[Withdrawn] Sushi Phantom Troupe - Strategic Raise

Right and this is the problem.

Right now, Sushi only is competitive because its paying Sushi rewards for liquidity.

Based on the volume to reward ratio of most of the pools, this actually costs sushi money.

That’s exactly why its critical to focus on getting more volume in the door, but on improving the other ecosystem products.

My hunch is that bentobox is designed in a manner with the goal of letting those assets provided liquidity while also serving other functions (similar to Balancers AMM)

Yes. It is.

Which is why they require funds to continue to staff up, attract and retain top talent and spend the time and effort on all of these things, whether that is AMM redesign as you suggest or product ecosystem as I suggest.

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In the end, that’s just paying for volume. Personally, I think the issue is Kashi is actually fairly confusing and non-intuitive, and the farm rewards for it are the same.

The alpha there is huge, and the risk on pairs is low. So there is no reason capital shouldn’t be there given how low yields are right now other places.

Insights like this and being able to correct it are something that are easy for experienced PMs and analysts to work on; and its part of transforming a fast growing startup into a major business.

I think these things can perform very well and be a big core part for Sushi, they just need the right amount of attention.

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The community has already voted for a way to handle the management. The %% it generates should be enough to cover dev expenses. If it’s not enough, then the treasury allocation should be increased till it’s enough. Or we seek alternative strategies like safe yield farming, using yearn/aave/cream.

coincidently, these users make up the community the VCs want to dump on claim to care so much about.

…and yet here we are, with this whole public voting thingy, where clueless joes click aimless buttons to participate in a governance process they put their pennies into. Let’s take them out of equation, would VCs make money as easily, when it’s other VCs they have to convince to buy their bags?

60% discount with 6 month lock-up period just screams of their benevolent influence over the protocol. The only party they are ‘benevolent’ is their shareholders, to the extent the law bind them.

That’s why we’ve been asking Maki to speak plainly on what he wants that only VCs can deliver.
Also, ‘they’ have drastically underestimated the risk of sushi in the beginning. Would love to see any VC participating in the project moments after Nomi pulled the plug. And yet that clueless retail provided enough vibe for the project to succeed. Go figure.

The pie is big enough for everyone. The moment the team decides to follow ‘one solution takes all’ grab is the moment they bite way more than they could ever chew. The community so far seemed to increase organically, after the devs came up with promising solutions.
I have high doubts any VC could convince a tradfi champ to move his retirement funds into bentobox, and somehow justify all the risk it entails. Otherwise, where would the exit liquidity come from?

As opposed to dumping the treasury for stablecoins, and having no aligned incentives with the community, other than chillingly chew through the funds with ever-inflating expenses?

Again, who is going to pay for it?

So we could higher a team through the usual process.

So VCs are in a business of running charity? Who knew.

absolutely not. As some other suits in this thread demonstrated, they are only interested in the discount as a way to secure low risk profit. There’s an outlier in a form of FutureFund. But they are exactly that, an outlier.

Because comparing the sushi treasury situation, which is filled with a deflationary token, with the companies that can print their shares at will to fund the business in one of the most expensive places on earth to run business at, is somehow a reasonable thing to do.
Thankfully, we can source our talent from all over the globe, that doesn’t suffer from SF’s bubble.

And yet they were very eager to subscribe even at the discount Maki originally offered. Suspicious.
If the deal is so bad for them, they are free to deploy their assets at whichever venues that formula provides.
Speaking of formulas, we could just stick our treasury into a yearn vault, draw a very safe amount of stablecoins and get 20%+ apr. Should we take into the account our cost of lost revenue too in your equation?

Oh yes. Curve really lapsed on this one. And other projects, that copied their approach. They just should’ve followed Uniswap approach and kneel before VCs.

How convenient.

By that logic all of defi should’ve never touched the community and remained ‘cefi’ with a reskin. Thankfully, it took another route.

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Some do care, some don’t. That’s entirely the point of vetting them.

Some would sell their grandmother for a quick buck and so you need to align incentives.

Yes, I entirely agree 6 months lockup is unacceptable. In my post, I’ve advocated for at least at two year linear vest (although I don’t think as high as 4 would be unreasonable) and at minimum 6-month clif

A cliff is the period after which the vesting begins, not when it unlocks.

[quote=“Graine, post:177, topic:4554”]
That’s why we’ve been asking Maki to speak plainly on what he wants that only VCs can deliver.[/quote]

Yes, we agree on that.

Right after Nomi pulled the plug no VCs were here?

I am a VC now and was certainly here.

SBF was certainly here in providing all of the technical infrastructure and finance to make the saving of Sushi happen.

Sino Global and CMSHoldings both jumped in as multisigs and made important contributions behind the scenes.

I’m not sure how to even reply to this chunk.

No one said one solution grabs them all, that’s the entire point of blue ocean v red ocean strategy.

The point that was made is there is still a 10x-100x growth opportunity here that requires funding to capture before someone else does.

That’s why you align incentives with long lock up periods.

With capital that you’d just dump from the treasury creating downward selling pressure.

This is the problem.

People say “Oh all VCs are bad” and put forth economics that attract bad VCs.

I think the current deal in terms of discount is fine, but in terms of lock up its too short. But as you scale along that line it changes the investor quality you get.

No, because that opportunity would be self-dilutive.

But, it should absolutely be considered that Sushi could use the treasury assets to take on debt financing from Iron Bank, Aave or other lenders. It’s a totally viable option.

(Also not sure where this “our” vs “your” language is coming from and how you’ve decided some users are more part of Sushi’s community than others, but that’s probably part of the problem in why we will continue to talk past each other.)

A contract with initial liquidity mining is very different than taking and specifically selling treasury assets, especially bundled into the same transaction as one being pitched as an investment.

Laws are also evolving.

Many ICOs in 2017 got off with a slap on the wrist.

Trying to do a 2017 style ICO these days would result in a lot worse.

Avoiding dumb legal battles is not the same as not building at all.

For whatever reason, there has been a contingent of people who have convinced defi that all investment capital from wealthy individuals is just “VCs” who are “evil and just going to dump on you”

A lot of crypto funds now are run by VCs who were in the space early, who built defi projects, got involved in governance and made money doing that. They leverage their expertise to continue investing capital.

There is a range of VCs and some of them are total out to make a quick buck and get the best deal they can.

But, some started as community members and operators in this space and do care about what happens to it, how it operates and the users.

There are a lot of open-ended liquid funds, that buy discount presale tokens and dump them on to users in non-delivered, non-revenue generating early stage products; and that is a huge damn problem.

But there are also plenty of VCs who contribute to the space, who would lock up their capital for multiple years to help fund Sushi’s growth.

Parsing out the ones that are useful is the hard part, and is dependent on the value the Sushi team most needs.

Based on your retorts, I don’t think I’m going to convince you to not see this as black and white, but for others who are in the same boat of thinking VCs are just vultures, maybe they’ll take heed and see that there is a spectrum.

Sushi’s team should explore all the options, including not selling any tokens at all, but not because of some weird ‘us vs them’ mentality towards venture capital.

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@AdamSCochran

The idea I got from this post by @0xMaki is that the point of the raise is primarily to onboard strategic partners, and that was the notion I think many of us were contradicting.

I can agree with what he is saying here, and that value.

I can also assure you that if you raise money from strategic partners with the right experience, they will push you to deploy it in scaling with talent, because that capital is growth fuel to capture the once in a generation financial opportunity at play in this market.

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Written in conjunction with Arca CIO Jeff Dorman

We think this ‘Phantom Trope’ proposal for SUSHI is value-destroying – Arca will backstop a new deal with the first tranche 31% above the current TWAP price. We encourage the community to vote down this proposal. Below we have outlined an executive summary as well as a more detailed counter-proposal.

Executive Summary (TL/DR):

  • Arca holds 7.51% of the xSUSHI circulating supply. We are opposed to the deal as proposed and feel strongly that it should not be put up for consideration. Our rationale is below along with an alternative proposal:
  1. Sushiswap does not need money, as indicated by 0xMaki himself. Sushiswap has $10.15M worth of SUSHI in its ops wallet and $214M in SUSHI in its Treasury Wallet, so the asset mix is predominantly SUSHI tokens. We agree that there is merit to diversifying, but not at current prices. Current market conditions do not justify a raise of this size. If Sushiswap does need money, we’d like to see justification for why $60mm is the right number. What are run-rate expenses and how much runway does $60mm give Sushiswap?
  2. The proposed discount and short lock-up are not indicative of a vibrant growth project, which Sushiswap is. SUSHI is currently trading at a massive discount to its fair value, and now is absolutely not the time to be selling.
  3. We believe our expertise in capital markets and deal structuring can bring more economic and strategic benefit to Sushiswap and its existing investors/community than the current proposal.
  4. Some of the VCs on the list touting their “strategic benefits” are the same ones selling SUSHI into a declining low-volume market to buy this new deal at cheaper levels. In other words, this looks more like an arbitrage trade than a strategic, long-term investment.
  • Arca’s Proposal - As large investors, and strong believers in Sushiswap, we are very willing to continue putting our money where our mouth is. If the Sushiswap community is intent on selling from its treasury in this environment, then we will happily be buyers at prices that are advantageous to us, but fair to the community. Since we strongly believe that Sushi is already trading at a significant discount to fair value, we also won’t require further discounts. In fact, we will pay above current trading levels.
    The average Price-to-Sales ratio of the entire DEX market, excluding the highest outliers (KNC and ZRX) is 12.7x. If SUSHI traded at these levels, SUSHI would trade at $39.85. We see no reason for $SUSHI to trade at a discount to its competitors. We propose that Sushiswap sell a fixed number of tokens at different price intervals, based on the lowest closing price in 2Q 2021 ($6.40 on 6/25/2021). We believe Sushiswap should offer tokens transparently on Sushiswap using the new limit order feature, so that every member of the Sushiswap community has the chance to participate. These prices are as follows:

  • Why is this proposal better?
  1. There is clearly strong demand for the SUSHI token given the vibrant community, project fundamentals, and large number of “strategic” investors who have expressed interest in a private round. If there is this much bullishness on Sushiswap’s future, investors should buy SUSHI, forgo the discount, and add the “strategic value” being claimed.

  2. We believe it is more valuable to have a diversified community of many smaller investors and users than it is to have a concentrated group of large passive investors.

  • Conclusion: If our proposal is accepted, Arca will backstop the deal with a minimum purchase of $10 million at the first offering price. With this higher bid from Arca, Sushiswap would be negligent offering tokens below this price. Our proposal saves Sushiswap $22.6mm dollars and releases 4mm less tokens saving SUSHI holders from additional dilution.

Background: My name is Jeff Dorman, Chief Investment Officer at Arca. I started my career as a capital markets investment banker and worked on the structuring, syndication and pricing of many debt and equity deals. While the digital assets space is new and exciting due to its differences, there are some components of TradFi debt and equity raises that can and should be utilized to prevent avoidable mistakes like the deal presented for Sushiswap.

Arca is one of the largest holders of xSUSHI with 7.51% of the xSUSHI circulating supply. We have bought every one of these tokens in the secondary market, without lockups or discounts. We are staking, we are customers, we own insurance on Nexus Mutual, and we have been very outspoken publicly, supporting the ecosystem. Contrary to popular belief, you don’t have to announce your investment, get a discount or have a lockup to be a valuable, long-term investor. We can sell at any time, but instead we have been actively buying in the open market at these depressed levels. We are active buyers because, in my 20+ years of professional investing experience, I have never seen a company with hyperbolic growth and a healthy balance sheet trading at 3x sales with an average dividend yield of 16.4% (20.8% if we annualize the last rolling quarter).

We believe the current proposed deal lacks a very simple understanding of how capital markets are supposed to function, and completely ignores key differences between privately held and publicly traded companies. Below is our rationale for why this deal needs to be restructured, and our counter-proposal for what Sushiswap should do instead.

Rationale:

There are 3 reasons a company raises money - via debt, equity or tokens

  1. Company needs money - it has been articulated clearly that this is not true for Sushiswap
  2. Company thinks they will need money in the future and wants to take advantage of a “hot market” today – clearly this is not true as this is far from a hot market
  3. Company sees strategic benefits raising money from certain investors – if this is true, it has not been clearly articulated in an actionable plan on what these VC’s will bring to the table.

There are also 3 types of capital market raises:

  1. Syndicated Private raises – this is for companies that do not have access to public markets and therefore must raise money behind closed doors, from whoever will listen to the company and give them money. This is not an efficient process, and the price is often a reflection of what 1-2 people are willing to pay for it and who has access to the company, not necessarily a “going market rate”. Venture capital investors thrive on this asymmetry of access, and companies are not particularly adept at efficiently finding the best investor or price. There is often a time cost here as well, as it takes a long time to privately find a few willing investors.

  2. Syndicated Public raises – this is typically done at market price, or at a slight discount to public market prices. It is syndicated by an investment bank who does independent research to come up with a fair price. The deal is offered to all investors in the community, and then the bankers and the company decide who gets allocations - if the deal is oversubscribed, investors will get less than what they want, and the price usually moves up after pricing. If the deal is undersubscribed, it typically prices cheaper or the deal is downsided (less is sold). These deals can be done much more quickly than private deals, and lead to the greatest diversity of the investor base, and the best price.

  3. PIPEs (Private in Public Equity) – PIPE’s are generally used by companies with small market caps or small public floats, or for companies who want to fast track a round in lieu of longer regulatory filings. Typically these are done only when there is no real way to issue stock publicly, so they issue private stock that can be converted into the public stock. Galaxy Digital did a PIPE last year, because the float on their stock was tiny (Novogratz owned it all), and because it would have taken too much time to do a public offering. FWIW, the PIPE came at a 25% discount to the publicly traded stock price, and was issued into strength after GLXY stock had traded up to $4.60 (+300% in 3 months following a 3 year bear market). That’s when you issue a PIPE - when you’re trying to work quickly into strength, not a 3-month drawn out process into weakness.

For all intents and purposes, Sushiswap is a publicly traded company, with ample public liquidity. There is no reason to do a private round (PIPE), at a steep discount, unless Sushiswap was distressed and needed bailout financing (which of course is not true). Sushiswap has access to millions of potential investors, and does not need to find a handful privately to invest. The need for private financing is over - it is time to access the public markets.

Conversely, every single investor who has indicated interest in this deal has access to the public exchanges where SUSHI trades, and if they really want to own SUSHI, they have had the ability to buy it in the public market. This is even more true when an asset falls 70% in 8 weeks – plenty of tokens for sale, go out and buy them if you’re bullish. VCs historically don’t buy private shares in public stocks because their “value” diminishes once a company has access to public markets.

In a typical publicly underwritten deal, an investment banker would gauge interest from investors, and possibly line up a large lead investor (i.e. Blackrock) to help determine pricing (i.e. at what price does that lead investor show interest?). The deal is then marketed to every other investor at that price. Once that price is set, which is likely fixed and not some arbitrary 30-day TWAP that can be easily manipulated, investors have the chance to “take it or leave it”. Because the company is offering this deal to many investors at once, rather than hand-to-hand combat in a private setting, it doesn’t matter if some investors pass on the deal. The company and the bankers have a strong enough gauge on investor demand to feel confident enough to launch the deal at a certain price, even if they don’t know exactly who will ultimately invest. If market conditions change during the marketing of the deal, or if there is insufficient demand, the deal might get pulled, or pricing might change. You often see a deal pulled citing “adverse market conditions”, which just means “we’ll revisit later rather than offer this at a distressed price for no reason”.

So let’s compare this to today’s SUSHI offering:

  • Market conditions: This deal was originally “soft marketed” to a handful of investors around June 15th. SUSHI closed that day at $9.16. Earlier discussions of a potential raise go back as far as April/May, when SUSHI was trading between $15-22. Clearly market conditions have changed since then. This deal should be pulled until market conditions improve, or be heavily revised.
  • Demand: We now know there is ample demand. Look at how many investors are clamoring to buy this deal – the deal is way oversubscribed. Sushiswap should now be comfortable offering this publicly to many more investors than just a small list of VCs, when market conditions improve.
  • Governance: Issuing a large percentage of tokens to a small, concentrated group centralizes votes further with friends of “management” that will likely support more bad decisions in the future. We see this in public equity deals all the time. One way management teams defend their governance votes is to issue a big PIPE to a “friend” that they know would vote for the board/mgmt in a contest. I see the same dynamics here – give more votes to friends at a discount with less accountability.

So the only thing up for debate at this point is “Does this new investor group provide any actual strategic value?” The history of digital assets has proven that hundreds of small evangelists and customers are worth many fold what a single private investor is worth. If the VC community really believes they add value, then they should pitch themselves to the community one at a time with SPECIFIC examples of what they will do for SUSHI, rather than read bullet points off a generic marketing pitch stating how VCs are so helpful. Then the community can vote on each pitch, and decide who should be allocated tokens in the round (i.e. syndicate the deal).

Proposal for a better solution:

Since we know SUSHI has a vibrant community, a publicly traded token, and we’ve established demand, we can go out with “price talk” when market conditions improve. Even though there is no investment banker in digital assets, and the Exchanges won’t market and underwrite a secondary offering, we can still utilize the public markets. We can set price intervals for where Sushiswap will sell a fixed amount of tokens, until the desired amount has been raised:

If our proposal is accepted, Arca will backstop the deal with a minimum purchase of $10 million at the first offering price. With this higher bid from Arca, Sushiswap would be negligent in offering tokens below this price.

Now we have established price talk and a lead investor. Sushiswap can put all three offers on Sushiswap using limit orders (3 sell walls), and provide the exchanges, the media and all SUSHI-specific chat forums with detailed descriptions of what this sale is, and how this sale will be ongoing until it is all gone. This opens up the bidding to the entire community, including these 21 VCs who are “so bullish”, only now they’re competing with each other and with every other investor for access to fixed supply at a predetermined price. Take it or leave it. If one fund wants to take down the whole round, they now have a chance to do so with no lockups.

There are no lockups on public bond and equity deals for a reason – they are completely unnecessary. If the security is priced correctly, long-term holders will hold regardless of whether or not they have a lockup or a cliff. What about Pantera’s nonsensical comment about “what price would $60mm clear if they were a seller on the order books?” First, that implies a forced seller (not the case), second, large secondary sales happen all the time and if there is sufficient demand (which there is), it can be syndicated very easily without impacting price and third, the same nonsense logic applies to buying… at what price could someone buy $60mm all at once on the screens? Obviously that would cause massive upside slippage. So if the demand is there and the selling is not forced, why not clear this supply in a more tactical manner? The most likely scenario is that there is more demand than there is supply, and many of the VCs who thought they were buying this discounted deal were selling tokens to clear room for it – well they can now buy it back at market prices that more accurately reflect the value of SUSHI or risk being underinvested to a great project. Further, if they want to earn the yield for being an active participant, they now have to actually be an active participant rather than getting free money from the Treasury staking on their behalf.

For SUSHI and its token holders, this new proposal gets a higher potential price, is no longer forced/rushed, is more transparent, and brings in an even more diversified investor base. It also proves a new concept of token sales – telling the market the price in which the community is comfortable selling, and leaving it there for investors to buy when they want to, in the size they want to, until it’s fully sold and allocated.

What else should be considered?

  • Time - one reason for doing a syndicated deal at below market prices is simply to get the deal out of the way and move on. There is merit to doing a deal, and being done, rather than a constant overhang. That said, the overhang from this deal and the constant yield farming unlocks have been ongoing for months. The ability to move quickly is gone. Now, with transparency and no time concerns, I see this as being a low risk.
  • Value – Selling tokens at a significant discount to present and future value is very costly to current token holders. At SUSHI’s current price, ~11.1mm new tokens must be issued to raise $60 million at the current 30% discount to TWAP ($5.36 as of 7/16/21), which is near 6-month lows. Our proposal has an average price of $8.53 to clear the $60 million raise, and releases only 7.1mm tokens. Our proposal saves Sushiswap $22.6mm dollars and releases 4mm less tokens saving SUSHI holders from additional dilution. Additionally since the current proposal stakes the tokens sold, xSushi circulating supply would be inflated by 18.05% overnight. Our proposal would mitigate that, something we see as valuable with current yields suppressed.
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Absolute beast. How can you not back this in.

The comments to this post are going to be :fire:

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in complete agreeance with all the points being raised here. Also a great opportunity to send a message as a community to all the predatory VC’s who sold tokens in the past couple days to artificially suppress the price

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Excellent breakdown.

I hope the community backs this

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How incredibly based. Love to see good work from a fellow Jeff.

All of my xSUSHI is posted as collateral right now. I went ahead and market bought some more so I can do my part in getting this chad proposal OTL. I suggest you do the same.

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All I’m seeing is block paragraph after block paragraph. All I know is Sushi has branded itself as a community driven protocol and the sushi token holder has been taking a beating since Sushi got listed on Coinbase. When eth went from 2k to 4k, sushi was one of the only tokens that went down in price. Then when the crypto crash happened in May the sushi token got decimated. But us sushi token holders have been keeping faith because we believe in the project and have dreams of it becoming a top 10 cryptocurrency. Everything seems like its going great besides the price, which is the reason why I have been holding. Just Xsushi alone with the fees sushi generates has the other projects beat, then on top of that Sushi is doing so much more. It seems the community believes right now the price is ridiculously low. Oxmaki you can say sushi is a blue chip defi and sushi is eating peoples lunches, but right now the sushi token price does not reflect that. The only thing that has kept people invested in the project is Sushi’s innovation and not being a sell out. Now you propose selling a garage sale price sushi token for an additional 30% discount to venture capitalists. Not only does that not ruin the sushi brand, but it also shows that you do not believe in project with such a garbage proposal. I would never sell my sushi for a lousy $5 with the market cap being less than $1B, but you are and that’s scary.

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Jeff,

While I have respect for your work, I’ve got to say I don’t think this proposal is fair or at all in the best of interest of Sushi. I think its worth breaking down though.

Sushiswap has $10.15M worth of SUSHI in its ops wallet and $214M in SUSHI in its Treasury Wallet, so the asset mix is predominantly SUSHI tokens. We agree that there is merit to diversifying, but not at current prices.

Operational costs are not paid in Sushi though.

If Sushiswap does need money, we’d like to see justification for why $60mm is the right number. What are run-rate expenses and how much runway does $60mm give Sushiswap?

This I highly agree with, I think the number is way too high and not clearly allocated.

The proposed discount and short lock-up are not indicative of a vibrant growth project, which Sushiswap is.

Agreed we should have a long lockup period.

SUSHI is currently trading at a massive discount to its fair value, and now is absolutely not the time to be selling.

Yes, but the sale isn’t talking about selling liquid Sushi its talking about time locked Sushi which we would all agree is two different assets.

Some of the VCs on the list touting their “strategic benefits” are the same ones selling SUSHI into a declining low-volume market to buy this new deal at cheaper levels. In other words, this looks more like an arbitrage trade than a strategic, long-term investment.

I feel this is a bad faith argument. If you believe someone is currently unfairly treating the asset compared to any other liquid fund then I encourage you to name and shame them as they shouldn’t just be dumping Sushi now for sake of buying discounted and that should totally remove them from the list.

We believe Sushiswap should offer tokens transparently on Sushiswap using the new limit order feature, so that every member of the Sushiswap community has the chance to participate.

The problem with this is they are now taking millions of dollars of Sushi and putting it into liquid circulation which is very different than locked Sushi and accelerates dilution.

We believe it is more valuable to have a diversified community of many smaller investors and users than it is to have a concentrated group of large passive investors.

Not a fair argument. Sushi does have a diverse community of current users, however, unlike other startups in the space it does not have large strategic investors.

Are ‘passive’ investors a bad thing? Yes.

Are some VCs ‘passive’ investors? Yes.

Are all VCs ‘passive’ investors? No.

There are 3 reasons a company raises money - via debt, equity or tokens

This is where I’m confused, on the one side you are advocating for the fact that Sushi does not need to sell tokens and doesn’t have a good reason to, and then on the other hand you are making a proposal where your fund would buy a committed amount of those tokens.

  • Governance : Issuing a large percentage of tokens to a small, concentrated group centralizes votes further with friends of “management” that will likely support more bad decisions in the future. We see this in public equity deals all the time. One way management teams defend their governance votes is to issue a big PIPE to a “friend” that they know would vote for the board/mgmt in a contest. I see the same dynamics here – give more votes to friends at a discount with less accountability.

This is another bad faith argument here.

The list of VCs above is incredibly diverse, if 0xMaki was wanting to sell $60M of the token to friends who would only back him then that list would look very different.

More over, we’re kidding ourselves if we think friendly VCs don’t currently own enough of the active votes already.

The deal you are proposing is one that pushes out $SUSHI into liquid, unlocked dilution at a point when it is at a lower unit cost than it has been for months.

Your fund is willing to scoop up a large portion of that on public market as a large holder.

I don’t fault you for that.

I think you guys are a good fund, and a strong advocate to have in ones corner.

But, you are in a position to take something on a liquid market at an above market rate and have it still be beneficial to your position, and you are framing this as a robinhood action of supporting small investors, which you know they will enjoy because of a higher propose price point.

You are basically saying:

Hey don’t sell $20M to VCs locked up over time on a TWAP discount, sell at least $10M to us right now, above the current market rate, which is roughly equal to the discount if that TWAP was done over any point of time, and its unlocked

I think you’d be a great fund for Sushi to have in their corner on an additional tranche of locked assets just like everyone else, and I agree with you on many points that you listed around the lock-up period, the amount and the need for an accountable break down of the purpose of these funds.

But, I think you are unfairly vilifying ‘VCs’ for trying to buy locked tokens for a discount tomorrow, while you are trying to buy those same tokens at scale in a discounted environment today.

I think your rational arguments on price, lockup and accountability are sufficient and stronger without the other positioning.

If you guys were interested, I’d be more than happy to collaborate on putting together:

  • An outline of things the community should want to see from Maki (et al) that breakdown the need for funds and what they want to get out of VCs
  • Some models around selling locked tokens to funds (including you guys) with a more robust pricing model

Then we could put that forward as a revised proposal.

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Only response is to point #3 below from Jeff:

Screen Shot 2021-07-16 at 9.47.38 PM

Just want to make sure everyone saw this from 0xMaki in a prior post:

Screen Shot 2021-07-16 at 9.46.58 PM

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Enough with the block paragraphs. It’s quite simple. If Oxmaki wants to propose that we sell sushi tokens from the treasury for $3.95-$8.56, then he must not think the protocol is worth much and the whole talk of sushi being a community driven project is trash. If venture capitalists want to be sushi token holders, they can buy it for the market price at an exchange like the rest of us. No one cares about vesting schedules. The irony of this proposal is baffling. I thought we were trying to go against the grain of the traditional finance world. Sushi literally did something most projects were unable to do. Avoid giving away tokens to VCs for dirt cheap prices that no one else could buy them for and now after everything Sushi has done and gone through, you want to sell for dirt cheap discounted prices. It’s absurd. I guess my only question is this proposal for Series A funding? If so, what are your plans for Series B and Series C? What a joke. It looks like I’m going to lose a lot of money on my investment.

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I dislike the proposal, mainly because Sushi doesn’t really need to sell substantial tokens at a discount. If something like this was to happen, I am in favour of a great, long term vesting schedule (esp to help ease any over supply issues during bear markets, good for less sell pressure)

Doesn’t anyone have info on how investor tokens can be used on governance decisions?
Can any VC investors who already have a stake in Sushi use these tokens to vote YES (for the proposal in a snapshot). I saw Jeff state in his proposal they hold 7.9% of xSUSHI supply and saw others mention many already have a stake.

It would be good to exclude from the vote and more transparency around holders + voting power. If this is already the case can anyone drop a link get to learn more.

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Actually agree with Adam completely here.
While some points are reasonable - this reads more to the benefit of the fund than anything else

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You bring up some good points, and I think this exchange adds some clarity to the essential conflict at play here.

If the purpose of the raise is explicitly to raise operating capital, should Sushi:

  • Sell tokens on the open market over time in some fashion as Jeff outlines, or
  • Sell them to certain parties willing to accept a lockup under specific terms (but perhaps also to the general public too).

In other words: dilute supply in the short term, or push off dilution until later?

Also, sell when? Speculate on the market being more bullish or bearish short-term? Timeframes?

Selling timelocked/vested tokens isn’t a bad thing, even if unconventional for a token already trading on public markets. UMA’s range token offering and other ways of raising funding shouldn’t be considered lightly either.

Much of the discussion above has been centered around whether or not the firms listed can provide critical strategic value or not, to which many disagree and some agree, though that’s besides the point. Jeff’s suggestion that any raise should be available to all is best IMO, even if the treasury diversification deal involves a lockup. Most of that offering will be bought up by larger funds anyways even if the offering is available to everyone, in which case, they’ll still be strategic investors as the original deal positions them and they’ll still have the same level of vested interest and opportunity to provide value to the project.

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Hi everyone, thank you for welcoming us (Lightspeed) to the Sushi community forum on Discord yesterday. While there is a diversity of opinions, here’s what we heard most frequently:

  1. An upfront discount is not fair
  2. A call option structure may work better
  3. A longer lock-up/vesting is preferred
  4. The round should be smaller
  5. There should be fewer investors; they should be referenced for their value-add
  6. Investors should provide updates to the community on involvement

We’ve heard you. We’re discussing with the team this weekend. We remain excited to be part of this community.

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Having read the entirety of this thread, it doesn’t seem to be clear why the raise is being done, could be motivations be clarified?

The motivations could lead to a suitable path. If its for strategic partnership and help with research the choice of VCs would differ compared to if you wanted to up your game in the PR dept and needed some operating capital

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