Sushi Meiji Restoration

Sushi Meiji Restoration

Authored by @ControlCplusControlV, @levx.io, and @Cookies

Like Japan before the Meiji restoration, Sushi has fallen behind and needs to rebuild if it is to avoid collapse.

This proposal aims to instate a new era for Sushi, one led by a reinvigorated DAO and one where the SUSHI token reclaims its place as one of the most productive assets. By addressing both of these issues in a single stroke, SUSHI holders interested in price can be rescued by Gauges, while DAO Members are given the tools needed to begin building a protocol to last for years to come. Gauges will replace xSushi as a more healthy mechanism to reward holders without compromising revenue. The DAO will put Sushi at the forefront of decentralization and light the way for other token-based protocols.

There are 2 main parts to this proposal - the introduction of oSushi Gauges and the introduction of the Meiji DAO.

Separation of Concerns

DeFi has long thought that token price and governance should be tied together, which can be seen in the many non-revenue generating protocols latching onto a narrative to pump their token. This proposal seeks to introduce a separation of control that will ensure successful token economics as well as honest and healthy governance. The Gauges and generated revenue will be governed by oSushi holders, who will be motivated to increase the SUSHI token price. The Meiji DAO will focus on driving forward the development and direction of the protocol, and most importantly will be free from interference from those looking to short-term pump the price of the token.

Although the two tiers of governance are separated, they both have the same long-term goal of seeing SushiSwap become a great success. The key feature here is that the governing entities are removed from each other enough to ensure that bad actors are prevented from gaining control over the protocol, while simultaneously allowing the free market to do what it does best.

Similar two-tiered governance models are beginning to take shape throughout DeFi. We believe it is likely that non-transferrable “soulbound” tokens coupled with voting escrow token economics will pave the way towards improved decentralized governance and token incentive models as we move forward.

:sushi: The Meiji DAO

The new Meiji DAO will take inspiration from one of the most successful DAOs to date, MolochDAO. Token-based governance does not work, as has been explained many times by Vitalik himself. The Meiji DAO instead works based on shares, which are non-transferable governance rights. Another large improvement of the Meiji DAO it is entirely on chain (with deployment options to Ethereum mainnet or a trusted layer 2), meaning that the Sushi protocol can execute entirely permissionless without buy-in from any organization.

:sushi: Why/What’s Different?

The Meiji DAO provides many improvements over the current one, with one of the main benefits being that governance and operations can move on chain. The Meiji DAO being smart-contract based also allows many exciting new possibilities such as Sushi being able to “sign” smart contracts with other DAOs, own liquidity, and take loans from places like Aave, among many other possibilities.

The Meiji DAO will also see a more decentralized form of governance and put Sushi at the forefront of decentralized governance once again without minority control or proposals requiring buy-in from whales. This will foster community growth which in turn will result in better contributors to push Sushi further.

Gauges will provide a new tokenomics shift investors have been wanting, and work to remedy any current bleeding of token price. Since only 1 year of SUSHI emissions remain, ve economics will prepare Sushi to remain sustainable and thrive in this new environment.

:sushi: DAO Membership

To prevent Shares from just becoming tokens again, they are granted by locking up SUSHI in an entrance contract (of which you can exit at any time, forfeiting shares), and follow the formula of Shares granted = sqrt(Total SUSHI you've locked up) / log(sqrt(Total Members)). This formula was chosen because it results in a distribution similar to that of Quadratic voting, where whales see diminishing returns in shares granted instead of emphasizing the power of the average contributor, but the denominator slows the effectiveness of Sybilers. Additionally, the Meiji DAO is protected from Sybilers since a Member can be kicked out of the DAO for malicious behavior (not disagreements, but Sybiling and other destructive behavior) with a vote where at least 80% are in favor.

This Mechanism is shown below, at different member capacities. (The number in the log(sqrt (_)) in the denominator is how many members are in the DAO, with the x-axis being SUSHI locked up, and y being shares granted)

The tables below show shares granted at various thresholds of members and Sushi locked up into the DAO. The result is a mechanism that has some in-built Sybil resistance, which compliments nicely with a minimum share threshold and member slashing to protect the DAO from Sybil or other governance attacks.

Total Members 100 Sushi 5000 Sushi 10000 Sushi
100 10 shares 70 shares 100 shares
1,000 6 shares 47 shares 66 shares
60,000 4 shares 29 shares 41 shares
1,000,000 3 shares 23 shares 33 shares

Shares are also not granted immediately, and instead, Members must wait for double the voting period before they can vote on proposals. This is designed to prevent new voters from joining the DAO in an attempt to attack or vote through a specific proposal without prior service or participation.

High Kitchen

As a final backstop against sybiling and other attacks, an optional “High Kitchen” can be instated made up of trusted community members and contributors. While not granted special voting powers, this “High Kitchen” can veto proposals through the DAO with the intent of this power being used to defend the protocol against governance attacks, or similar vectors which arise from the new DAO being on chain.

It is important to note this High Kitchen will be chosen by the community on the finalization and made up of trusted community Members. The High Kitchen cannot rush through any proposal, nor do they have the power to act on behalf of the DAO. They can merely block proposals from being executed if they are deemed harmful, and a last line of attack.

The idea is to eventually remove the High Kitchen, but as fully autonomous DAOs are a novel concept, it is important to have some operational guardrails in place. This is one of them, so while mechanisms will be built in the DAO to allow the removal of the High Kitchen (such as a majority vote from within the Kitchen), they will remain to protect the DAO at first.

:sushi: DAO Operations

Since users in the DAO cannot vote on Gauges with their SUSHI locked up, the DAO is funded through 10% of the xSushi fee (the other 90% going to gauges), and 30% of remaining SUSHI emissions (this 30% is granted as SUSHI is emitted, not a chunk all at once). This money is designed to allow the DAO to do things like facilitate development bounties, attend conferences, pay devs, or anything to facilitate the growth of Sushi as a whole.

Proposals on chain will be able to suggest arbitrary eth_call actions from the DAO, opening up many new possibilities for governance. Some of the main benefits of this are opening the door for things like protocol-owned liquidity, and Sushi being able to finance from protocols like Aave.

The operational goals for this DAO are to move development to a bounty-style system. So the ideal flow for the Meiji DAO becomes

  1. Proposal for a new idea proposed by Member
  2. Proposal passed by the DAO
  3. DAO posts bounties to implement the idea
  4. DAO votes to pass an implementation, paying the developer in the same proposal

Of course, this is an ideal situation, and it will take time before the Sushi DAO operations can reach this level. Meiji will put in place the framework for this to be possible though.

Bounties

While not fully detailed here and a flexible construct, the idea behind bounties is to provide an open way to implement proposals in the Meiji DAO. So if the proposer isn’t able to implement their idea, the DAO can then post a “bounty” to implement the proposal. Then approve an implementation once written, and pay the author.

Voting exhaustion is also another issue the Meiji DAO needs to solve (voting on everything pushes people away fast). The Meiji DAO will curb this through 2 configurable parameters, Maximum Weekly proposals, and Maximum Signaled Proposals. When a proposal is made by a Member, it then must be signaled by other members. At an interval to be determined during Parameter Finalization, the top signaled proposals are then brought to the voting block where voting on each one begins. This limits the number of proposals which can be spammed and provides on-chain proposal curation.

:sushi: Parameter Finalization

If this proposal passes a final vote will still be required to both deploy this new DAO, and to finalize parameters such as voting period, share quorum threshold, minimum share amounts, and any other needed variables. This proposal is to determine whether there is support for the Meiji DAO, but the contracts won’t be enacted until a later implementation vote.

:sushi: Sushi Gauges

Curve-style gauges have been a constant source of admiration from the DeFi community, as a way to distribute revenue and protect token price. Previous proposals such as oSushi and recently from LevX have looked to add Gauges to Sushi, and this proposal will see Gauges similar to the ones discussed there implemented.

The gauges proposed here are near identical to those proposed in the oSushi proposal, but one modification is needed for oSushi to work. Since SUSHI emissions are cut off in just over a year, Gauges will also need to be funded with the xSushi fee.

So the implementation of Gauges will see 90% of the total xSushi fee redirected to Gauges. These xSushi fees will then be used to buy SUSHI which will then in turn be distributed by the gauges. In addition to xSushi fees, 70% of remaining SUSHI emissions which would usually have been distributed via Onsen will be redirected oSushi Gauges.

oSushi would then be implemented with the following parameters.

:sushi: oSUSHI

This is similar to veCRV in Curve ecosystem but to inherit the legacy proposal, we’ll use the name oSUSHI instead of veSUSHI. To receive oSushi you must lock up your SUSHI for at least 1 month up to 4 years. The longer the period is and the more SUSHI you lock up, the more oSUSHI you get. However, all of your SUSHI will be locked up in the contract until your chosen lockup period ends.

Unlike SUSHI, this token is non-transferrable, so you can’t buy or sell it. When you lock up your SUSHI you can choose to delegate your oSushi to someone else, but this delegation is one-time and cannot be changed until your vesting term ends (Similar to how Curve works). Also, while you can unlock your SUSHI, doing so will impose a penalty of 50%, which will then be distributed through the Gauges as extra emissions.

Your oSUSHI balance decays linearly every week. If you lock up more SUSHI the unlock time remains the same. You can also increase your lock-up period up to a maximum of 4 years, which will decrease the rate at which your oSushi decays.

With oSUSHI or gauge voting power, you can vote for gauge weights to decide which pool will receive more SUSHI and fee emissions. This is done via the GaugeController contract, as described below.

:sushi: GaugeController

The GaugeController contracts maintain a list of all the pools that are eligible for SUSHI emissions, across all chains. This also means that each chain could have a different weight, so for example if Optimism or Polygon want to run a liquidity mining program, they can boost weights for pools on their chain. Each chain could have a different weight and as decided by oSushi holders. (For example, the whole Ethereum pools receive 3x boost, polygon ones 2x, optimism ones 1x, etc) Adding pools to this list is also decided on through a vote by oSushi holders.

oSUSHI holders vote for pools to decide which one should receive more SUSHI emissions. They can use up 100% of their voting power for 1 pool or distribute it across multiple pools. Once their vote is cast for a specific pool, it cannot be changed to a new pool until the next week.

:sushi:LiquidityGauge

Each pool will have its own LiquidityGauge that users can lock up their LP tokens and this contract is registered as a pool in GaugeController, not the LP token itself. This contract keeps track of which user should get how many newly minted SUSHI with a boost of up to 2.5x in proportional to how many oSUSHI they already locked up.

In short, to receive the maximum emission as an LP, you need to deposit your LP tokens into its corresponding LiquidityGauge contract and vote with as many oSUSHI as possible.

:sushi: Bribe

Bribe contracts reward voters who voted for gauges with additional tokens on top of SUSHI emissions. One gauge could have multiple Bribes which means voters could receive multiple reward tokens. We could expect each token project encourages their liquidity providers to deposit their LP tokens to LiquidityGauge and vote for their gauge to receive juicy yield.

:sushi: Minter

This contract will be used as the dummy pool in the mainnet if this proposal passes, to distribute SUSHI for each pool in GaugeController with all the factors in consideration including the emission amount per week, relative gauge weight between pools, and how much LPs got boosted by voting with oSUSHI, etc.

:sushi: The Impact of Gauges on Token Economics

Gauges look to fix one core problem right now - lack of commitment from holders. As it stands, xSushi absorbs most of the protocol revenues but xSushi holders can exit at any time. This increases volatility for the SUSHI token price and leads to revenue flowing out of the hands of the protocol into the hands of holders who look to leave at the first sign of trouble. Vesting solves this problem by rewarding people for how long they are willing to hold for, and holding them to it. Gauges ensure that value flows to entities that are aligned with the long-term success of the protocol.

In addition to fair revenue distribution, the VE token model also makes it easy to bootstrap deep liquidity. This can be done by farming and locking, or by bribing locked VE token holders to vote for a particular pool, which, in turn, will increase fee distribution in the form of sushi + sushi emissions. This method has proven to be very effective through protocols such as Curve, Frax, Balancer, and most recently Velodrome. Liquidity and volume are what bring revenue to the SushiSwap protocol. SushiSwap must regain deep liquidity and high volume to provide fees to oSushi holders. The implementation of gauges will help in this regard, as can be observed in the image below which outlines the mechanics of the oSushi system.

Another important factor to consider is how the implementation of gauges, oSushi, and the Meiji DAO will remove liquid SUSHI from the market. Currently, the liquid nature of xSUSHI is a net negative for the price of the SUSHI token and the long-term success of SushiSwap. Fees and emissions NEED to be distributed to partner protocols and investors who are focused on the long-term success of decentralized finance. As these entities lock SUSHI in return for oSUSHI and DAO shares they will remove a large percentage of the current liquid market cap, therein making SUSHI a more highly sought-after token and likely increasing the market price.

The graph below shows two scenarios in which SUSHI is removed from the liquid market. In the “base case” the only SUSHI removed is the amount that is currently held as xSUSHI. The “base case” assumes no additional removal by people locking for shares of Meiji DAO and only considers that 50% of future emissions will be converted to oSUSHI. This scenario leaves room for some variation between current xSUSHI holders not locking and some newcomers locking SUSHI for DAO shares. In the optimistic scenario, 50% of the current supply is locked in an arbitrary percentage between oSUSHI and DAO shares, additionally, 75% of future emissions are locked.

It’s clear that if between 20-60 percent of liquid SUSHI tokens are locked for fee + emission distribution or DAO governance depending upon where people are excited about participating, the circulating SUSHI supply will drastically drop. If all other dynamics such as TVL and volume remain consistent the value of the SUSHI token will increase. Of course, it would be ideal to grow TVL and volume, which opens the door for discussion on the possibility of additional token emissions to regain lost liquidity across many chains and capture far more fees, in turn, solidifying the success of SushiSwap in the highly competitive DeFi space.

:sushi: Action Items

If this proposal passes work will begin on oSushi Gauges as described above, as well as the contracts for this new Meiji DAO. Those contracts will be provided pre-audit but with thorough testing and of the highest quality. This process will be led by LevX and ControlCplusControlV to lead development efforts.

:sushi: Key Details :sushi:

  • Gauges are created to control Onsen rewards on Liquidity Pools
  • Gauges replace xSushi, favoring a new tokenomics model to let SUSHI begin building long-term value
  • Tokens used in Gauges cannot participate in DAO and vice versa, but users can still participate in both
  • New DAO created, which requires lockup of $SUSHI to enter.
  • New DAO is Share Based, which grants shares based on a lockup mechanism favoring multiple medium participants rather than a few large ones (similar to quadratic voting)
  • DAO gains 10% of the Protocol Swap fee (also known as the xSushi fee) and 30% of token emissions to fund the project’s long-term success.
  • Sushi Gauges are created to distribute 90% of the Protocol Swap fee (also known as xSushi fee) rewards and 70% of newly minted $SUSHI.
Meiji Restoration
  • Yes
  • Maybe (Adjustments Needed)
  • No

0 voters

8 Likes

Had to repost with a new option, and fix a minor nit

2 Likes

Apart from the name it’s same as Vote Escrow tokenomics? The same idea which Defi Wonderland proposed.

It is it’s own unique proposal. For example the new DAO having a quadratic entrance mechanism for shares, oSushi having rights to govern gauges, removing xSushi fee to redirect it to oSushi (and Meiji DAO), new DAO governing development while other handles gauges. I’m confused where you are seeing parallels?

Fukkatsu: Make Sushi great again

This proposal talks about veSushi.

Can you outline successful quad voting approaches? How does it stop the sybil attacks?

How is oSushi different than a veSushi model?

The question is why not go with the Defi Wonderland team, as they have already executed successfully for Keeper V2.

1 Like

One of the big things is we not asking for 5M SUSHI and we are Sushi Natives, some other differences are

  • Our oSushi model doesn’t require voting from SUSHI holders to allow new pools to be signaled, our oSushi is essentially a very limited subDAO controlling SUSHI gauges
  • Successful Quadratic voting examples I think most notably is Gitcoin. It reduces the power of whales, meanwhile if you look at the graph I posted it reduces additional voting power the more members there are, so it doesn’t stop Sybil but it slows their effectiveness (if they spam to many members each successive sybil grants them less voting power)
  • Our oSushi is different from veSushi since ours outlines a path to sustainability, funding it through fees long after SUSHI emissions end in just over a year.

Our proposal covers numerous things theirs doesn’t such as Novel DAO that is actually decentralized rather than just giving veSushi holders voting rights. It is hard for me to compare them because they are so different to me, especially since ours doesn’t touch much on the Sushi Org itself, while their does extensively? If you have questions feel free to reach out on discord and I can clarify any issues you may have there, but as I see our proposals are very different and do different things.

8 Likes

I think this is a really well-written proposal that can lead us back to success while eliminating a lot of issues prevailing right now. Looking forward to seeing a follow-up post on the finalized parameters etc. I’ll be watching this thread so I can see more discussion/feedback from others.

I am in full support of this proposal!

2 Likes

Can you elaborate on the decay mechanism for oSushi?

Also, as a user less familiar with Ve tokenomics could you illustrate how swap fees would flow to oSushi compared to the current xSushi system?

We have brought so many interesting products on the market but our tokenomics is still based on 2020 DeFi summer model. Emission model keeps creating sell pressure and we have got no counter measure to stop it. Ve tokenomics has proven to be successful in multiple DeFi exchanges like Curve and Balancer. Its time to progress on this front and implement Ve and gauges. I like the suggestion but don’t agree with directing xSushi fee to the gauges instead we need to take a cap off and create a sustainable long term emission. Protocol revenue should continue to be shared back to those who lock their Sushi Token.

2 Likes

I’m a maybe at the moment… only because this proposal is a book and I need some time to read it and comprehend. :rofl:

2 Likes

The reason the xSushi fee must be redirected to Gauges is that Sushi emissions are limited, so for any ve tokenomics to work there must be a consistent stream of revenue coming from somewhere. The idea of redirecting the xSushi fee is that currently those “locking” up Sushi for xSushi aren’t actually locking up anything since they can leave at any time. So by redirecting the xSushi for Gauges (and the Meiji DAO) to receive protocol fees SUSHI holders must actually lock up their SUSHI

1 Like

250 Million cap limit us and we don’t have enough volume compared to last year to keep the gauge incentive attractive. Solution is to take the 250 million cap off and add tail emission on sustainable level. Sushi existence came with fee sharing model with the token holders and that should never be taken off. What is the incentive for small holders to lock the token if they will get nothing on return?

oSushi would decay linearly with respect to time and you would need to re-lock in order to get max oSushi voting power. Of course, if people wanted emissions to be increased, a non-dilutive rebase could be added for oSushi lockers.

In regards to swap fees there is discussion about whether they should go to oSushi lockers or be added to the SUSHI emissions. If we increased emissions fees could flow to oSUSHI lockers, if we did not increase emissions fees would have to be used to buy back SUSHI and provide yield to LPs.

I wanna do a little more research / run some numbers for this proposal (overall really like the direction / think it’s a good way of making the onsen + incentives sustainable)

But this is one of the main initial things I’m unsure about, is that if there is enough of an incentive for peeps to take part in governance via the share model.

3 Likes

As more DEXes are moving to veTokenomics, this proposal is spot on.

1. veSUSHI aligns investors and changes game theory for token holders:

• Encourages long term holding
• LM is more efficient & transparent
• Holders incentivized to become LPs & vice versa
• Revenue incentivizes the team without selling tokens
• Bribe system attracts other protocols

2. veTokenomics will attract governance/yield aggregators to Sushi.

Think Convex or Aura Finance.

These protocols will bring their own resources, community and marketing to Sushi.

Also, Aggregators solve many problems of veTokenomics so holders can expect higher yield thanks to bribes and compounded interest. They will also make oSUSHI liquid although trading at a discount.

3. Sushi risks being left out of liquidity games.

veTokenomics will commoditize liquidity in DeFi. Think Curve Wars but across many DEXes. How?

New emerging protocols need to attract liquidity seeking to grow fast. Thus they’ll evaluate on where the liquidity acquisition is the cheapest and fits its growth needs.

It’s all possible thanks to transparent weight gauge voting and bribing systems.

As more DEXes switch to veModel, new protocols will calculate the costs and benefits and choose the most efficient alternative to grow its liquidity.

For example, a new stablecoin will evaluate if it’s better to list on Curve or Sushi.

Even though Curve is more efficient for stablecoins, it’ll cost more in bribes to attract liquidity.

Therefore they’ll choose to grow on Sushi first and bribe oSUSHI holders.

Whereas previously the team decided on emissions, thanks to veTokenomics holders can expect to profit from the liquidity games.


I analyzed 20+ veToken projects so you can find their differences, APR, % of supply locked, inflation rate etc. here: ignasdefi.notion.site

4 Likes

To help ease your concerns on the governance share model incentives, it is by design governance isn’t incentivized by default. Outflow from the Meiji treasury will primarily be in the form of bounties, so part of my thinking is those drawn to governance will be those contributing to the DAO, whether its in community support, developing smart contracts, designing the front-end, building the frontend, or working on tooling those people will be paid by the DAO (and those incentivized to participate in governance), and those people will be the most attracted to joining and participating in governance.

1 Like

We’ve opened a discord server only to discuss Meiji Restoration and anyone who’s interested is welcomed:

1 Like

Bravo.
This proposal eloquently combined many things I would want for sushi.
Thank you.

1 Like

This is amongst the strongest proposals being made to address the current challenges with the protocol. There is much to admire here & it’s great to see such a detailed & well-structured proposal, congratulations on putting this together

There are, however, a few areas where this proposal could be further strengthened, putting Sushi back on a footing where restoring its reputation as a truly decentralized & innovative protocol within the defi landscape is not only possible but within reach of this proposal given a few additional tweaks.

The ideas below are put forth in the hope that they will be considered for incorporation within this proposal - making this ‘restoration’ hopefully even stronger.

Summary of Feedback / Additional Thoughts

This response is quite detailed, I thought it would be helpful to provide a short categorization in helping to summarize the feedback;

oSushi Locks, Gauges, LP innovations & emissions;
Attempting to ensure a high threshold of Sushi tokens are locked would be a desirable outcome (more locks > higher scarcity > higher token value), but this can be more easily achieved through alternative means;

  • Governance Token basis - Utilizing existing Sushi tokens via locks for both the new governance & oSushi models should be reconsidered, with governance tokens as an entirely new token recommended (basis for which detailed below)
  • oSushi lock duration term - Since ve tokenomics with four-year locks inevitably attract secondary third-party applications that wrap the lock into lesser duration terms, it’s fair to conclude that this is a corrective market adjustment brought about by the demand for higher trust - this proposal should therefore be adjusted to reflect;
    • a shorter duration maximum lock targeting a much higher threshold of total Sushi locked as a result (evidence of this can be viewed by comparing vlCVX & veCRV as % of circulation locked)
    • also allowing users to opt-in to keep duration perma-locked thus receiving perma-boosts
    • For example, max lock period may be 24wks (given as an example), but the user can opt for max lock to be maintained by protocol, therefore, ensuring full boost - however also meaing only way out would be to sell their oSUSHI (see point immediately below). Alternatively, user can set lock for max period of 24wks, wait till unlock period before receiving unlocked Sushi whils accepting the trade-off that gauge power decreases linearly.
  • oSushi lock restrictions & penalties - Recommending that oSushi lock should not be limited to a single delegation & penalty should be removed. Instead offering the inclusion of optionality for holders to sell oSushi locks ahead of term-end to other users much like TradFi bonds markets work. As the home of a marketplace for this Sushi can create an additional revenue stream based on taking a percentage for facilitating the marketplace. This can be enabled if oSUSHI locks are handled as NFT positions.
  • Incentivization methods; -Sushi can switch from standard emissions of Sushi to an OLM model (model originally developed by the Sushi team) whereby standard LPers would receive an option to purchase Sushi at a set discount when redeemed within an expiry period. Redemption of these options will create a new revenue stream for Sushi, and some/all this revenue could even be used to buy back Sushi tokens, with all purchased Sushi being allocated for future emissions directed to the OLM contract
  • Regarding gauges- replication of the liquidity incentivizing mechanics of other DEXs without additional innovation is likely to limit the success of any implementation. Therefore the question the proposing team needs to ask themselves is “what would make a protocol incentivize liquidity in Sushi over any other DEX?”. Understanding the answer to this requires some appreciation for the challenges protocols are trying to solve - top of the list here is deep liquidity that is sticky (i.e. will not be prone to exit in search of other yield opportunities). As majors & stables make up around 80% of volumes for most DEXs this would provide a benefit to protocols in stabilizing the depth of liquidity for their tokens. This, therefore, presents a huge opportunity for Sushi to target major protocols listing due to innovations that;
    • Introduce a new tier of LPing whereby LP positions are bonded for a time-locked period (bLP). Protocols can target a % of TVL that is time locked.
    • Time locks can be staggered across periods (for example; 4wks, 8wks & 16wks) with bonding of LPs limited to target % of TVL
    • Sushi emissions can be used to incentivize each duration period with higher emissions directed to longer duration bLPs - if OLM is adopted this can be adjusted to have increasingly deeper discounts on the strike of the option available on bLPs (when compared to standard LPs)
    • Indeed, if Sushi develops a marketplace for oSUSHI holders to sell their locked position (as described above) then such a marketplace can easily be extended to include capability for bLPers to sell their position to other buyers with Sushi taking a similar fee for enabling the transaction
    • Protocols would be enticed to add further rewards to bLP gauges, and would also seek to accumulate oSushi in this model to direct emissions to their own bLP targets
    • This is also a more ideal state for LPers since they are not placing their trust directly with the protocol owner - who may otherwise offer them the opportunity to bond LPs directly or acquire POL via an Olympus Pro style program. Due to the trustless aspect of using Sushi as a 3rd party between the LP and Protocol (i.e. all Sushi and additional protocol rewards could be viewed in allocation to the timebound/bond or OLM contracts)
    • If adopted in full, an OLM UI can even be developed for protocols to easily stack and distribute their own native rewards/incentives to gauges with ability to set tick & expiry - in return Sushi taking a set % as a fee. Further extending revenue streams

Governance;
Separating new Governance tokens from any relationship with/to existing Sushi would benefit the Governance structure significantly in that it can ensure Sushi governance tokens are distributed not based on previous capital acquisitions, but instead strive to allocate based on previous contributions to Governance tasks & protocol development.

Since the changes/tweaks described above would likely decrease circulating supply at a higher level than the initial due to increased locks then there is no unintended harm to token value based on this change, affording more flexibility to think about Governance in a more holistic way. Therefore some initial allocations can be distributed based on;

  • Previous voting participation
  • Previous successful proposals
  • Previous development contributions
  • Previous forum & discord contributions/participation

Some of these areas are fairly easy to determine and allocate based on voting record, forum history & repos but the more contentious such as value to forum & discord contributions/participation can be based on 1p1v from those platforms’ members for initial distribution, perhaps after a nomination process. This would set up the quadratic voting methodology described for success in initial implementation

As future emissions of governance tokens are distributed they should be allocated on a similar basis, with monthly distributions. Overcoming the challenge of governance tokens being acquired by a bad actor is near impossible but perhaps it could be a consideration to also make governance tokens NFTs, that can therefore be traced if exchanged to or delegated to a bad actor - in such cases they can be managed as hinted in the proposal (Sybil)

Thanks for reading these suggestions and for further consideration, happy to discuss more with the proposing team if interested.

2 Likes

I really like a lot of the ideas here, I am still looking at oSushi implications and how it could work as well as some other ideas you discussed in the discord.

As far as govnernance I would like to avoid making a new “token (or token-like)” system as I view simplicity as essential to adoption. I do like the idea of maybe linking shares to a “identity” NFT as I think using something like Lens for Governance forums could be cool (and then it would be easy to link identities). One reason I would think avoiding a new governance token would be good is that Participants should be paid for their work (as development and similar things are WORK), and so by using the same token devs can do bounties, claim SUSHI and either sell it for food, or accumulate shares if they can.

So I would rather progress from initially token based shares, then to as people start participating the DAO can begin evaluating what memebership looks like and if it makes sense to move away. One main advantage of SUSHI is it is “fair” (in a broader sense, it’s hard to manipulate), while measuring people’s contributions and awarding them as such would be more difficult to decide on.

1 Like