My name is Justin Bebis, CEO of Byte Masons, the DeFi/smart contract development collective behind projects such as Reaper Farm, Granary, and others. Sushiswap was the first DeFi protocol I ever used. I remember seeing the 2000% APR and immediately rushing to Uniswap to buy some $SUSHI and throw it in a farm with my ETH on launch day. This experience was nothing short of formative for me, and was a major factor in deciding to pursue a career in DeFi development.
We propose to assist SushiSwap’s team in replacing their MasterChef emissions management system with Reliquary, a more efficient & incentive-aligned solution for distributing remaining $SUSHI rewards.
SushiSwap’s MasterChef system for distributing incentives was one of DeFi’s most important innovations, creating a whole new means of attracting liquidity for young projects. Over time, however, it has proven to be a highly inefficient means of incentivizing sticky liquidity due to its lack of a mechanism to encourage long-term liquidity provision. We have spent the past year developing Reliquary, a system which can distribute emissions across a series of maturity tranches, such that longer-term depositors receive a larger portion of rewards. We believe that, in tandem with appropriate adjustments to $SUSHI tokenomics models (which we will leave to the SushiSwap team), that the integration of Reliquary contracts can significantly bolster SushiSwap’s long-term prospects in regards to the remaining supply of $SUSHI.
We are longtime admirers of SushiSwap & its contributions to the DeFi ecosystem. With concerns about SushiSwap’s future floating around, we thought we’d offer our support as a small token of appreciation.
As many of you know, the $SUSHI token has reached ~98% distribution, meaning it’s more important than ever for emissions to be utilized in the most efficient manner possible.
SushiSwap’s current emissions management system, MasterChef, uses a linear distribution for rewards, granting users a portion of the base token emission rate weighted by their share of the farm.
This model fails to account for time spent in a farm, creating a misalignment between incentives for farmers (who would like to maximize their rewards received) and the protocol (who would like to see consistent & deep liquidity as a result of incentivizing farms).
In July 2021, Nansen performed an analysis of the behaviors of MasterChef farmers (both on SushiSwap and elsewhere) & found that over half of farmers exit within 15 days of entering a farm.
Those who were present for the yield farming craze of the past couple years are surely familiar with the wild goose chase that it created, with farmers constantly moving from one farm to the next in order to maximize their returns. While profitable for farmers, this profit was at the great expense of the protocols incentivizing them in the first place & led to an extremely unsustainable ‘race to the bottom’ for projects wishing to compete in the DeFi yield market.
Here at Byte Masons, we’ve been searching for ways to improve on this system in order to create a more sustainable long-term solution for rewarding liquidity providers within farms. After a year of research & development, we’ve developed a novel emissions management system called Reliquary, loosely based on SushiSwap’s MasterChef system, but with several additional features designed to much more closely align incentives between farm hosts & liquidity providers.
By distributing rewards across maturity tranches, Reliquary can adequately reward long-term liquidity provision & maximize the efficiency of $SUSHI emissions. Each maturity tranche represents the length of time a user will receive a certain level of incentives. This is done in a non-dilutive fashion, with the same amount of rewards always being emitted to the pool no matter how many users are in any tranche.
In short, the longer you provide liquidity for, the more rewards you’ll receive. No locking, vesting, or other trade-offs required.
We believe that this system presents a much more efficient & sustainable way to distribute remaining $SUSHI to liquidity providers without adversely affecting protocol health. Implementation of this system, along with some changes in revenue management & $SUSHI tokenomics (which we will leave for the SushiSwap team’s tokenomics update), could position your protocol to achieve sustainable long-term self-sufficiency, even in times of uncertainty.
You can read more about Reliquary here:
Reliquary — The new chef in town? | by 0xSkly | Beethoven X | Medium
DeFi’s New Yield Primitive. Reliquary is giving DeFi an edge it’s… | by Justin Bebis | Dec, 2022 | Medium
The Evolution of Music — fBEETS X Reliquary | by Beethoven x | Beethoven X | Medium
Byte Masons are offering, free of charge, to assist the SushiSwap team in implementing the Reliquary system for managing $SUSHI emissions. The Reliquary contracts have been tested thoroughly and audited by Certik, Peckshield, and Guardian Audits, and are ready to be integrated into any incentives program. We hope that our small contribution can serve to bolster Sushi’s protocol health & create a fairer & more efficient DeFi ecosystem for all while highlighting the strengths of Reliquary as an emissions management solution.
Byte Masons will work with the SushiSwap Team to develop a plan to replace SushiSwap’s MasterChef contracts with a customized implementation of the Reliquary system. We will assist in testing, customization, implementation, and any other tasks required to get the system up & running.
We will take any feedback into account, and revisit our proposal at a later date.