Sushi Meiji Restoration

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.


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:


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

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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.


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:


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.

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

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

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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

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.


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.

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Thanks, glad I could be of help. Feel free to tag me on the discord if you would like an expansion on any of the ideas, including more full bodied examples of how they’d work.

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Discussion is also available in the Sushi discord now under the Meiji section, with sections pertaining to a oSushi and the new DAO for those interested in participating on discord

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I’m just catching up on reading on the Meiji DAO proposal. This feels entirely necessary.

Does this extend our emissions? It would seem we need to make a plan for a way to continue emissions indefinitely? Am I wrong in that analysis? Sorry for rudimentary questions here, but am just a beginner when it comes to tokenomics.

I’m thinking of a way that we can do a SUSHI buyback in order to continue emissions. Are there reasons we don’t want emissions to continue indefinitely?

This may answer some of my above questions.

So ideally, I’ll have some of my SUSHI locked up in gauges, but to continue participating in governance voting, I’ll have to keep some of my SUSHI as xSushi?

I’ve now voted yes on this proposal. Though I freely admit I’m not well versed enough in tokenomics to fully comprehend all potential impacts.

Hoping others with greater depth of knowledge on this side of the business are asking the right questions. It seems necessary for moving forward.

I certainly can appreciate the need to eliminate token governance and realize Optimism was thoughtful in their efforts to avoid token governance.

Does this extend our emissions? It would seem we need to make a plan for a way to continue emissions indefinitely? Am I wrong in that analysis? Sorry for rudimentary questions here, but am just a beginner when it comes to tokenomics.

This proposal doesn’t extend emissions, and doesn’t require plans to extend emissions. I am not against it but I didn’t want to add more controversy to the proposal, and this way when oSushi is implemented we will have some months of data to inform any decision which would extend emissions before current emissions run out.

I’m thinking of a way that we can do a SUSHI buyback in order to continue emissions. Are there reasons we don’t want emissions to continue indefinitely?

I can’t think of a reason for emissions to continue indefinitely. Emissions would continue regardless though for the gauge in the sense that the xSushi fee they are recieving would be used to buy SUSHI, then the SUSH would be distributed by the gauges alongside any actual emissions.

So ideally, I’ll have some of my SUSHI locked up in gauges, but to continue participating in governance voting, I’ll have to keep some of my SUSHI as xSushi?

To continue participating in governance your SUSHI wouldn’t be xSushi, but rather it would be locked up the Meiji DAO. After this proposal xSushi essentially becomes a novelty SUSHI wrapper token.

Appreciate the feedback.

Yeah, this is definitely one of those sections where I’m going to have to rely on other members of the community to know better.

Probably just don’t fully understand all the mechanics here.

Are there any specific questions you can boil it down to? I am also available to chat anytime in the #meiji-dao section of the Sushi Discord should you have any questions there. Any issues you have in understanding the mechanics could provide insight into how to better explain this proposal to others as the vote comes up and discussion continues

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No, Control. I probably just need to keep reading on this stuff until I get a better understanding myself. Appreciate the willingness to discuss though. I mean, with what I do grasp, Meiji DAO feels like a great idea.

Probably the stuff I don’t understand is more rudimentary and I don’t want you to take the time to educate me.