams.
Goals for a Redesigned Token Model
The revised proposal has several objectives:
- Promote decentralized ownership.
- Amplify liquidity.
- Encourage sustainable growth.
- Enhance the protocol’s sustainability.
- Bolster $SUSHI utility.
- Diversify the treasury for robust financial operations.
We’re committed to enhancing liquidity, offering non-dilutive token rewards, instituting a balanced token supply, and ensuring Sushi remains competitive.
We look forward to your insights and feedback on this proposal to facilitate an upcoming governance vote. Your input is invaluable as we aim to refine and improve Sushi’s token model for the betterment of the entire community. Please share your thoughts, suggestions, or concerns regarding the proposal.
- Reshape Sushi’s token model to promote its long-term ecosystem goals.
- Continue to encourage decentralized ownership in the DAO.
- Realign stakeholders with optimal outcomes where the current model is limited.
- Promote ecosystem growth with sustainable emissions and value.
- Continue with the existing model and its limitations.
- Yes - deploy new tokenomics (please show your support in comments)
- No - keep existing tokenomics (please provide feedback in comments)