Sushi Kraken Protocol Owned Liquidity Manager

Sushi Kraken Protocol Owned Liquidity Manager

As it stands Sushi has faced declining TVLs, along with the rest of the market. Now I and others have been working hard to collaborate on new tokenomics ideas to fix Sushi’s current token situation. This proposal aims to put in place a contingency plan which will remedy Sushi’s liquidity issues. Protocol-owned liquidity has only been narrowly applied to protocol tokens, but in the Kraken, proposal Sushi will begin to diversify by accumulating other protocol tokens as liquidity.

This proposal intiates a PoL strategy for Sushi which can build, while a more robust tokenomics solution for Sushi long-term can be built out and designed by the community.

:squid: Kraken Liquidity Manager

The Sushi Kraken Liquidity manager will receive 90% of the current xSushi fee tokens (with the other 10% going to Kanpai), and it will convert these fee tokens into Liquidity on the pools which it receives them from, and then store them until February 1st, 2023 unless a plan is in place to utilize them before then.

The Kraken Liquidity Manager will hold these liquidity tokens, and these will be strictly separate from treasury assets. The point of this will be to lock liquidity on the Sushi Platform. This management will move Sushi from a decentralized exchange to a decentralized market maker.

:sushi: Reasoning

The purpose behind this proposal is to ensure Sushi can keep liquidity in its pools. Long-term this proposal benefits xSushi holders greatly, by making sure they still have the liquidity to earn fees from, even if Liquidity Providers leave the platform.

This also differentiates Sushiswap from Uniswap on a more fundamental level and leverages Sushi’s protocol fee to directly benefit the protocol.

Impermanent Loss

While these liquidity positions may suffer some impermanent loss, their purpose is more important. This liquidity will draw users (and then more liquidity) to the platform.

:sushi: Termination

If no new plan is decided on before January 1st, 2023, then these liquidity tokens will be sold for SUSHI and dispersed among xSushi holders. This proposal takes immediate action to help Sushi, and buys time for future tokenomics reworks to be built out.

  • Yes
  • Maybe / Changes Needed
  • No

0 voters

I like the idea. Liquidity is most important and owning it may be a great advantage. Though I wonder if redirecting liquidity to where we see it fit won’t give us more leverage…

The problem I am running into is that things get messy / requires off chain work the second active management is introduced. So while I don’t think passive management is ultimately ideal, I see it as low risk and easy implementation to buy time while a more permanent solution is found

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its an interesting idea, however the bigger issue is fractured liquidity across sushi and all the networks.

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